How To Buy Gold

Published on

If you’re looking for an asset that protects against inflation, buy gold!  Take a look at our helpful guide below for some tips on purchasing this precious metal.

Get The Full Ray Dalio Series in PDF

Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2021 hedge fund letters, conferences and more

Gates Cap Management Reduces Risk After Rare Down Year

Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More

Wondering How to Buy Physical Gold? Consider The Different Types:

Gold Bars and Rounds

Gold bars are one of the most popular gold buying options for investors. Bars are available in grams up to kilograms, or in ounces. Each bar usually comes stamped with the manufacturer, weight, and purity. Some even showcase a unique serial number.

One of the most important details when investing in gold is the item’s purity. When buying gold bars for investment vehicles like IRAs, the bars have to be at least 99.5% pure gold. However, preapproved coins are allowed to have lower purities.

Another option to look for is the Gold Round. Like bars, rounds do not bear a face value, so they usually have lower premiums than coins.

You should only buy gold bullion from reputable dealers like Bullion Exchanges. Bullion Exchanges utilizes a model pairing extremely high inventory volume with low margins. This allows Bullion Exchanges to provide customers with bullion products at some of the most competitive prices in the industry.

Gold Coins

Gold coins are another top choice amongst gold investors and collectors. Some popular gold coins include the South African Krugerrand and the American Gold Eagle. Gold coins are most attractive to collectors as they usually carry a higher premium than gold bars and rounds. Also, keep in mind that some gold coins contain a lower gold purity than others. For example, the American Gold Eagle coin contains 91.67% fine gold, while American Gold Buffalos contain .9999 fine gold. However, because it is preapproved, the American Gold Eagle is still acceptable for gold IRAs.

Gold coins are available through reputable dealers like Bullion Exchanges. Buying gold coins from legitimate dealers prevents you from making the mistake of buying a counterfeit coin or paying an unfair price


Another gold option that might interest you is jewelry. Like coins, jewelry carries an additional premium. Not only are you paying for the gold content, but you are also paying for the labor required to make each piece. Some manufacturers and retailers can charge over a 200% premium on jewelry.

Additionally, you should consider the amount of gold used on each jewelry piece. Jewelers combine gold with other less valuable metals to create an alloy that is more durable for everyday use. They also use other metals to change the yellowish gold color to white and rose gold.

Gold jewelry is rated using a measure called karats. The amount of gold in a piece of jewelry is broken down into parts of the metal. The following list shows the karat ratings for gold purity:

Karat Gold Content
10K 41.70%
14K 58.30%
18K 75.00%
22K 91.70%
24K 99.90%

You must take extra precautions when buying gold jewelry. Since alloys are used in the creation process, it is easier for some jewelers to use less gold than advertised. Make sure to purchase jewelry from reputable sources. Also, make sure to obtain documentation that vouches for the quality of gold purchased.

Aspects to Assess When Buying Physical Gold

Here are a few things you should also consider when buying physical gold:

  • Storage: Physical gold is heavy; depending on how much you buy, it can take up a large amount of space. Many investors purchase a reliable safe for home storage while others prefer to contract a custodian. Hiring a custodian will add a cost to your investment but provides a secure way to store your gold.
  • Insurance: We all know that life is unpredictable. If you decide to secure your gold at home, make sure to insure your investment. Purchasing insurance will provide you peace of mind and decreased probability of monetary loss. If your gold is stored with a custodian, make sure it’s insured as well.
  • Manufacturer: Buying gold bullions from a respected manufacturer will solidify your investment. Look to government mints like the US Mint, The Royal Canadian Mint, and the Perth Mint, along with respected private mints like Credit Suisse, PAMP Suisse, and Asahi Refining. These mints have an outstanding reputation for both quality and purity.
  • Purity: The purity of gold bars, coins, and jewelry has a strong influence on its value. Buying gold with the highest purity level will provide you with the best value in the long run. Try to buy gold with at least a purity level of 91% or higher.

Other Methods to Buy Gold

If buying physical gold sounds too daunting, then stocks, ETFs, and mutual funds that relate to the gold industry might be the right option for you.

Gold Mine Stocks

Buying stocks in mining and refining companies can be a good alternative if you are more familiar with the stock market. Although these stock prices do not directly reflect the price of gold, they are very closely correlated.

Gold ETFs and Mutual Funds

Investing in gold ETFs and mutual funds allows you to invest in a diversified portfolio of gold-affiliated securities instead of one single company. Funds can include shares of various gold mines and refineries. They also invest in futures and other options in the gold market.

Futures and Options Trading

If you are a more experienced and savvy investor, futures and options might be an ideal choice for you. These types of investments are a lot riskier than buying stocks, ETFs, mutual funds, and physical gold since they are highly speculative.

You will need a brokerage account to trade futures and options. The way gold futures work is by committing to buy or sell gold at a specific price in the future. With options, you have a contract that gives you the option to buy or sell gold shares at a specific price at a predetermined time. You’ll have to closely observe the gold price and your account to successfully execute your options.

Dealing in futures and options can prove profitable, they can also cause investors to incur tremendous losses since it usually includes borrowing money using leverage.

Conclusion: Is Gold A Good Asset To Own?

Gold has been viewed as a sound investment for centuries. Gold coins first appeared as far back as 650 BC and have been used as currency ever since. Since the adoption of fiat currencies by governments in the 1900s, gold became a safe haven and hedge against inflation. Since 2016, the gold price has gained over 36% of value and is expected to gain even more as inflation increases. With a myriad of options to choose from, it’s hard to go wrong when investing in gold. A majority of decision-making comes down to a personal choice: Which mints or dealers do you trust? What designs do you prefer? How much money are you willing to spend? Whatever you decide, you can always count on Bullion Exchanges to provide you with high-quality and competitively-priced gold products.

Subscribe to ValueWalk!

Get updates on the latest posts and more from ValueWalk straight to your inbox.