How to Buy Gold and Silver | Basic Terms Explained | APMEX®

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So, you’re thinking about investing in metals like Gold and Silver. Like any smart investor, you do your homework. You look at the financial pages. You visit a
few websites. And it’s not long before you realize that in one very important way, investing in Precious Metals it’s like hearing a teenager on the telephone. It has has a language all of its own In precious metals an ounce isn’t a normal ounce, “ask” isn’t a question, and “Spot” isn’t a dog in a children’s book. Let’s go over some basic terms and what
they mean to you as an investor. The first word you’ll want to know is “spot”. The spot price of Gold is the current
real time price as set by supply and demand in the global
financial markets. Tied to the spot price is the “bid” and
the “ask” prices. Bid and ask mean pretty much the same
thing in Precious Metals as they mean for any stock on any
exchange The “bid” is the price that the financial
markets will pay to buy the raw metal at any given time. The “ask” is the price the will sell it for. Most of us can’t buy precious metals at
the spot price, because the spot price doesn’t include
what it costs to manufacture and distribute an item. The price most of us pay for Precious Metals includes what’s called a Premium. Before you make any investment in Gold or Silver, you should know how much of a “premium over spot” you’re paying. The calculation is simple. In a one ounce product, the most popular size, you simply take the price of the item and subtract the “spot ask price.” This tells you the premium over spot. Premiums over spot will vary depending on any number of factors. Bullion products that are manufactured by refiners generally have a lower premium than government-issued coins, even though both may have the exact same weight and purity. Rare coins have higher premiums, mainly based on what’s called “Numismatic value.” Numismatic value is determined by scarcity quality, demand and other intangible factors. In short, the price you pay for a Precious Metals product is the spot price plus the premium. Simple? Yes. But we’re not done yet. Other terms you need to know explain the Precious Metal product’s “weight” and “purity.” The traditional measurement for the weight of Precious Metals is the troy ounce. The troy ounce is not the same ounce you see on a kitchen scale. The troy ounce is actually about one point one standard kitchen ounces. The purity of a coin or bullion product is measured in karats. When jewelers tell you that a ring is twenty-four-karat Gold, they generally mean it’s ninety-nine point nine percent pure Gold. Precious Metals dealers usually use the term “fine” to describe this purity. When you see that a Gold or Silver product is point nine nine nine fine, that means it’s ninety-nine point nine percent pure Precious Metal. When it’s four nines fine, that means it’s ninety-nine point nine nine percent pure. If you intend to purchase coins, another term you’ll want to know is “Grading.” Grading effects the numismatic value of a coin by determining how much or how little wear the coin has experienced, and how sharp the dies were when the coins were struck in the mint. So, now that you know some basic terms about buying and selling Precious metals go online to APMEX.COM and start shopping. If you have any questions, call us toll free at 1-800-375-9006.

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