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How to buy gold

Learn how to invest in gold and diversify your portfolio with this safe-haven metal.

Gold is a relatively stable investment that doesn’t experience the same degree of volatility as stocks and other tradable assets. If you are looking to hedge against large drops in the market, you may want to consider investing in gold as a way to protect your wealth. Here’s what you need to know and how to start investing in gold.

How to buy gold in 4 steps

  1. Find a gold bullion dealer. Compare bullion dealers by fees, available metals and reviews.
  2. Sign up for an account. Provide your personal information and open an account.
  3. Set up a funding method to pay for the transaction. Deposit funds into your account by linking your banking information.
  4. Place your order. Buy gold. It’s that simple.

How to buy and store physical gold

Buying and storing physical gold allows you to get your hands on a tangible asset and avoid the risks associated with the stock market. Gold bullion refers to gold that is at least 99.5% pure and has been transformed into bars or ingots or minted into coins. Gold bullion is the form in which gold is traded on commodities markets worldwide. You can buy gold bullion in the form of gold bars or coins:

  1. Bars and rounds: Gold bars and rounds can come in a range of sizes, from a half gram to several ounces, and typically offer lower premiums and higher purity.
  2. Coins: Because of their intricate designs and production costs, historical or sentimental value and collectability, gold coins typically come with a higher premium compared to bullion bars or rounds.

At most institutions, there is a limit to how much gold you can purchase daily. For instance, most banks have a daily limit of around $10,000 worth of gold, but this can vary. Whether you are a customer may also influence your daily purchase limit and price.

Retirement-minded investors may consider gold IRAs for their bullion investing. These types of self-directed IRAs let you invest in physical gold and other precious metals through a tax-advantaged retirement account.

How to buy gold bars

Gold bars generally range in size from 1/10oz (ounces) to 1kg, but bars of up to 500oz are available. Remember that precious metals use troy ounces and that one troy ounce equals 31.1 grams.

There are two types of gold bars: cast bars and minted bars. Cast bars are produced by pouring molten gold into an ingot mold, while minted gold bars are manufactured via a minting or stamping process.

Cast bars are cheaper to produce, but minted bars look better and are generally easier to sell. You can buy gold bars from these bullion dealers.

How to buy gold coins

Mints around the world also produce gold bullion coins. Typically smaller than bars and ingots, they’re generally considered to be a more convenient option for many investors.

Not only are they cheaper to buy, but they also make it easier to liquidate a small portion of your investment when you need cash. Coins contain between 1/20oz and 1oz of pure gold. A 1/20oz coin will cost you less than $200, making it a more cost-effective way to gain exposure.

These coins also have a nominal monetary value and can be accepted as legal tender in the country where they’re made — examples include the Australian Kangaroo, the American Gold Eagle, the Canadian Maple Leaf and the UK’s Gold Sovereign. You can buy gold bars from these bullion dealers.

What is the price of gold right now?

The graph below tracks the spot price of gold, which is the current marketplace price per ounce of gold.

Factors that affect gold pricing

There are numerous pricing factors to consider and compare before selecting your gold.

  • Spot price. This industry standard represents the up-to-date rate for one ounce of gold. The spot price of gold fluctuates constantly and is determined by the forward month’s futures contract with the most volume.
  • Markup. Gold markups help retailers cover costs and can range from 2% to 30% on top of the gold’s spot price. The retailer may express this cost as a commission or service fee.
  • Premium. Some gold has additional collector’s value, and some issuers of gold — like the US Mint — command a higher premium than others.
  • Market factors. The price of gold can be affected by a variety of market factors, including economic conditions, geopolitical events and more.

Other ways to invest in gold

Buying physical gold isn’t the only way to invest in this precious metal. You can also buy gold stocks or invest in gold ETFs. These are good ways to diversify your investment portfolio and give you access to gold without having to worry about handling and storage.

Why is gold a “safe haven”?

A safe haven investment is typically stable in times of market volatility. It is also useful for investors looking to diversify their portfolio, decreasing exposure to riskier assets or investments. Investors view gold as a safe haven for several reasons:

  • Gold is a physical asset.
  • It’s not easily created or destroyed.
  • It doesn’t change — gold is resistant to oxidation and will look the same in hundreds of years.
  • It has cultural and historical value — gold predates modern currency and has always been seen as beautiful and special.
  • Governments have turned to gold in times of financial crisis, which adds to gold’s stability.

Bottom line

If you’re searching for ways to protect your wealth or diversify your investments, gold bullion, stocks and ETFs may be a practical addition to your portfolio. These securities provide a means to add gold exposure to your portfolio, either through physical acquisition or exposure through the stock market. Regardless of how you choose to invest in gold, remember that, like all investments, it carries risk.

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