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How to Buy Gold – a Detailed Guide

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With gold under the spotlight as an asset with renewed value, there’s still some uncertainty around how exactly you go about buying it. I

f you’re interested or already decided, here’s all you need to know about buying gold.

Below we discuss gold bullion, gold coins, and the various options you have on getting some of the precious metal into your hands.

In itself, “buying gold” can mean a whole lot of different things.

There’s the purchase of actual, physical gold in the form of (retail size!) gold bars, or investment in gold through a variety of stocks, funds, futures, or any one of a number of investment vehicles that have the gold price driving their value.

The current investor passion is to invest in gold as directly as possible, and it is a passion, as nothing appears quite as gratifying to modern investors as the emotional tug inherent in handling physical gold.

Krugerrands and other gold coins are, for the record, not pure 24 karat gold.

Typically 22 karats (and in the case of Krugerrands, containing one troy ounce of pure gold), gold coins of course also derive their value from gold, and buying gold coins is very akin to buying gold bars.

With that said, a preference for pure (24kt) gold is rising, however, and from being an age old purists’ tradition, that tendency is doubling down today.

In the here and now, the fashion is to either invest in or actually own and store pure gold, the pure yellow metal.

Nothing shines like gold bullion

When most people think about investing in gold, bullion is what they think of—big, shiny gold bars locked away in a vault.

Gold bullion comes cast in bars of various sizes, with the smaller, slimmer gold bars being the favorites of those who want to buy and store physical gold.

Traders in the investment arena carry the same logic of small being better, as it allows far more retail investors to buy gold, than were gold packaged as a single large block only.

When a single ounce of gold costs around $1,900 in the current market, it’s easy to see why one ounce and ten-ounce bars are popular.

There are of course other vehicles to investing in that big gold bullion block so typical of central bank reserves, but there’s something about owning the whole of a gold bar that appeals to us modern humans, hence the appeal of the tinier gold bars.

For investors who want to enjoy handling their gold in the literal sense, buying gold bars isn’t actually that complicated.

The more hands-off investor might want to trade gold via a gold exchange-traded fund (ETF), but bullion (which is the name given to actual physical gold of investment grade) is easy enough to purchase online.

Of course, with a commodity asset that sells for around $1,900 per ounce, you need to be sure you’re dealing with reputable gold IRA providers.

Gold buyers on any given day will buy their precious metal at the spot price, essentially the price of the unmanufactured metal, plus sundry peripheral charges the seller adds.

The joy of physical gold is, of course, the understanding that if and when everything takes a direct hit from some unforeseen calamity, and markets collapse, gold at least can be liquidated and employed as a widely accepted form of currency.

It has to be said, regardless of what the future holds, that’s unlikely to change, that part about being widely accepted. It used to be “Safe as houses.”

“Safe as gold” might be the idiom of the future.

How gold buying works

If you want to directly own gold, you’ll be shopping for bullion or gold bars.

Here, due diligence is paramount, as you need to deal only with legitimate dealers that have a flawless history of service without issue.

Such a supplier will allow you to easily check the bullion’s purity, listed weight, and size before buying.

You’ll pay the day’s spot price, plus the seller’s add-on, but you’ll also need to consider storage and insurance costs.

Having a literal gold stash in your home means you’ll want to hedge (insure) against its theft or other loss, and ideally also means a suitable wall safe or vault facility.

Gold sellers will usually give discounts on a sliding scale. The more bars you buy, the cheaper the overall purchase, although it’s just the service fee or other charges that diminish.

The spot price remains the spot price, and you’re unlikely to be able to buy gold below the day’s spot price ever, assuming you’re dealing with legitimate businesses when making the purchase.

When you actually take receipt of your bullion, remember to keep the bars wrapped as they were when they first arrived, or at least rewrap them after you’ve finished cooing over them every now and then!

Bullion, just like gold jewelry, ideally remains unscratched, and preserving the initial packaging will ensure they still glint as new in a hundred years’ time.

A few cities around the globe-like Las Vegas in the US and Dubai the UAE-have gold bar dispensing ATMs, and that’s another route to getting some of the clinking little ingots in your pocket.

That being said, be aware that ATMs will typically dispense gold at a much higher price than online or legacy venues.

You’re paying a premium for those gold bars to tumble out of that machine.

For some, it’s worth the cost just to have the experience, but seasoned investors steer clear of the practice because of its comparatively exorbitant price tag.

How to buy gold in simple steps

Keep the following in mind when investigating gold purchases:

  • Only buy pure gold (which by international standards means a minimum of 99.5% pure). Typically, anyone offering bullion for sale will certainly be dealing in pure gold only, trying to compete in an exacting market, but scammers take a fly at every arena, so do the necessary homework.
  • Understand the difference between gold and gold coins. Only bullion is pure gold, whereas while gold coins have added collector’s value (and often a higher price tag), to really track (and gain from) the price of gold, it’s pure gold that’s needed.
  • Buy sizes fit for the future. If you have the option of buying one 10 ounce bar or 10 one ounce bars, take the 10 smaller bars, as they’ll be much, much easier to liquidate later on.
  • If you’re buying from abroad, find out about your gold’s safe passage into your hands, including potential declarations at customs and so on.

It’s worth remembering that in many countries for many years, owning gold was a convoluted proposition, so controlled was the mineral wealth under successive regimes.

It still is to a large extent, but ordinary citizens can today actually purchase and stash gold bars with comparative ease.

That’s good news, because the gold train is leaving the station, and its destination looks exciting indeed.

Reaffirmed as the store of value by recent international legislation, gold has been given a serious boost.

Whether it’s one or two steps removed from the mine, or as close to handling gold bars as possible, now really is the time to get into gold!

Also Read: How Much Is a Gold Bar Worth?

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David is a professional gold investor and trader, cryptocurrency analyst, and blockchain vehement. He has written articles, technical analysis, market analysis, books, broker reviews, etc. in the gold and cryptocurrency and market. He also has an online mentoring platform and portfolio management services.

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