How to Buy Physical Gold

Recent news events and market performance have pushed gold back into the spotlight. And with gold now more affordable than it’s been in a while, that has spurred renewed interest among many Americans in buying gold. But if you’ve never bought gold before, you might be wondering how to buy physical gold.

Yes, there are other ways to gain exposure to gold and gold markets, like buying shares of gold exchange-traded funds or shares of gold mining stocks. But each of these has its drawbacks.

For many people who want to buy gold, they want to have physical gold. Whether that means actually taking possession of physical gold that they can hold in their hands, or buying physical gold through a gold IRA that they can eventually take possession of through a distribution, for many people there is no substitute for owning physical gold.

So if you’ve ever wondered how to buy physical gold, here’s how to do it.

Types of Physical Gold

First, let’s discuss the different types of physical gold, because that can play a major role in how you buy it, where you buy it, and how much you might pay.

Gold Ore and Dust

Before gold is melted down and refined, it starts off as gold ore. Gold is mined in huge mines in which tons of rock are extracted from the earth, crushed, and subjected to various chemicals to leach the gold out of them.

It can take several tons of rock just to produce one single ounce of gold. While it’s possible to buy this raw gold, or gold dust, or gold nuggets, these are mostly just sold as curios or keepsakes.

While it might be neat to own gold dust or raw gold ore, it’s going to be difficult to convince other people to buy it from you, which is part of the point of owning gold. The reason gold coins and bars became so popular is because they allowed anyone to immediately ascertain that they contain a certain amount of gold of a given fineness.

That allows the next buyer of that gold to know exactly what they’re getting for their money, which isn’t always the case when it comes to gold dust, gold nuggets, or gold ore.

Gold Bars and Ingots

Next up are gold bars and ingots. When you think of gold in a vault, like at Fort Knox, this is what you’re thinking of. Imagine stacks and stacks of large gold bars, on heavy duty pallets, stacked floor to ceiling.

In reality, gold bars and ingots come in numerous different sizes. While the 400-ounce Good Delivery bar is the standard for the London gold trade, those bars aren’t affordable to the average consumer.

Consumer-grade gold bars come in sizes ranging from as little as 1/100th of an ounce to as much as 1 kilogram (~32.15 ounces). Among the most common sizes are the 1 ounce, ½ ounce, and ¼ ounce among the ounce sizes, and 1 gram, 5 gram, 10 gram, 20 gram, and 50 gram among metric sizes.

Gold bars and ingots can be either stamped or cast, and normally contain some sort of marking indicating which refiner or assayer produced them. Very often they will contain a serial number, either stamped or minted into the surface of the bar.

Smaller bars such as the 1 gram bars often come in assay cards or with other special holders that feature certificates, QR codes, or serial numbers to guarantee their authenticity.

Gold Coins and Rounds

While gold bars come in a variety of sizes, they often lack the unique designs that coins offer. And because gold coins come in shapes and sizes that are familiar to those of us who grew up using coins to buy things, gold coins have remained a popular choice for people looking to buy physical gold.

Older gold coins came in a wide variety of sizes and diameters, based on the currency system of their country of origin. Many of these coins, or modern restrikes, remain popular both with collectors and investors.

Modern gold coins are very often minted with an eye for the investment market, particularly for the gold IRA market, which requires that gold coins or gold bullion be a minimum fineness of .995 (99.5% pure gold). New designs are produced every year, and there are numerous coins to choose from.

Among the most popular sizes of gold coins are the ¼ ounce, ½ ounce, or 1 ounce sizes. While there are both larger and smaller sizes of gold coins produced as well, those smaller and larger coins are relatively seldom encountered.

Gold Jewelry

We can’t forget gold jewelry, which in countries like China and India is often treated as an investment. Gifts of gold jewelry to newly married couples are intended to help get them started in building their financial security, and gold markets in those countries are keenly attuned to the dual use of jewelry both as decoration and investment.

Gold jewelry doesn’t play quite that role here in the United States, although there are undoubtedly some people who hold or acquire gold jewelry pieces primarily for their metal content. But when it comes to liquidating gold jewelry, the market for it isn’t as widespread or liquid as it is for gold coins.

Methods of Gold Purchases

In addition to the types of gold you can buy, there are also different ways to go about buying gold. The two most common ones for people looking to buy physical gold today are direct cash purchases and gold IRA purchases.

Direct Cash Purchases

A direct cash purchase is just what it sounds like. You pay with cash, check, bank wire, or even a credit card, and you receive physical gold in return.

Cash transactions are relatively straightforward, and depending on where you buy your gold, you can go home with it that day or have it shipped to your doorstep within a few days. Then it’s up to you to determine how to store it.

People who make direct cash purchases of gold often adhere to the principle that a bird in the hand is worth two in the bush, or believe that if you can’t hold your assets, you don’t really own them. These people often don’t trust banks, safe deposit boxes, or other third parties.

They’re often willing to take the risk of theft to store their gold at home where they can hold it. And while some people may think that’s crazy, that’s why there are different strokes for different folks.

Gold IRA Purchases

The other way to buy physical gold is through a gold IRA. A gold IRA is an IRA just like any other, except that it owns physical gold coins or gold bars.

The annual contribution limit for a gold IRA is the same as any other IRA, $6,500 per year. Now if you’re scratching your head wondering how you’re going to buy lots of gold with only $6,500 per year in contributions, you’re not alone.

Most gold IRAs are funded through rollovers from existing tax-advantaged accounts such as a 401(k), 403(b), TSP, IRA, or similar account. Since rollovers aren’t subject to annual contribution limits, this allows you to fund a gold IRA with a much larger amount of money.

