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If you are starting out investing in precious metals, and particularly gold for the first time, you will know that there is a number of ways that you can invest in gold. These include investments that are both intangible in that you cannot physically hold them such as stocks, and ETFs. If you are an investor that likes to have a tangible holding of your investment though, there is another way. Physical gold, also referred to as gold bullion. Here we will lead you through the process of buying physical gold, and the different types which are available depending on your needs.
Types of Physical Gold
Investing in physical gold, you will generally be faced with two options. These are gold bars, or gold coins. Depending on your needs, both can be significantly different when it comes to investments and their value.
Gold bars are the most commonly purchased form of physical gold. When bought for investment purposes, these should typically be at least 99.5% pure gold bars. What you will typically see though from investment grade gold bars, and what you should be on the lookout for when purchasing, is that the name of the manufacturer, the weight of the bar, and the purity which is typically expressed as 99.99% is stamped on the face of the bar. These will indicate the quality of the bar, and vouch for the authenticity of it.
Gold coins are another way to make a physical gold investment. You should note though that if you buy gold coins, they may not always be equal to the spot prices of gold in the same way that a gold bar would be. This is due to a number of other factors being at play.
With gold coins, these will typically not be of the same purity levels as gold bars. They typically contain 91%-92% gold. With that said, the price of coins in terms of weight, can be more than that of gold bar. This is due to the collectability which some of the coins have. Determining this collectability though is another area of expertise altogether, and if you are looking for the most straight forward physical gold investment possible, then bars are likely the best place to start.
How to Buy Physical Gold
The next question when getting involved and buying physical gold for the first time, is understandably, where can you buy it?
When it comes to this question, it goes without saying that you want to buy from the most trusted sources only. These are relatively easy to find, and typically have a strong online presence and the backing of a lot of positive reviews and credibility. In this regard, it is very important to do your own due diligence prior to buying to make sure that the dealer you are using is completely legitimate. The very first thing you need to be extremely clear on is the current spot price of gold, and avoid any dealers who seem either too good to be true, or have added huge premiums to the current spot price.
Within the US, the Better Business Bureau is a good place to start if you are looking to review or confirm the reputation of a dealer.
If you prefer to skip the homework, we recommend these companies:
- Vaulted (Best for USA, Premium Royal Canadian Mint Gold)
- Bitpanda (Tokenized Gold – Europe only)
- Gold Broker
- Bullion Vault
Factors to Consider When Buying Gold
Though you are now well on your way to buying physical gold for the first time, there are still a few key points which are great to not in keeping yourself on the right track.
Size: Buying gold does not mean you have to dive straight in and purchase a 1kg, or even a 1oz bar. Gold bars come in all manner of sizes. Typically you can purchase anything from 1 gram to 1 Kilogram in weight. The key is to buy the size which is right for you. This is both in terms of your own budget, and considering resale. It is likely that smaller quantities would be easier to resell in the future if needed.
Price Premium: Make sure you shop around the various reputed suppliers of gold. All bullion purchases will have a slight premium added to the spot price, but there should be no hidden fees to contend with. This is always worth double checking before you buy.
Storage & Insurance: Now that you have bought physical gold, you will want to keep it as safe and secure as possible. This may well mean paying for another secure storage facility which is a highly recommended option, particularly if you are buying in large quantities. If you want your bullion to be properly insured, then you may also have to invest in a professional storage solution or specialized third-party insurance.
Condition: Of course when you are buying the gold, you want to make sure that it is in top condition. This is typically very well detailed when you buy from a reputable seller. Once in your possession, you will want to keep your gold in this condition. That is another advantage behind secure storage as you want to make sure your gold stays completely out of harm’s way or any scratches that could impact the value.
Overall, buying yourself some physical gold in today’s market is certainly more accessible than you may think. If you are the type of investor who likes to get your hands on intangible assets, then gold could be the perfect choice for you as it stays near record highs.
Once you have overcome the hurdles of finding the best gold supplier accredited by the BBB, and considering where you will store your asset, there really is nothing to stop you from making that first purchase at any size of gold bar or coin that works for you.
Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.