How to Buy Gold
Humans have coveted gold for thousands of years, and today's investors are no exception. Whether you plan to buy the metal in its physical form as coins or bars, or as gold-backed securities like gold stocks and gold exchange-traded funds (ETFs), there are plenty of reasons you may want to consider adding the precious metal to your portfolio.
Gold has long been considered a safe-haven asset because when prices of other investments — like stocks or real estate — drop sharply, gold historically retains its value. In some instances of market volatility, it may even significantly gain value while other investments decline in value, as panicked investors rush to buy what they consider a safer store of value.
Some experts also see gold as the ultimate hedge to protect your savings against inflation since it’s retained its value for centuries and recently appreciated to all-time highs. Due to its inverse relationship with paper currency, gold tends to rise in value when the U.S. dollar weakens. So during periods when people experience eroded purchasing power, the precious metal tends to increase in worth.
But when does it make sense to buy gold? And what's the best method? In this review, we share everything you need to know about how to buy gold, including the benefits and downsides of buying physical gold or investing in different types of gold-backed securities.
Table of Contents
Buying gold
If you’re interested in buying gold, there are principally two ways to do it: (1) purchasing physical gold or (2) investing in gold-leveraged securities like gold stocks, mutual funds or ETFs. Depending on your investment strategy, expertise and the level of risk you’re willing to take, you may find one or the other more appealing.
Read on to learn how you can buy gold, whether or not it’s a good investment and if it’s the right fit for your goals.
Gold bullion
Bullion is physical gold of high purity and usually comes in the form of ingots, bars, coins or rounds. Rounds are often confused for coins — like the U.S. Mint’s American Gold Eagle — because of their circular shape, but they're closer to gold bars in that they don't have value as legal tender and don't differ in design from one year to the next.
Bullion derives its value from the gold content of the precious metal rather than the form of the metal, and it’s measured in what’s known as a troy ounce (standardized at 31.1034768 grams or 1.09714 ounces). You can purchase gold bullion bars in various weights, with bars ranging from 1 gram to 1 kilogram. Investment-quality gold bars are 99.5% (995) pure gold, which is the international standard. Legitimate bars are stamped with the manufacturer's name, purity and the weight.
Like any investment, there are pros and cons of having gold in your portfolio. Here is a brief overview of the benefits and downsides of owning the physical precious metal:
Pros of buying gold bullion
- When you own gold, you own a physical, valuable asset that can be easily passed on to others.
- Gold bullion provides stable value.
- You don't need to watch it closely like you would with a portfolio of stocks, mutual funds, ETFs and bonds.
Cons of buying gold bullion
- You may need a secure vault or insurance to protect it, especially if it’s held in a gold IRA.
- There are many reputable dealers, but scams are commonly committed by fraudulent online gold dealers. Read about the best online gold dealers to learn more.
- It could be difficult to determine gold purity on your own.
- Gold dealers typically charge a markup — known as the spread — from the precious metal’s spot price when you buy or sell it. In some cases, the markup could be 10% or more of the gold’s value.
How to buy gold bullion
There are many retailers that allow you to buy gold online and feature a variety of gold coins, rounds, bars and ingots. Sellers routinely mark up the price of physical gold from its current spot price, so be prepared to pay more than the actual value of the gold itself.
These dealers often offer discounts to members of the military and for buying in bulk. Buying more than 100 gold bars (or 500 gold coins) is considered a bulk purchase, but this will depend largely on the individual seller. You may also be able to buy smaller gold bars, ranging from half a gram up to 100 grams, in stores that specialize in numismatics, pawn shops or some jewelry stores.
Where to buy gold bars
For investors interested in purchasing these physical gold assets, our guide on how to buy gold bars includes a comprehensive breakdown. Some well-known, reputable dealers that sell gold bars include:
- APMEX
- American Hartford Gold
- JM Bullion
- Provident Metals
- Westminster Mint
- Money Metals Exchange
Where to buy gold coins
Several governments, including the U.S., as well as many private mints currently manufacture gold coins. Some of the most well-known government gold mints in the world include:
- The United States Mint
- The Royal Canadian Mint
- The Royal Mint of the United Kingdom
- The Central Mint of the People’s Bank of China
- The Perth Mint in Australia
Some of the most well-known privately-owned gold mints in the world include:
- New Zealand Mint
- Sunshine Minting
- Valcambi
- Austrian Mint
- South African Mint
- Geiger Edelmetalle
- PAMP Suisse
Coins issued by the U.S. Mint are technically legal tender, meaning that in theory, they could be used to pay for goods and services. However, the value of gold coins tends to be much higher than their face value. Collectible coins may have an even higher market value due to their rarity or potentially higher demand. Popular minted coins include:
- American Eagle
- Gold Buffalo
- Canadian Maple Leaf
- South African Krugerrand
- Vienna Philharmonic
- Mexican Gold 50 Pesos
- British Sovereign
- Australian Kangaroo
Minted coins usually range in size from one-tenth of an ounce to an ounce to accommodate various investors’ buying power. Their purity is usually between 22 and 24 karats, with the purity guaranteed by the mints that produce them. You can buy gold bullion coins from:
- Mints
- Coin shops
- Online dealers
- eBay
- Coin shows
Where to buy gold jewelry
When buying gold jewelry, keep in mind that the price you pay will be tied to the craftsmanship of the piece and, importantly, that the amount of gold content will be just a percentage (karat) of its overall weight. In effect, this means you'll be paying more money for less gold.
