Have Questions About
Buying Gold Bullion?

No worries … I created a framework for buying gold bullion that will hopefully help you find answers.

Two common methods of physical gold ownership in which you have complete control of the gold bullion are when it is:

  • Held and stored by you.
  • Allocated and stored at a secure third-party depository.

Choosing a gold storage method is a key consideration when buying gold bullion.

The operative word in the above second bullet item is “allocated” as opposed to “unallocated.” Generally purchasers do not have unfettered ownership and control with unallocated gold bullion programs.

Read about the Perth Mint's unallocated and allocated programs to better understand the essential differences.

Lady Holding Question Marks

Gold coins and bars are the two traditional ways to physically own gold bullion.

Let's begin with gold bullion coins since there are more of them in the marketplace.

Investing In Gold Coins

I would choose a coin that is very credible and liquid.

By credible I mean the coin’s gold quality is beyond reproach. Liquidity refers to the ease of selling a certain gold coin in your region of the world.

You will likely want to sell your gold coins at some point in the future. So a solid brand that’s in demand is a key consideration.

Please visit here to learn how the value of gold coins is determined.

Your first fork in the road is to choose between coins made by private mints (gold rounds) and government-minted alloy and pure gold coins.

Advantages of government gold coins are:

  • Governments back the weight and purity of their gold coins.
  • There is less potential for fraud since governments aggressively pursue those who counterfeit legal tender coins.
  • The market for government gold coins is larger.
  • Legal tender coins are usually exempt from value added taxes (VAT). See EU's 2012 list of exempt gold coins.

So what’s the major attraction to gold rounds? They’re cheaper.

Woman Leaning On Stack of Gold Coins

A dealer's premium, which is the retail price minus the spot gold price, is usually less for gold rounds.

However, the lower cost of gold rounds does not necessarily mean they are inferior products.

On the contrary, there are highly-respected gold rounds in the marketplace (i.e. APMEX and Sunshine).

Click here to learn how precious metals dealers price their products.

Gold Bars Cost Less

Buying gold bullion bars is the best way to get the most gold for your money.

Like gold rounds, bars cost less per ounce than government gold coins … sometimes substantially less.

See cheaper by the ounce section for more details.

Private vs. Government Issued

When buying gold bullion products made by private mints or refineries, you are depending on different (non-government) assurances that a product’s gold purity and weight are correct.

Instead of a government guarantee, a brand's reputation with gold investors is based on the credibility of its refiner and assayer. Learn more about gold bar assay certification by clicking here.

Royal Canadian Mint

Some of you may rest easier buying gold bullion bars made in government-owned facilities.

If that is the case, you might consider gold bars made by the Austrian Mint, Perth Mint or Royal Canadian Mint.

The Perth Mint is owned by the government of Western Australia. Please click here if you plan on buying gold bullion in Australia.

All three mints listed above operate as for-profit corporations.

In some instances private-sector companies supply government mints with coin blanks to produce their gold coins. So the line separating the two sectors is sometimes blurred.

Ultimately the precious metals marketplace is very competitive, so informed buyers will most certainly reject inferior products ... regardless of where they're produced.

Fractional Gold Coins and Bars

You should also consider buying gold bullion in fractional coin and bar weights. Gold Coins come in a variety of sizes including 12 oz., 14 oz. and 110 oz. gold weights.

Fractional Gold Coin - Australia

Ditto for gold bars ... plus you can buy gold bars that are measured in grams.

Sunshine Mint Gold Bar

So gold bars are available in a greater range of sizes.

Generally the smaller gold bullion products are more expensive per ounce.

However, they enable you to liquidate your gold in smaller quantities when you are ready to convert your gold to cash.

Not Comfortable With Large Purchases?

Try dipping your toe in the water to check the temperature before you jump in – figuratively speaking – by limiting your first purchase to a few gold coins or bars.

Use that experience to gain confidence concerning where and how to buy gold bullion before you make a more substantial purchase.

Additionally, buying gold bullion in small chunks over time can help reduce the investment risks of falling gold prices.

For example, if you buy a Maple Leaf Gold Coin for $1,500 one month then buy another coin the following month for $1,450, your average cost is $1,475 per coin ($1,500 + $1,450 = $2,950 and $2,950 ÷ 2 = $1,475).

Man Sitting on Stack of Gold Coins

On the flip side, if gold prices increase, your average cost per coin is higher - reducing your profit potential.

There are risks either way using a cost averaging method.

Nevertheless spreading your purchases out over time is the more conservative approach for protecting your principal ... and possibly easier on your emotions.

Where To Buy Gold Bullion

As with most things purchased these days, you can buy gold bullion online. But if this is a task you prefer to do face-to-face you can always buy from a local gold bullion dealer or participating bank.

Please visit here to learn more about online gold bullion dealers. Whether you buy gold online or locally, you can quickly verify a dealer's reputation by visiting the Better Business Bureau's website at www.bbb.org.

I hope you are now better prepared for buying gold bullion.

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