Cheapest Way to Buy Gold

by Regina Paul ; Updated July 27, 2017

With gold hovering around $1000 an ounce, it's not that surprising that many people are interested in procuring it for investment purposes. While no one can predict what will happen in the future, or even tomorrow when it comes to the price of this commodity, gold is still a good investment.The cheapest way to purchase gold is by purchasing it in bars, krugerrands (a South African gold coin) and sovereigns.

Gold Sovereigns

Gold sovereigns are smaller, historic gold coins. They are in fact smaller than krugerrands and they are also better known, and as such, some dealers suggest that it makes sense to pay a bit of a higher premium to purchase them. Purchasing sovereigns in bulk, say, by purchasing 100 at a time, a person can bring that premium down from about 2% to 1%. Also, when a person purchases gold sovereigns in bulk, they can be sold at a 10% increase, allowing the investor to make back what he spent, plus a bit more. This is not necessarily true of krugerrands.

Krugerrands

As previously mentioned, krugerrands are from South Africa. They are 1-ounce gold boullion coins. They can be purchased in larger quantities, for less money, than any of the other 1-ounce boullion coins. They are also easy to price, since they are always one ounce of gold, and their production quality is usually high. However, a few things to keep in mind are that they have no historical value, and according to some, they are not very pretty. But because of the the fact they are easy to price, they can be a good investment for those who want to start small when buying gold coins.

Gold Bars

On the surface, gold bars look like they would be the cheapest investment when it comes to buying gold; however, different from buying gold coins, a person would not get a discount if he purchased in bulk. This can be a drawback for those considering buying gold to add to their investment portfolio. Another issue is that gold bars can be more difficult to sell than sovereigns or krugerrands. For large investors or gold dealers, gold bars can be a good investment, and one of the cheapest ways to buy gold, but for the individual investor because of the things mentioned above, they may not be such a good investment.

Something to Consider

The time to purchase gold is when the price is low. Many people are tempted to purchase gold when the price goes up, and this can work in their favor if the price continues to rise. However, if the rise in price doesn't happen, it can make for an unhappy investor who is forced to take a loss.