For example, the most common type of gold used in jewelry in the U.S. is 14K gold, produced from 58.3% pure gold and 41.7% of other metals like copper and silver. Other common mixtures of gold are 18K and 22K. On the other hand, 24K gold — like investment-grade gold bars — is 99.95% pure gold and contains no other metals. However, it is rarely used for jewelry because it is softer and more malleable because of its purity.
Some jewelers take steps to assure customers that their gold doesn't come from areas of armed conflict. These pieces are often sold with the tags "ethical," "conflict-free" or "sustainable." For example, Fairmined jewelry may have a Fairmined stamp to assure it comes from a responsibly-managed community mine.
Investing in gold
If purchasing physical gold doesn’t seem like the right fit for you, you can invest in a variety of gold-backed securities. These investments can be made through brokerage accounts and online trading platforms and include shares of gold mining stocks, gold streaming stocks and gold ETFs.
Some examples of how you can invest in gold outside of the physical metal include gold ETFs, like the VanEck Gold Miners Equity ETF (GDX); gold mutual funds, like the Fidelity Select Gold Portfolio Fund; stocks of gold miners and refiners, like Newmont Corp. (NEM) and Barrick Gold Corp. (GOLD); and gold futures contracts, through exchanges like the Chicago Mercantile Exchange.
To learn more, read our guide about how to invest in gold.
Should you buy gold?
- Gold is a tangible asset that is highly liquid, meaning it’s easy to quickly find a buyer if you need to sell.
- Gold has historically been considered a hedge against inflation, since the price of gold tends to keep pace with the cost of living.
- Gold can be used to diversify your portfolio because it tends to rally when other asset classes — such as stocks and real estate — fall in value.
- Gold doesn’t produce income like bonds or dividend-paying stocks and ETFs. In the long run, these other assets are likely to outperform gold.
- Gold prices can experience volatility.
- There are additional costs associated with buying, selling and holding physical gold as an investment.
Owning gold can be a way to diversify your investment portfolio. Gold is also considered to be a good way of protecting your money from inflation. But, as with any investment, there are risks. Gold can be volatile in the short term and can lag behind equities in terms of long-term price appreciation.
Before purchasing physical gold or investing in gold-backed securities, make sure it fits with your investment strategy, financial goals and risk tolerance.
Gold and diversification
Diversification — which entails owning a mix of different assets — aims to help shield investors from dramatic losses. In a well-diversified portfolio, when prices for one type of investment decline, you're insulated by the prices of others, which can potentially offset losses.
While gold's price can be volatile in the short term, it often has an inverse relationship with stock and bond prices. In fact, during financial calamities when investors tend to flee the stock market, gold prices often rally. When the S&P 500 fell around 30% between November 2008 and March 2009, the price of gold was up by about the same amount.
However, this isn't always the case. During 2022's bear market when the S&P 500 lost nearly 20%, the price of gold also dropped. But it only fell by -0.1% by year's end, ultimately beating many other asset classes. Additionally, when gold hit its all-time high in October 2024, the S&P 500 was continuing its bull market run that began in 2023.
Nonetheless, owning some gold alongside stocks and bonds is one way to diversify your investment portfolio. Just be mindful that financial advisors typically don’t recommend investing more than about 10% of your overall assets in gold or precious metals in general.
The ethical concerns of buying gold
Investors have increasingly been looking for investments that align with their viewpoints. That has been coupled with the emergence of environmental, social and governance (ESG) investing. Gold mining can have significant environmental impacts and mining practices have raised concerns about labor practices and human rights, as many gold mines are located in conflict-affected areas and impoverished nations.
In 2019, the World Gold Council took steps to implement guidelines for member companies, as did the International Council on Mining and Metals. Both require that participating mining companies publish information on their progress publicly, making it easier for consumers and investors to find and use as consideration for their purchases.
The price of gold fluctuates daily, but the precious metal hit its all-time high in December 2023. Price fluctuations can be attributed to multiple factors, some of which include the monetary policies of various nations’ central banks, the value of the U.S. dollar and overall market conditions.
In the U.S., the COMEX is the primary exchange for gold futures, and therefore the place where the most-widely quoted gold prices are set. The London Bullion Market Association also provides a twice-daily fixed gold price used as a benchmark for large market participants.
In general, look for what's known as gold's spot price, which is the price at which buyers and sellers are willing to trade gold on any given day, as opposed to some future date.
Profits from trading securities (e.g, stocks, ETFs, mutual funds, CDs and bonds) are considered capital gains and are taxed at special long-term and short-term capital gains rates. Short-term capital gains taxes can range anywhere from 10%–37%, while long-term capital gains taxes are 0%, 15% or 20% depending on your taxable income. One exception is for ETFs backed by physical gold (not gold mining companies), from which gains are taxed as collectibles rather than capital gains.
The IRS views profits you earn from trading physical gold and other collectibles differently. If you own physical gold for less than one year, gains are taxed as ordinary income. If you own physical gold for longer than one year, gains are taxed at a maximum 28% rate.
Summary of How to Buy Gold
Gold investments are considered a hedge against inflation and, historically, a store of value. They also offer the benefits of portfolio diversification. However, consider the risks of investing in gold before adding the precious metal to your portfolio.
Most financial advisors recommend not investing more than 5% to 10% of your overall portfolio in alternative assets like gold. Because the price of the precious metal remains relatively stable — unlike speculative investments like cryptocurrency — it offers a safe haven for investors. But because the physical metal doesn't generate income, gold is unlikely to produce the large gains that other asset classes like stocks and real estate are capable of.
If you decide to invest in gold, you can purchase the physical metal (i.e., gold bullion ingots, bars, coins or rounds) or invest in gold-backed securities (i.e., stocks, ETFs, mutual funds and futures).