For someone that is just getting started in gold investment, it is important to decide what kind of gold is better to buy for short term. With gold being available in coins, bars and collector’s pieces, it is important to determine which is better to trade quickly in order to realize a profit.

Gold has soared in price over the past four decades, adding more than $1,100 an ounce to its spot price. Combined with a US dollar that has actually fallen more than 20% over the same period, gold represents one of the best investments in the world for a new generation of traders. Coins and bars, which collectively are referred to as bullion, are regarded by many as the best short term investments for gold.

Gold bullion is closely tied to the spot price, or the agreed selling price of an ounce of gold before commissions or any other charges are added. As the spot price increases, the value of the bullion increases as well. Because bullion is primarily a function of price plus commission, its value can climb quickly and make profits for the person holding it. For example, a person who bought 10 ounces of American Eagles for $1,100 an ounce plus 7% commission would have paid $1,177 per ounce for each ounce. To realize a profit, the person would then need to sell the same coins for over the $1,177 mark to earn anything.

The volatility in gold prices and the fact that bullion reacts to those changes make it a better short term investment. Over the past year, gold spot prices raised nearly $300 per ounce, an increase of approximately 30%. This would mean that an ounce of gold that was purchased for $850 in January 2009 would have cost $910 with a 7% commission. The same gold could have been sold in January 2010 for $1,150, resulting in a $240 per ounce profit.

Because of its reaction to price volatility, bullion is typically the best kind of gold to buy for short term investing. With the continued instability in the US economy, many analysts continue to pick it as an investment with great potential in the days ahead.