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Bid : 3,626.79/oz
Ask : 3,637.67/oz
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Refresh in 00:00
Gold
Bid : 3,626.79/oz
Ask : 3,637.67/oz
Silver
Bid : 43.30/oz
Ask: 43.43/oz
Platinum
Bid: 1,510.56/oz
Ask : 1,549.83/oz
Refresh in 00:00

Know The Cheapest Way To Buy Gold

October 25, 2023

When looking for the cheapest way to buy gold, it's important to consider factors like fees, premiums, and ongoing storage costs to ensure you're getting the most gold for your money. Methods like buying gold coins or bars in bulk directly from reputable dealers can often provide significant cost savings compared to making smaller purchases from retail shops. Online gold dealers tend to have lower overhead expenses which enables them to offer more competitive gold prices. 

Private sellers on peer-to-peer marketplaces may also offer gold at a discount to the current spot price. This blog post will explore the cheapest types of gold to buy as well as the least expensive methods for investing in physical gold so you can find the most cost-effective approach. We'll analyze options like buying gold bullion online from dealers, purchasing in bulk to reduce premiums, and factors to look out for like insurance and liquidity.

Why Do People Buy Gold?

There are several reasons why people like to invest in or buy gold. Gold has historically held its value well during periods of high inflation and economic uncertainty. When prices increase overall and paper money loses value, gold generally maintains or increases its purchasing power. This quality makes gold appealing as a store of value. 

Gold is also a tangible asset, meaning it has intrinsic value beyond just being a currency or a commodity. You can feel gold in your hands in the form of gold bars, gold coins, gold jewellery, or gold Exchange Traded Funds (ETFs). For these reasons, buying some degree of physical gold is a popular way for investors to diversify their portfolios and potentially help protect against downturns in the stock market.

Gold bars

Gold Bars

Gold bars can offer a very inexpensive option, with smaller fractional sizes like 1 gram or 1/10 oz bars providing the most competitive premiums above spot prices. Larger full oz gold bars also tend to have lower premiums per ounce than smaller bars.

Australian Nugget gold coin - a shiny, valuable coin featuring a kangaroo design, symbolizing Australia's rich gold mining history.

Gold Coins

Produced in high volume, gold coins like Gold Maple Leafs and American Gold Eagles usually have relatively lower premiums compared to rarer coins. Their universal recognizability also provides good liquidity if later sell the coins.

Gold jewelry on a table: rings, bracelets, and necklaces in various styles and designs.

Gold Jewellery

Higher fabrication and design costs mean jewellery will usually have much higher premiums versus bars and coins. Jewellery is not ideal if focusing only on the lowest upfront investment costs.

Gold ETFs

Exchange-traded funds that track the gold price like GLD have minimal ongoing fees but do not provide direct ownership of physical gold. For pure investment costs, ETFs are often the most affordable option.

Cheapest Methods To Invest in Gold

When purchasing gold, the acquisition approach impacts costs. Carefully analyzing options can help you find the most affordable route.

Buying in Bulk

Making larger single orders allows for maximizing volume-based discounts from dealers. Many offer lower per-ounce prices for purchases over $1,000 or 1oz such as 5-10% off premiums. Larger wholesale transactions of 100oz or more may qualify for even deeper discounts. Spreading expenses across higher quantities lowers the average cost per ounce.

Buying From Online Dealers

Well-established Internet precious metals dealers maintain minimal overhead, allowing competitive prices on bars, coins and rounds. Many pass these savings to customers along with perks like free insured delivery. Sites like Gold Secure offer competitive pricing, especially for products they mint or distribute directly. Doing thorough research protects buyers from hidden fees eroding affordability.

Buying from private sellers

Private sellers have individuals directly selling lower than the market. Sellers may liquidate portions of large collections or make back small premiums from estate gold. While slightly riskier without certification, motivated sellers can provide significant deals to careful buyers. Comparing ask prices to bullion values ensures you get the lowest cost.

Other Factors To Consider

When analyzing the total costs of a gold purchase, it's important to also account for ongoing storage, insurance and liquidity factors over the long-term ownership period. Proper safe storage, such as a security deposit box, comes at an additional yearly or monthly fee. Insurance against theft or damage provides peace of mind but also carries a cost. 

Additionally, different gold assets have varying degrees of liquidity if you later need to sell. Coins and bars are widely accepted and easy to sell back, but jewellery would take more effort to liquidate at a fair price. Understanding these longer-term expenses helps ensure you're buying in the most affordable way overall.

A secure safe with a keypad and electronic lock for enhanced protection of valuable items.

Storage costs

Properly securing your gold requires safe storage, such as a home or bank safe deposit box. These facilities charge annual or monthly usage fees which need accounting in overall costs. For example, a small home safe rents for around $50-100 per year while a bank safe deposit box ranges from $25-100 annually depending on size.

Insurance costs

Insuring your gold value against theft or accidental damage brings extra costs but prudent peace of mind. Annual insurance premiums vary based on value but typically run 1-2% of coverage amount. For instance, $10,000 in coverage may be $100-200 per year. Without insurance, the costs of replacing lost gold in an emergency would be much higher.

Liquidity

Different gold assets also vary in their liquidity or ease of selling back if wanted. Coins and bars have a highly liquid global resale market while changing jewelry back to cash takes greater effort. For cost efficiency long-term, considering an asset's liquidity is important in the ability to potentially lower expenses through later sales if needed.

Final Words

In conclusion, carefully considering factors like premiums, purchase quantity discounts, storage requirements, insurance costs and liquidity will help narrow the options to choose the most cost-effective type of gold investment tailored to individual needs and budget. 

While physical bullion in the form of bars and popular bulk coins tends to offer the lowest initial premiums, other options like ETFs or collector coins may provide better longer-term value depending on goals. Doing thorough research on sellers, assessing all applicable fees and weighing asset characteristics will equip investors to make well-informed choices to get optimal value for their money over the long run.

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