Particularly since the financial crisis of 2007-08, gold has appealed to investors looking for an investment that will hold its value and preserve their wealth. Many investors see gold as insurance against global uncertainty. Unlike currency, gold has an inherent value because of its high demand and exceedingly limited supply.
Although some banks do offer gold bars to customers, this is exceedingly rare. Banks who do trade in gold will often offer coins to customers rather than bars.
Buying Gold at Banks
It would be reassuring to walk into the bank that you’re used to doing business with and walk out after buying a gold bar. But the reality is that a lot of banks do not sell gold. Those that do often sell only gold coins. Also, if you buy gold locally, there is added risk in transporting it from the bank to where you’re going to store it. You could be vulnerable to theft, or worse.
Buying Gold Online
Today, most gold is bought and sold online. Like stocks and mutual funds, it can be purchased with a few clicks on your computer keyboard. Gold is even sold on eBay.
Chances are that you’ll be purchasing gold online. But it’s a good idea to do your research first. If you do a little digging, you might find that some websites selling gold have no physical address. This is a big red flag. Also, you could wind up paying a lot more than the gold is worth if you get caught up in an eBay bidding war. Also, be aware there often are extra fees attached to eBay purchases, such as shipping and handling.
Finding a Reputable Dealer
It’s best to do business with a large, established gold dealer who is located in the United States. Do an internet search of the dealer's name that you’re considering doing business with and see what comes up. Look at customers’ reviews, and also take note of how long the dealer has been in business. Check out its Better Business Bureau rating. Once you’ve determined which dealers are the most reputable, you can browse their websites for the different types and weight of gold bars they have for sale.
Evaluating Gold Coins
All forms of pure gold are valuable, but not all pure gold is equal. Because of their intricate designs and, in some cases their rarity, gold coins may have value to collectors in addition to the value of the gold they’re made of. Unless you're an expert in coin valuation, this can make buying and selling gold coins more complicated and riskier. Keep it simple and reduce your chances of being scammed by doing business only with a reputable, verified dealer.
Newly minted U.S. gold coins sometimes can be purchased at banks and always through dealers. Coin prices are based on the market value of the metal. Their meltdown value is usually far more than their face value. The U.S. Mint’s website provides a link to help you locate an authorized dealer for the coins they produce. The purity of newly minted U.S. gold coins is guaranteed by the government. Coins offer more flexibility than bars because you can buy and sell them in smaller increments.
Exploring Gold Bars
If you want to buy a large amount of gold, bars are the way to go. Big investors usually buy bars because they can be stored more efficiently than coins. While gold bars come in a variety of weights, they’re generally heavier and costlier than coins. If you decide to sell yours, finding a buyer can be more difficult than finding a buyer for coins. There's a larger market for coins because they're affordable to more people. But the dealer you bought the bars from often can help you find a buyer. Bars are the easiest form of gold to hold on to as a long-term investment.
- Moneyweek: How to Buy Gold Bullion
- United States Mint: Bullion Dealer Locator
- Gold Bars Worldwide. "Gold to Go Vending Machines," Page 1. Accessed July 31, 2020.
- The London Bullion Market Association. "The Guide: An Introduction to the Global Precious Metals OTC Market 2017," Page 18. Accessed July 31, 2020.
- United States Mint. "American Eagle 2020 One Ounce Gold Proof Coin." Accessed July 31, 2020.
LeDona Withaar has over 20 years’ experience as a securities industry professional and finance manager. She was an auditor for the National Association of Securities Dealers, a compliance manager for UNX, Inc. and a securities compliance specialist at Capital Group. She has an MBA from Simmons College in Boston, Massachusetts and a BA from Mills College in Oakland, California. She has done volunteer work in corporate development for nonprofit organizations such as the Boston Symphony Orchestra. She currently owns and operates her own small business in addition to writing for business and financial publications such as Budgeting the Nest, Zacks and PocketSense.