Beginner’s Guide to Gold Bullion: How to Buy Gold

Gold bullion is physical gold in the form of bars, coins, or rounds, valued primarily by its weight and purity, usually at least 99.5% pure. It’s a popular investment for those seeking a tangible asset that can hedge against inflation and diversify their portfolio.

But there’s more to know before diving in. In this guide, we’ll explore different types of gold bullion, where to buy it, and the pros and cons of investing in it. Whether you’re looking to buy gold for the first time or add to your precious metals investments, we’ll help you make an informed decision.

How much is gold bullion worth?

The value of gold bullion constantly fluctuates, influenced by global economic conditions, geopolitical events, inflation expectations, and market demand. The price of gold remains strong after reaching a record high of $2,540 per ounce in August. A combination of persistent inflation concerns, currency instability, and investor demand for safe-haven assets amid geopolitical tensions drove the rise.

While the price of gold may seem high, many analysts believe it could continue to rise in the near term. Factors such as central banks potentially slowing or reversing interest rate hikes, ongoing geopolitical uncertainties, and increased demand from both institutional and retail investors contribute to this outlook. However, like any investment, the value of gold is subject to market volatility and can change quickly.

When buying gold bullion, keep in mind that you’ll often pay above the spot price due to dealer premiums. These premiums, which are how gold dealers make a profit, can range from a flat fee per ounce to a percentage of the spot price. Generally, the more gold you purchase, the lower the premium per ounce.

How to invest in gold bullion

When it comes to investing in gold bullion, the three most accessible options are to buy gold from a dealer and store it at home, open a gold IRA, or purchase shares in a gold exchange-traded fund (ETF). Each has unique pros and cons, and the strategy you choose depends on personal preference and your investment goals.

Investing option	Best for
Buy from a dealer	Storing bullion at home
Open a gold IRA	Retirement savings and a tax break
Purchase gold ETFs	Investing in gold without physically storing it

Buy from a dealer

Buying gold from a dealer and storing it at home is the most straightforward way to invest in bullion. But be sure you buy from a reputable dealer, and compare prices because markups can vary. Ensure your gold is stored in a secure location and that your home insurance policy will cover your investment in the event of theft or another loss.

Pros

• Simple transactions in which you can buy whatever gold you’d like.

• Tangible asset you can access whenever you need it.

Cons

• Untrustworthy dealers may charge excessive markups or deliver inferior gold.

• May require additional costs for secure storage and insurance coverage.

Open a gold IRA

A gold IRA may be the right investment choice if you’re looking toward the future and want to boost your retirement savings. You’ll need a self-directed IRA and must store your gold in a depository. In exchange, depending on how the account is set up, the benefits might include an immediate tax deduction for contributions or tax-free withdrawals in retirement.

Pros

• Offers valuable tax benefits not available with other gold investments.

• Diversifies retirement portfolio with a hedge against inflation.

Cons

• Requires an IRA custodian, which comes with additional costs.

• Gold must be stored in a depository and cannot be kept at your home.

Read More

What is a gold IRA custodian?

Purchase gold exchange-traded funds (ETFs)

Not everyone wants to store physical gold at home or in a depository. Gold ETFs offer a way to benefit from the value of gold without maintaining coins, bars, or rounds. 

Gold ETFs hold physical gold. Shareholders don’t own the gold themselves, but the value of their shares is based on the value of the gold.

Pros

• Easy to buy and sell shares through a brokerage account.

• No additional costs for storage or insurance.

Cons

• Does not provide owners with physical gold.

• No control over the gold purchased and held by the fund.

Pros and cons of investing in gold bullion

Each type of gold investment has its own pros and cons, but it’s important to consider the drawbacks and benefits of investing in gold bullion in general before you decide to invest your money in it.

Pros

• Tangible asset

  With gold bullion, you have a physical asset with a value that isn’t tied to any country’s currency.

• Inflation hedge

  One main reason investors like gold is that it’s a hedge against inflation, meaning it typically holds its value or even increases in value during times of high inflation.

• Diversification

  Gold has often performed well as an investment when the stock market has faltered, making it a good option for diversifying assets.

Cons

• Additional costs

  Because gold is a physical asset, additional costs are involved with storing and insuring it.

• Converting to cash can take time

  Gold is sought after, but converting it to cash is a more involved process than making a withdrawal from the bank. For this reason, gold is not a suitable choice for an emergency fund.

• Price volatility

  Gold tends to hold or increase in value over the long run, but it can be prone to price swings in the short term.

Our expert’s advice

Erin Kinkade

CFP®

It’s important to note that this should be a portion of an individual’s investment portfolio. Ideally, no more than 10% of your investable assets should be allocated to one stock or investment, such as gold or other coins.

Is it worth buying gold bullion?

Investing in gold bullion isn’t for everyone. Depending on your investment goals and personal preferences, other assets or investing strategies might be best. The table below provides guidance regarding when it might make sense to buy gold.

Consider investing if…	Reconsider investing if…
✅ You want a hedge against inflation.	❌ You need short-term gains.
✅ You are comfortable storing gold at home or paying for gold storage elsewhere.	❌ You worry about gold being stolen and don’t want to pay to store it.
✅ You want a tangible asset that may be a safe haven in times of economic and geopolitical uncertainty.	❌ You are comfortable keeping your money in paper assets, such as stocks and bonds.
✅ You can invest enough to meet dealer minimum purchase requirements.	❌ You have only a small amount to invest right now.

How to choose the right gold bullion

When choosing gold bullion, consider the type, purity, and size of the gold, as well as where you’re buying it. Different forms of bullion, such as bars, coins, and rounds, have advantages and drawbacks, so understanding these differences can help you make an informed decision.

• Decide on the type: Gold bullion comes in three main forms—coins, bars, and rounds. Coins, like the American Gold Eagle, are minted by national governments and often have a face value, making them legal tender. They tend to be easier to sell, especially to other investors, but they can have higher premiums. Bars, which range in size from a few grams to several kilograms, typically have lower premiums and are a solid option for those looking to buy in bulk. Rounds are produced by private mints, have no face value, and tend to have lower premiums than coins.
• Check the purity: To qualify as bullion, gold must be at least 99.5% pure. Look for gold labeled “.995,” “.999,” or even “.9999” (known as “four nines” fine gold). Higher purity levels can be advantageous for investors because they offer more gold content per ounce and are often more desirable when selling.
• Consider the size: Gold bullion is available in various sizes, from 1-gram bars to 1-kilogram bars or larger. Smaller denominations, like 1-ounce bars or coins, offer flexibility and can be easier to sell, but they often come with higher premiums. Larger bars tend to have lower premiums per ounce but can be harder to liquidate and store.
• Buy from a reputable source: Always buy gold bullion from a reputable dealer to avoid counterfeits and overpricing. Look for dealers with a solid reputation, transparent pricing, and a good range of products. Ensure the dealer is affiliated with the Professional Numismatists Guild (PNG) or the American Numismatic Association (ANA).

By considering these factors, you can find the right type of gold bullion that aligns with your investment strategy and goals.

Where to buy gold bullion

If you’re ready to buy gold bullion, choose a dealer carefully. Beware of scammers who try to take advantage of new investors. You can compare options with our list of the best gold dealers.