How to Buy Physical Gold

Gold is a great investment option for investors who prefer less-risky investments. Gold holds much value and offers its investors the same. However, like every other security or investment, there are certain external factors that can as well affect the value of gold.

Some experts are of the opinion that investing in gold bars is a better option for investing in gold coins. Given that gold coins come at an extra cost due to the manufacturing and packaging processes. While Gold bars are stalwart of the industry; it is what both average and industrial investors purchase and store. Gold bars can be purchased at spot price (price of un-fabricated gold).

Compared to buying physical gold, gold can also be purchased in the form of intangible investments like gold exchange-traded funds (ETFs). The best way to directly own physical gold bars is by acquiring bullion bars.

When it comes to buying physical gold you must bear in mind the following:

• Why buy physical gold?

• How to buy physical gold?

• Where to buy physical gold?

• Which physical gold to buy?

Why buy gold?

You may be wondering ‘why buy gold?’ if it can’t be used as a currency. Imagine walking into a store to purchase a snack bar, if you were to pay using a gold bar or a gold coin, what exactly would be the equivalent of one snack bar to gold? The value of gold is more superior to any currency even as it cannot be used as a currency as such. In the history of money, gold has been in longer existence and it promises a long-term store of value. Gold is a tangible asset and highly liquid. It can also be used to protect your portfolio from financial crises.

One major advantage of physical gold is that you can buy it and store it personally or decide to keep it in a bank if you wish. It doesn’t affect the value when you decide to sell it and it can be easily converted to cash. This is contradictory to other investments or securities. In addition, physical gold can withstand fire, water, and stand the test of time. Basically, it cannot be destroyed.

Gold bar vs gold coin

First of all, with gold bars, you’d get more ounces for your money compared to gold coins. Bars are less expensive than coins. This is because coins pass through manufacturing and packaging processes with explicit designs. The cost of labor is added to the cost of the gold. Another advantage of gold bars is that they are easier to store compared to coins. Once you receive delivery of your gold bars, leave them in their packaging to avoid scratching and store in a safe place. However, buying gold bars doesn’t mean that the fundamental advantages of gold are compromised compared to buying gold coins. It only means that the costs and purity differs. A pure gold bar contains at least 99.5% gold; the rest is an alloy (silver or copper) which aids smelting. While a pure gold coin contains about 91.67% gold, yet costs more than a gold bar.

How to Buy Physical Gold

The process the buying physical gold is a bit simple as you could either walk into a brick-and-mortar bullion store or access an online store. If buying online, you can find good gold offers on reputable websites like JM Bullion, APMEX, and WholesaleCoinDirect.com. On any of the websites, you can select the gold bars by quantity, weight, and price.  

Bullion dealers offer customers different kinds of discounts such as large quantity purchases (online dealers), credit card payment, and wire transfers.

There is a section on eBay where people can bid gold bars. However, extra caution must be applied when shopping for gold through the auction website. Disregard sellers with negative feedbacks and ratings especially on authenticity, shipping and handling fees, and delivery time.

When buying gold, ensure that it is at least 99.5% pure anything below this percentage is a ripoff. Average investors looking for gold bars to buy should only consider bars that carry the manufacturer’s name, weight, and purity (usually 99.99%), and registration number well stamped on them. Stamping and hallmarks are very important.

Note: A hallmark can be simply referred to as the brand of the bar, that is, the refiner or manufacturer that minted the bar. Some popular mints are the Royal Canadian Mint, Perth Mint, and Valcambi. A good hallmark will give you the leverage of selling your gold bar anywhere in the world, and you can be rest assured that you are getting high-quality gold.

Gold Sizes

Gold bars are in different sizes and weights. There are small bars of one gram also called ‘wafers’ because of their nature. There are also large bars of 400 ounces, which institutional investors like banks, ETFs, and exchanges buy. Usually, when purchasing gold bars, the bigger the bar, the smaller the premium. Because it costs less to produce a kilo bar than a one-ounce gold bar. Yet, big bars are not as divisible as smaller bars. It is better to liquidate smaller bars in exchange for the exact amount of currency the holder needs.

Buying small bars holds many advantages over big bars such as easily finding potential buyers, less counterfeiting risk, doesn’t require an assay to be sold. While the major advantage of buying a larger bar over a smaller one is that the premium is less. Nevertheless, premiums on small bars are affordable as well.

Where to Buy Physical Gold

It would do you a lot of good to select gold dealers based on their reputation. There are other factors to consider, but be on the lookout for reputation as there are many rip-offs. One of the best ways to avoid being ripped off is by buying a reputable brand. All reputable brands have the proper stamping all pure gold bars should have. You can know this by checking out their customer ratings, buyback policy, and salespersons. Another way to spot a good dealer is that they could also offer you the necessary education on how to go about your gold purchase and investment. More so, be sure to check the bars’ purity, form, size, and weight before you buy them.

You can know a trustworthy gold dealer by:

• Strong positive ratings: Trustpilot has trustable ratings of bullion dealers on their website. Some dealers go-ahead to include the Trustpilot logo on their websites to lure customers. It would be in your best interest to go on the Trustpilot website to look up the list of dealers and their reviews. While considering positive ratings, be on the lookout for repeat customers and what other customers are saying.

• Educational services: The dealer’s website should include educational services or advice that would guide customers on how to go about buying physical gold. They’d put into consideration things like what gold bars are best to buy or gold coins.

• Buyback Policies: This is an important factor to consider. A dealer should be able to buy back the gold you purchased from them. Many rip offs wouldn’t agree to buy back the gold they sold to you. While some other dealers may have tangible reasons for not permitting buybacks. Unless it’s something you can deal with, its preferable to buy gold from dealers with favorable buyback policies. Some dealers also offer customers the best resale price during a buyback.

• Online Stores: This is based on individual preferences. Some people would rather purchase physical gold from a brick-and-mortar store to see what they are paying for before the purchase is completed. While for some others, online purchase works better for them. Quite a number of online dealers are cheaper than brick-and-mortar dealers. They also give discounts to customers who buy large quantities.

When buying gold as a first-timer it would be best to look up at least three trustworthy gold dealers in comparison with each other. By doing you, you’d be comparing their commissions, credit card fees, bank wire fees, shipping, and insurance. Other factors to compare are customer service, buyback policies, and delivery time.