It’s also important to note that these rollovers can be done tax-free. This means that you don’t have to take a distribution from your current 401(k) or IRA accounts in order to buy gold, you can buy gold with your existing tax-advantaged retirement savings.

A gold IRA must be administered by an IRA custodian, and the physical gold you buy is then stored at a bullion depository. You may have heard about so-called “home storage gold IRAs” that purport to allow you to buy gold with a gold IRA and store that gold at home.

If that sounds like something that’s too good to be true, that’s because it is. And people who have tried to go that route have ended up paying the price for it, racking up significant fines and penalties from the IRS.

Because a gold IRA’s assets are stored at a bullion depository and are managed by an IRA custodian, you’re going to pay annual fees for that storage and administration. In general you’re looking at $200-300 in annual fees, depending on which custodian and depository you choose.

That’s another reason that a gold IRA rollover makes more sense than starting a gold IRA from scratch, because those fees are often flat fees regardless of how much physical gold you buy for your gold IRA. $300 out of a $6,000 account is a much greater bite than $300 out of a $60,000 account or a $600,000 account.

Where to Buy Gold

With gold ownership being as widespread as it is, you can buy gold in numerous different places. From estate sales to pawn shops to coin shops to online marketplaces, you can find gold of all different types just about anywhere.

But if you’re looking for specific types of gold, certain gold coins or bars, then you’ll have to focus your search a little more closely. If you’re looking to buy gold for investment purposes, to hedge against inflation or recession, or to protect yourself against a collapse of the dollar, then not just any gold will fit the bill.

There are numerous sellers of gold, many of whom have an online presence. Some sellers specialize in certain types of gold, such as numismatic gold for collectors. Others specialize in selling gold to investors.

Wherever you decide to buy gold, you need to do your research and read reviews. It can be tempting to peruse online marketplaces to buy gold, but how do you really know that the gold coins or gold bars you’re purchasing are real?

Even the most experienced gold buyers occasionally run across counterfeit coins, and with the high quality of Chinese counterfeits today, buying gold online from unknown sellers can be a gamble. That’s why it helps to work with experienced partners who know what they’re doing and who can guarantee that the gold they’re selling you is authentic.

At Goldco, we work directly with mints around the world to bring our customers guaranteed authentic gold coins. By cutting out the middleman, we can ensure that you’re buying 100% authentic gold.

In addition, working directly with mints allows us to weather supply disruptions that periodically impact the gold market. It can be frustrating to be ready to buy gold coins to start protecting your wealth, only to find that there isn’t any gold available. That’s why Goldco works hard to make sure that our customers don’t have to deal with those problems.

How to Buy Gold

Once you’ve figured out what kind of gold you want to buy, and you’ve decided to work with a trusted partner like Goldco, the only thing left to figure out is how to buy your gold. And that’s going to depend on whether you want to make a direct cash purchase of gold or buy gold through a gold IRA.

Goldco has specialized in gold IRAs for years. The gold IRA rollover process is just like any other IRA rollover, but it can still be tricky, particularly if you’ve never done a rollover before. Making a mistake can cost you dearly in terms of taxes or penalties.

But you can get started with a gold IRA in just three easy steps.

1. Choose Your Type of Gold IRA

When it comes to gold IRAs, they can be either Traditional gold IRAs or Roth gold IRAs. Traditional gold IRAs invest with pre-tax dollars, gains accrue tax-free, and distributions are taxed. Roth gold IRAs invest with post-tax dollars, gains accrue tax-free, and distributions are not taxed.

When most people think of IRAs, they’re thinking of Traditional IRAs. And most gold IRA rollovers occur from 401(k) accounts or other IRAs into a Traditional gold IRA.

You could also choose to roll over funds from a 401(k) into a Roth gold IRA, which would be a Roth conversion and would subject you to taxes. Or you could do a tax-free rollover from a Roth 401(k) or Roth IRA into a Roth gold IRA.

The type of rollover you want to do, and whether or not you want to do a Roth conversion, is something you may want to talk to a tax advisor about, to see which type of rollover makes the most financial sense for you.

2. Fund Your Gold IRA

The type of gold IRA you choose is likely going to be dependent on how you plan to fund it. If you have a 401(k), you’ll most likely choose to roll over funds to a Traditional gold IRA.

Your first step will be to open the gold IRA with the gold IRA custodian of your choosing. Then once the gold IRA account is open, you’ll initiate the rollover process with your 401(k) plan administrator.

It’s important to remember that a gold IRA, like any other IRA, must be administered by an IRA custodian. Goldco works with established gold IRA custodians who have experience administering precious metals assets.

Once the funds you’ve rolled over have reached your custodian, your account is fully funded and you’ll be able to take the next step.

3. Choose and Buy Gold

After your gold IRA has been funded, you’ll get to decide which gold coins or gold bars you want to buy. The beauty of a gold IRA is that it’s a self-directed IRA, meaning that you’re in control.

You’re not bound to buy just one type of gold coin or one size of gold bar. As long as the gold you want to buy is IRA-eligible, which most coins and bars made today are, you can choose to buy it for your gold IRA.

Because Goldco works with mints around the world to bring our customers new and exciting gold coins, we have numerous different options to choose from. With various sizes and designs, we have something to suit everyone. And we’re always looking to bring more choices to our customers.

Is Gold Right for You?

The decision on whether or not to buy physical gold is a personal one that you’ll have to make dependent on your own personal financial situation and financial goals. Every person is different, and what might work for one person won’t necessarily work for another.

At Goldco we have worked with thousands of customers, with both large budgets and small, to help them benefit from owning gold. With over $2 billion in sales and over 5,000 5-star reviews, we work hard to bring our customers quality products and superior customer service.

If you’re interested in putting gold to work in helping to safeguard your hard-earned savings, call Goldco today to learn more about your physical gold buying options.