The first pure gold coins were struck by King Croesus of Lydia (present-day Turkey) during his reign between 560BC and 547BC – and gold coins have continued as legal tender ever since.  Gold is widely viewed, as the 'ultimate safe haven' for investors. It is liquid, so easy to sell and buy, it works as a currency hedge and always has supply issues - mining output peaked in 2003 - and short supply, typically leads to high demand.

Gold is well known to retain its value well, no matter how uncertain the political and economic climate of the times - it’s a well known fact when the outlook is grim, gold investment increases. After the false gold rush that was the dot com boom, many investors are rediscovering gold and are using gold as the stabilising element of a balanced investment portfolio.

Gold investment is offered by a number of financial institutions and precious metal dealers. You can buy shares in gold mining companies and this is usually the best way to make a paper-based investment in gold. The idea is that gold mining shares should roughly mirror the shifts in demand and price of gold bullion. However this isn’t always the case and the values of gold mining shares are also affected by shifts within the company and its management.

Share certificates are one thing but nothing can compare to that powerful rush you get when you hold your own chunk of gold. Buying physical gold is sure to be an exhilarating experience even for the seasoned investor and surely one that can never be forgotten. You can buy gold bullion is the form of bars or coins and which form to choose depends on the needs of the investor.

Gold bars are well suited to the large scale investor and buying large bars is usually more cost effective than buying smaller ones. The downside of owning large bars is that, when it comes to selling, they’re not very flexible and you can’t sell off a small amount of your gold at short notice.

Gold coins are an altogether more convenient form which is competitively priced, universally recognised and easy to resell. Old (numismatic) coins may also have additional value on top of their intrinsic gold value if they are rare or collectable.

If you do intend to invest in physical gold you must first consider the security implications - where will you keep it? You can of course have a safe fitted into you home, but this is costly and it doesn’t ensure total security. For this reason many investors take the less romantic route and choose to house their gold safely in the vaults of their favourite financial institution.

There are three main ways a gold investor can buy gold - Krugerrands, gold bars and gold sovereigns.

Gold bars are the least expensive way to buy gold, followed by Krugerrands and finally sovereigns. Each method of purchasing gold has advantages and disadvantages, so it’s worth your time researching the most suitable preference for you.

Gold Bars

Buying gold bars today will cost one between £75,000 to £92,000. While this may prove too expensive for the small time investor, kilo gold bars can be purchased for approximately £6000. One can use the British Numismastic Trade Association (BNTA). The BTNA was founded in 1973 and organise Coinex, the only major International Coin Fair held in the UK, which takes place each October in London.

Gold bars, while relatively cheap, can be difficult to sell. One must use a recognised, specialist gold dealer through which to buy and sell gold. Furthermore, the gold bar cannot be split into smaller parts and sold - one most sell it in its entirety.

Being a tangible investment, one must also consider storing gold. At present, the safest place to store gold is using a deposit box in a secure bank. This will cost upwards of £100 per year and needs to be factored into the investment cost.

Krugerrands

A Krugerrand is a South African gold coin first minted in 1967. Krugerrands cost approximately £250 to buy. They can be bought in great quantities, often at a discounted price, or as single 1 ounce coins. The coins are decorated with the face of Paul Kruger on one side and a springbok on the reverse.

The production quality of the coins is, typically, to a high standard, although they do not have the historical value of gold sovereigns. However, Krugerrands provide an effective means for small time investors to buy gold, plus they contain exactly one ounce of pure gold, making it a dependable way to compare prices.

Gold Sovereigns

Gold sovereigns are the most prestigious form of gold, outdating Krugerrands and also having a classic, historic value. Sovereigns are small than their modern South African counterparts and are considered the shrewder long term gold investment. Yet, due to their attractiveness as an investment, sovereigns are more expensive than Krugerrands buy up to five per cent.