Gold and silver have been a relatively safe store of wealth for millennia. Such precious metals can provide a decent hedge to other investment assets that might decline in value during difficult economic times.
To get involved in the precious metals market, investors can buy gold and silver instruments like futures, exchange-traded funds (ETFs), bars, coins, and gold and silver mining stocks, while speculators can actively trade these metals and their spreads using online forex brokers. If you’ve ever wanted to know how to buy gold and silver, this article will be of special interest to you.
How to Buy Gold and Silver
Below is a step by step guide for how you can buy gold and silver today.
Decide Where to Buy Gold or Silver
If you want to remain in control of your gold and silver investments, then taking physical possession of your gold and silver could make sense. To buy physical precious metals, you can buy coins from a bank or a bullion dealer. You can also contact and register with a reputable online retail precious metals dealer to make transactions.
Register with the Retailer
Banks were once a principal source for buying gold and silver coins, although fewer banks now offer this service. Those banks that do currently allow you to purchase bullion usually have a limited assortment of coins to choose from. Make sure you contact your bank(s) in advance if you want to buy metals this way. Also, banks generally require you to be physically present to buy precious metals that you must then personally transport to your chosen storage location.
Online retail metals dealers offer the convenience of delivering precious metals directly to you or to your secure storage facility. You can access such dealers via their websites to compare their bids and offer prices for coins and bulk precious metal or bullion.
When you purchase bullion or coins from an online retailer, you might find that their prices are higher than the current spot rate. The reason for this involves the demand for that particular coin, the quality, market sentiment and scarcity of the coin. Don’t be surprised to see physical metals trade at a slight premium to the spot rate, since this difference can arise from higher demand for physical precious metal assets.
Select the Gold or Silver Alloy Type
Once you’ve selected a reputable source for buying gold bullion, gold coins, or silver coins, you’ll want to pick the type of coin or bar that fits your budget. The highest quality bullion is 0.999 pure silver or gold and is also the most expensive since the higher the quality of the gold or silver, the easier you can typically find a buyer at a good price. A cheaper investment alternative consists of bullion of lesser quality, known as “junk gold and silver” and “scrap gold bullion,” which is sold at a discount.
Alloys refer to a mixture of metals that can often either reduce cost or improve performance for a particular use. Gold can be alloyed with other metals to increase its malleability and strength in purities typically referred to by karats (K): 24K refers to pure gold, 22K gold contains 91.67% gold, 18K gold contains 75% pure gold, 14K gold contains 58.3% gold and 9K gold contains only 37.5% pure gold.
Furthermore, the most popular 18K yellow gold alloy combines 75% gold with zinc and/or cobalt, silver and copper, while 18K white gold is alloyed with zinc and/or nickel, palladium and copper. Rose gold involves alloying gold with copper.
Silver is commonly alloyed with 7.5% copper to yield sterling silver or with gold to yield vermeil. Other common silver alloys with copper include Mexican and Britannica silver with 5% and 4.16% copper, respectively.
Investors will probably want to select pure gold or silver, although due to the higher cost of pure metals, you may have to settle for a lower purity. In any case, you’ll probably want to choose a type that is common so that you can resell it easier.
Pay for Your Gold and Silver
The payment method used may depend on how you buy your precious metal. Banks will typically take cash payments if they have the metals in stock, while most online bullion or coin dealers provide a toll-free number for you to contact them.
Once you’ve contacted an online dealer and placed an order, payment methods range from personal checks, credit or debit cards, bank wires and online payments services like PayPal and Skrill.
Trade Your Gold and Silver
If you plan on just trading gold and silver actively without taking physical possession, you’re probably better off trading in the highly liquid spot or futures markets or via online forex brokers. Physical metals tend to be harder to trade and require transporting, storing and delivering the metals, which just adds to your overall costs.
While coins and bullion are fungible, getting the best price for your investments of that type may be more difficult than if you trade these metals in the spot and futures markets. If you bought the gold or silver at a low price when you initially invested, however, then selling at the bid price of the prevailing market would still be profitable.
Best Exchanges for Gold and Silver
Importance of Gold and Silver Size
Sizes of commonly used bullion bars from 1 gram to 1 kilo. Source: bullionbypost.co.uk
For large metals purchases, the standard gold bar, gold ingot or “Good Delivery” bar generally weighs 400 troy ounces or 27.5 pounds. Due to the relatively high price of gold, gold coins and 1-ounce bars have recently become popular with people diversifying their investments.
Also, if you plan on selling just a portion of your silver or gold at a time, then you might want to buy the smaller denominations shown in the graphic above. On the other hand, those investors who plan on holding their gold and silver for the long term before selling it all might prefer to buy larger denominations.
Gold and Silver Authentication and Certification
Bullion generally comes with a certificate of authenticity or an “assay card.” While most national mints, including those in the U.S., Australia and the UK, guarantee the purity of the metal in the coins they sell, retail sellers of bullion must certify or issue an assay card to confirm the purity of the metal they wish to sell.
A certificate of authenticity (CoA or COA) consists of a seal or sticker that is placed on a piece of paper or certificate. The CoA seal guarantees that the coin or bullion item is authentic, although the CoA does not certify the exact purity of the item like an assay card does.
Despite the fact that a CoA does not seal the bullion piece like an assay, it does include vital details. These might include an approval stamp of authenticity, purity and mintmark proving the metal item is legitimate.
Best Gold and Silver Brokers
Finding the right broker for your precious metals purchases doesn’t need to be difficult. Check out our picks for the best gold and silver brokers in the list below.
Does Buying Gold and Silver Make Sense for You?
Gold and silver have historically been a popular choice for investors. Although owning physical gold carries the risk of theft if stored in a relatively unsecured home or even a home safe. Gold storage facilities represent an excellent and safer alternative in many cases, as do bank safety deposit boxes.
A gold storage facility has a prorated cost of roughly 0.5% to 0.7% of the stored metal’s average daily value and could make sense if you own a large amount. Also, a reputable storage facility is more likely to stay open in a financial event that could close banks, making safety deposit boxes unavailable.
You can also open a precious metals individual retirement account (IRA) that would allow you to save the value of your metal holdings for your retirement with deferred taxes. The bottom line is that gold and silver have historically retained value throughout history and may provide you with a long-term hedge against inflation.
Frequently Asked Questions
Can you buy gold and silver at the bank?
Banks used to be one of the few places you could purchase precious metals, although the number of banks that currently offer this service has diminished considerably. Some banks still offer a limited variety of gold and silver treasury minted coins, so if you prefer buying precious metals from a bank instead of a dealer, it would be a good idea to check ahead with them to ensure they can accommodate you.
Should I buy gold and silver bars or coins?
The answer depends on the amount of money you want to invest in precious metals. For example, a standard good delivery gold bar weighing 400 troy ounces represents the equivalent of roughly $690,000 at the prevailing market price. The same 400-ounce bar of silver would cost about $10,000. For smaller investments, either highly fungible coins or small denomination bars would typically make the most sense.
What is the best way to buy gold and silver?
One of the easiest ways to buy gold or silver is through exchange-traded funds (ETFs).
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