Is buying gold really as simple as going online, adding coins to your cart, and clicking the checkout button? Is one form of gold better than another? Do you have to have a lot of money to buy gold? So many questions—and America’s Gold Authority® has the answers! We’re here to teach you how to buy gold and walk you through the process.
What Types of Gold Are Available to Buy?
When most of us think of buying gold, we typically think of what’s known as physical gold. Gold is one of four primary precious metals; the others are silver, platinum, and palladium.
Physical gold, which is sold by U.S. Money Reserve, characteristically means bars and coins whose market value is based on their weight (in ounces) and fineness (such as 99.9% purity). You’ll frequently see these bars and coins cited as “bullion,” referring to their status as a tangible asset (as opposed to so-called “paper” gold).
Government mints and private mints produce an array of gold bullion bars and coins. Gold bullion bars and coins are usually sold according to their weight, as measured in troy ounces. A troy ounce is a specific unit of measurement for gold and other precious metals; it’s a little heavier than what we commonly know as an ounce.
Gold bullion coins can also be purchased in fractional amounts less than 1 troy oz., such as 1/10, 1/4, or 1/2 troy oz. The price of a fractional coin tends to go down as the weight of the coin goes down. Since it’s more affordable than a 1-oz. coin, a fractional coin can be a great way to own a piece of physical gold. Some people even like to buy the same coin in all sizes, like the ever-popular Gold American Eagle. It’s available in 1/10-oz., 1/4-oz., 1/2-oz., and 1 oz. sizes.
Physical Gold vs. Paper Gold
The other type of gold available for purchase is commonly referred to as “paper gold.” Paper gold includes exchange-traded funds (ETFs), gold mining stocks, and other paper assets whose “value” is tied to gold. But other than physical gold and paper gold both containing the word “gold,” their similarities mostly end there. Among the differences between the two are:
- You can touch and hold physical gold, but you can’t touch and hold paper gold. That’s because paper gold actually is better classified as “digital gold” since ETFs and other types of paper gold aren’t actually issued in paper form.
- Physical gold isn’t subject to the same market swings that ETFs and other kinds of paper gold are.
- You can mine physical gold, but you can’t create new gold. The scarcity of physical gold is one reason that gold has been able to maintain its long-term performance—there’s only so much to go around.
- The track record of physical gold stretches back for centuries, whereas paper gold has been around for just decades.
How Is Gold Priced?
As with so many things we purchase, supply and demand dictate the prices of gold bars and coins. The market price for gold, known as the spot price, fluctuates throughout the day. The spot price refers to how much you’ll pay for physical gold at a specific point in time rather than at some point in the future.
The price of gold is expressed in terms of how much it costs per troy ounce. On August 7, 2020, gold hit an impressive all-time high of $2,072.49/oz., according to Reuters.
The price of a gold ETF share or another type of paper gold generally goes up or down based on the price of physical gold. However, the two assets aren’t necessarily on the exact same track. For instance, the price of a gold ETF share may rise or fall based on the performance of the global gold-mining industry rather than the price of physical gold.
Where Can You Buy Gold?
Several reputable dealers in the U.S. sell gold bullion bars and coins. Just like so many other products, you can buy gold bars and coins online, over the phone, or in person. Sellers include precious metals dealers, such as U.S. Money Reserve, and local shops.
Unfortunately, it can be difficult to verify whether local shops are reputable. In addition, their inventory may be limited and they may bump up their prices to cover costs associated with operating a brick-and-mortar location.
How Do You Store Gold?
Once you buy gold bars or coins, you’ve got several options for storing them. Storage alternatives include:
- Safe deposit box at a bank.
- Private safe at home.
- Depository (or vault) with high-level security.
- Hidden spots. This storage method can give you immediate access to your gold. That said, it’s not recommended to hide your gold under your mattress, in the freezer, or in the backyard because it’s less secure than it would be in a safe deposit box, private safe, or professional depository.
How Can Gold Benefit Your Portfolio?
Owning physical gold can benefit your portfolio in several ways. Among these are:
- Gold diversifies your portfolio. Gold often moves in the opposite direction of stocks and similar paper assets.
- Gold serves as a hedge against inflation.
- Gold can offset weaknesses of the U.S. dollar.
- Gold’s price can increase during times of geopolitical volatility.
When you buy physical gold, you’re purchasing a precious metal that’s long been hailed as a store of wealth and seen by many as more dependable than emerging but highly volatile assets like cryptocurrency.
U.S. Money Reserve is America’s Gold Authority®, and we have resources to help you along your entire gold journey. Request your free Gold Information Kit online and call now to speak with a knowledgeable Account Executive.