Our guide provides a quick overview of the history of gold values and trends, and explains the fundamental benefits gold can provide. It also helps answer some important questions you may have, such as the following:
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Investors looking to enjoy the touch, feel, and security of owning gold may wish to buy gold bars instead of intangible investments such as gold exchange-traded funds (ETFs).
Physical, investment-grade gold, also referred to as gold bullion, can be purchased at spot price, which is the price of unfabricated gold plus additional costs, which vary depending on the seller. One of the reasons many investors buy physical gold is that it can be liquidated in the unlikely event of a total economic collapse.
Buying Gold Bars
Buying physical gold bars online is a relatively simple process. One common way to purchase gold bars is through licensed retailers online. Prospective buyers can browse gold bar products on reputable retail websites such as the American Precious Metals Exchange (APMEX), JM Bullion, and Wholesale Coins Direct. You can choose gold by weight, quantity, and price.
When you receive the gold bars, it may be a good idea to keep them in their packaging to prevent scratches and store them in a home safe or safety deposit box. You will likely be responsible for paying for delivery fees and insurance.
In Person
Some investors prefer to buy gold from local dealers, allowing them to inspect the gold and pay for it in cash physically. However, local dealers tend to have higher prices than online retailers while having a smaller selection.
Online
Online gold retailers can provide lower prices due to their higher volumes. On the downside, it requires more research to find reputable dealers.
Online stores may also give discounts to customers who buy larger quantities. Certain retailers provide discounts for purchasing by credit card, while others do so for wire transfers, so be sure to choose the most cost-effective payment option.
You can also bid on gold bars on eBay and similar auction sites. When shopping for gold on the auction website, reviewing the seller's feedback is important. Look out for sellers with documented negative feedback on authenticity, exorbitant shipping and handling fees, and failure to deliver.
Gold-to-go ATMs are available to buy gold bars in cities like Las Vegas and Dubai. Consumers should be cautious and aware of gold's spot price because such ATMs sell the precious metal well above this price and above the prices of most other retailers.
Considerations When Buying Gold Bars
Storage
Potential investors should also consider how they plan to store their gold bars. While it is possible to keep gold bars in a safe at home, many investors prefer to keep their gold in a safe-deposit box or with a custodian. These services typically charge a fee but provide better security than a home safe.
Insurance
If you choose to store gold at home, you should consider taking out an insurance policy. In the event of theft, flooding, or other disasters, you may be unable to retrieve your gold.
Unlike bank deposits, safe deposit boxes are not federally insured.
Purity
Investment-quality gold bars should be at least 99.5% (995) pure gold. The rest is an alloy, usually silver or copper, that makes smelting possible.
People who purchase gold bullion as an investment should only buy a bar with its manufacturer's name, weight, and purity, usually expressed as 99.99% stamped on its face. Popular mints that produce gold bars include the Royal Canadian Mint, Perth Mint, and Valcambi.
Size
Gold bar buyers should consider the ease with which they can liquidate the bars as part of the buying process.
For example, if gold is selling at $1,400 per ounce and an investor has $14,000 with which to buy gold bullion, they will usually have an easier time selling the gold down the road if they buy 10 bars that weigh 1 ounce, rather than one 10-ounce bar. They can sell the 1-ounce bars one at a time as needed, while they might have a harder time finding a buyer for the 10-ounce bar if they need to sell quickly. Conversely, considering the tiny size of gram gold bars, investors sometimes save up to buy bars of a more substantial size.
Aside from bars and coins, it is also possible to buy physical gold in the form of jewelry. Generally, gold jewelry tends to be sold at a significant price markup because of craftsmanship and retailer costs. For this reason, jewelry is not commonly seen as a strong method of investing in gold.
Gold Bars vs. Investing
Though all forms of pure gold have significant monetary value, not all investment-quality gold is equal. From an investment perspective, investors who want to add a physical product that tracks the price of gold may wish to avoid gold coins. These coins often feature attractive designs, have historical value, and contain a lower quantity of gold but still cost more due to their numismatic value.
In addition to costing more, gold coins sometimes skew the value of an investor's portfolio. For example, the highly regarded American Eagle coin produced by the U.S. Mint contains 91.67% gold but costs more than plain gold bars because of its value as a collector's piece.
Some investors may want collector's items, while others may wish for plain gold bars, which typically are the easiest to hold long-term and convert to cash. For this reason, plain gold bars tend to be a popular choice among investors seeking gold as a safe haven investment.
Stock and gold prices tend to move in opposite directions, which is why many investors use gold to store value during stock price drops.
However, gold bars do not produce dividends or yields or provide a passive income. So while gold bars are likely to maintain their value over the long run, an investment in the S&P 500 typically returns about 7% per year.
If you're still looking for exposure to gold, you might consider indirect access to gold through investments in gold mining stocks, gold-focused ETFs or mutual funds, or gold futures contracts. Each of these investments may be tied to the broader performance of gold but provide a way of diversifying a portfolio beyond physical bullion.
Comparing Gold Bar Sellers
When browsing the bullion market, investors should be aware of gold's spot price. Finance websites that display stock tickers usually display the daily price of gold.
Gold is relatively easy to buy, but prices vary significantly as sellers include their desired profit margin plus additional costs such as authentication certificates, shipping and handling, and payment processing fees. A price comparison, including the different sellers' charges, is critical to getting the best price on gold bars.
What to Look for in a Seller
Gold bar buyers should review websites like the Better Business Bureau and Ripoff Report to learn more about a gold seller’s reputation. In general, reputable gold sellers must disclose all the fees required to close a transaction upfront.
Buyers in the U.S. should also do their due diligence before buying gold from sellers abroad. Even when the gold bars are authentic, seller charges may be excessive, and buyers might face issues clearing the gold through customs, depending on the quantity purchased.
Investors should know that gold as a commodity tends to perform well during economic recessions. During periods of economic turmoil, many investors may be inclined to look to gold as an investment opportunity. These are periods in which potential gold scammers may also be most active.
The price of gold bars fluctuates with demand. Its price on June 17, 2023, was $1,961 per ounce.
Most reputable coin stores and gold dealers will accept payment in cash. However, they are legally required to report any cash transaction of over $10,000. This includes collecting information about the customer, such as name, address, phone number, and social security number.
As precious metals, gold and silver have many common qualities, and their prices often move together. However, they do have differences. Silver tends to be more volatile than gold, and its industrial applications mean the price is more closely linked to commercial activity. Gold tends to be more stable and has a better track record as an anti-inflation hedge.
The Bottom Line
While gold is a popular hedge against inflation, that doesn't always mean it's a good investment. Physical gold incurs large additional costs related to transportation and storage. Moreover, authenticating a gold bar can add to your transaction costs.
Investments in other types of precious metal bullion, such as silver, provide another means of diversification beyond gold bars.
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