Bullion Buying Basics: Navigating The Best Investment Options

Bullion is the physical form of gold and silver held as bars, ingots, or coins. It is often kept as a reserve asset by governments and central banks. Individuals can buy or sell bullion through dealers or invest in gold and silver bullion via ETFs or futures contracts.

When buying gold bullion, it is important to conduct due diligence and select a reputable seller. Some of the most well-known gold dealers include JM Bullion, American Precious Metals Exchange (APMEX), American Hartford Gold, and SD Bullion. These dealers offer accessibility, a wide variety of products, and pricing transparency.

Gold bullion bars are a popular choice for investors due to their diversity and affordability. They are offered by private mints and refineries worldwide and typically have lower premiums over the spot price of gold when compared to gold bullion coins.

Gold bullion coins, on the other hand, are backed by central banks and federal governments, providing added assurance of their weight and purity. These coins are issued by national sovereign mints and other state-owned facilities and are often available in various sizes and designs.

Whether choosing gold bullion bars or coins, investors should consider factors such as storage, insurance, manufacturer, and purity to ensure a wise investment decision.

Licensed online retailers

Online gold retailers offer the convenience of purchasing gold bars and coins from the comfort of your home. Licensed online retailers are a popular option due to their accessibility, wide variety of products, and pricing transparency. Some even offer discounts for buying in large quantities or paying by credit card.

However, when buying gold online, it is important to conduct due diligence and select a reputable seller. As with any financial product, scammers do exist. Look up the reviews and reputation of any online gold retailer you are considering on sites like the Better Business Bureau and Trustpilot. Ensure you are working with legitimate professionals who treat their customers fairly.

Some of the most trustworthy and well-known gold dealers include JM Bullion, American Precious Metals Exchange (APMEX), American Hartford Gold, and SD Bullion.

Variety of options

As diverse as gold bullion coins can be, there’s no matching the variety available when you buy gold bars online. Gold bullion bars are offered by private mints and refineries located around the globe. There is no government backing or central bank support, but these refineries have certified assayers (in many cases) checking the quality, purity, and weight of each product before it leaves the refinery.

Gold bars feature at least 99.5% purity, with 99.9% being the standard in most products. The weights offered for gold bars range from as small as 1 gram to as large as 5 kilograms.

• Sunshine Mint Gold Bars
• PAMP Suisse Fortuna Gold Bars
• Valcambi Gold Bars
• RMC Gold Bars
• Credit Suisse Gold Bars

Local precious metal retailers

Before visiting a local retailer, it is important to do your research. Compare prices between several retailers and check their reputations. Prices at traditional retailers may be higher than online due to the overhead costs of maintaining a physical store.

Some reputable online gold dealers include JM Bullion, American Precious Metals Exchange (APMEX), and American Hartford Gold. These dealers are easily accessible and offer a wide variety of products and pricing transparency.

When buying physical gold, it is important to consider factors such as storage and insurance. While you can store gold at home, many investors prefer a custodian for added security. Additionally, ensure that you are buying gold of at least 99.5% purity, which is the standard for investment-grade gold.

Banks

Some banks in the US sell gold bars and coins, as well as silver coins. This option may appeal to investors who prefer the public accountability of a federally regulated institution. However, compared to online retailers, banks may offer a more limited selection of bullion products. Before visiting your local bank, it is advisable to call ahead and inquire about their offerings.

Bullion can be considered legal tender and is often held as reserves by central banks. Central banks lend gold from their bullion reserves to bullion banks, receiving the cash equivalent in return. The central bank then lends this money on the market at a lease rate known as the Gold Forward Offered Rate (GOFO). The higher the lease rate, the more incentive the central bank has to lend from its reserves.

If the bullion bank sells the gold on the spot market, it will receive cash for the transaction. The spot market is where bullion and other commodities are traded at the prevailing market rate. Bullion banks that lend gold to mining companies usually do so to finance a specific project.

Bullion banks are members of the London Bullion Market Association (LBMA), an over-the-counter (OTC) market. Examples of bullion banks include Standard Chartered Bank.

Gold prices are determined daily by London's bullion banks, and the London Bullion Market Association publishes these prices on its website.

Pawnshops or individuals

Pawnshops and individuals are another option for buying gold bullion. However, it is important to exercise caution when purchasing from these sources as it can be challenging to verify the authenticity of the gold they are offering. These sellers may also have fewer reviews available for prospective buyers to consider.

When buying gold from a pawnshop or individual, it is crucial to ensure that the source is trustworthy and that the gold is pure enough to be a worthwhile investment. Obtaining an independent appraisal of the gold prior to purchase is advisable, as pawnshops typically offer less than the market value for gold items due to their focus on reselling or melting down the gold for profit.

Pawnshops can be a convenient option for those seeking to buy or sell gold locally, and they offer instant payment for gold jewellery. However, their staff may not specialise in gold appraisal, and their high-pressure sales tactics can sometimes result in unfair prices for sellers.

When buying gold from a pawnshop, it is recommended to:

• Separate gold items by karatage to avoid receiving a quotation based on the lowest gold purity.
• Refrain from polishing gold items before selling, as this can reduce their value.
• Obtain multiple offers from different pawnshops to find the best deal.
• Only sell to reputable, licensed pawnshops that provide detailed receipts and identification.

Jewellers

Bullion is a type of precious metal that is at least 99.5% pure and is often used as legal tender. It is commonly bought and sold by investors in the form of bars, ingots, or coins. Gold bullion, in particular, is a popular investment option due to its high value and recognition as a currency for thousands of years.

When it comes to purchasing gold bullion, one option is to buy it from jewellers. Here are some advantages of buying gold bullion from jewellers:

Variety of Options:

Craftsmanship and Design:

Gold bullion jewellery from jewellers showcases intricate craftsmanship and unique designs. These pieces often serve as wearable investments, combining elegance with financial insight. The value of gold jewellery is influenced not only by the weight of the gold but also by its craftsmanship and rarity, making it a desirable option for those seeking intricate and rare pieces.

Portability:

Gold bullion jewellery purchased from jewellers provides the advantage of portability. These pieces can be easily worn, transported, and accessed, offering a convenient way to carry your investment with you.

Authentication:

Gold jewellery often comes with a certificate of authentication, providing investors with peace of mind regarding the purity and authenticity of their purchase. This certification can enhance the credibility and value of the gold bullion piece.

Convenience:

Purchasing gold bullion from jewellers offers a convenient option for those who want to invest in tangible assets that they can keep with them. It eliminates the need for separate storage facilities, as the jewellery can be worn or securely stored at home.

When considering buying gold bullion from jewellers, it is essential to find reputable sources that offer high-quality, pure gold. Additionally, understanding the current market value of gold and staying informed about market trends can help you make informed investment decisions.

Overall, investing in gold bullion jewellery from jewellers provides a stylish and portable way to diversify your investment portfolio while also adorning yourself with exquisite and valuable pieces.

Frequently asked questions