How To Buy Gold And Silver: 5 Easy Steps
Getting familiar with the buying process is a wise choice before you buy gold and/or silver. Having a plan will smooth out the process tremendously.
Some of what you'll learn will be specific to the precious metals industry: the best ways to buy, what products to choose from, how to weigh your options for storage. Other parts of the process are merely best practices and key takeaways for any investment strategy: like managing a budget or judging your exposure to risk.
Various precious metals in bullion form.
Here are the steps to follow to get started.
1. Decide What Your Goals Are
Setting goals for your precious metals investments at the outset will make the entire process much simpler. In fact, it will determine what types of products you buy. This is important to know before you start buying.
Is your goal to establish a "nest egg," or long-term investment? If you plan on holding your gold and silver for the long run, bullion is your best choice. This includes bullion coins, bullion bars, and rounds.
These products are made specifically for investing purposes and are thus eligible for precious metal IRAs. They have a very high purity of 99.9% pure or better. (This is also expressed as .999 fine.) Best of all, they have the lowest prices of all your precious metals options in terms of a low premium per oz of silver or pure gold.
Examples include the American Eagle, Canadian Maple Leaf, and South African Krugerrand coins. Each is available in both silver and gold versions.
You will also find popular gold and silver bars from brands like the Royal Canadian Mint and PAMP Suisse. If you have very deep pockets, the most trusted bulk form of gold is the 400 oz "Good Delivery" bar recognized by the London Bullion Market Association (LBMA).
You can check out the best prices on gold bars for sale here on the Gainesville Coins website.
Buying Collectible Coins
Perhaps you're more drawn to collecting gold and silver coins as a hobby. That means you'll mainly be buying some combination of the following:
- rare gold and silver coins
- limited edition or limited mintage gold and silver coins
- vintage or antique gold and silver coins
- numismatic gold and silver coins
If you see any of these descriptors, like "antique" or "numismatic," then you're dealing with collectible coins. Anything in "mint state" or "mint condition" is another indicator. These kinds of coins are great for hobbyists. However, they are much more expensive than buying bullion.
The collectible market is also quite different from investing in precious metal bullion. Prices are more volatile but there may be greater upside in profit. In other words: greater risk, greater potential reward.
By contrast, bullion products track more closely with the price of the physical precious metal. This generally leads to steadier but more modest price movement in the bullion market. It's important to be aware of this distinction as you're deciding on your plan.
Buying Paper Gold
Maybe your goal is simply to generate income by trading (i.e. buying and selling) precious metals. In this case, your most logical options are the various forms of "paper gold," such as:
- gold futures contracts
- gold ETFs (exchange-traded funds)
- gold-backed derivatives
- shares of gold mining companies (gold stocks)
- mutual funds that invest in any of the above
The advantage of paper gold products is convenience. Each of these products closely tracks gold prices. You can buy and sell with the click of a mouse or a tap on your smartphone.
The main drawbacks are trading fees (or other taxes) and the fact that you don't take possession of any physical metal. Taking physical possession is still important to many buyers. Thus, on paper, all gold derivatives introduce some degree of counterparty risk.
There are futures, ETFs, and mining stocks for silver, platinum, and palladium, as well.
2. Make a Budget (and Stick With It)
Budgeting is one of those boring but necessary steps in any financial endeavor. Your precious metal purchases are no different.
Which metals are you most interested in buying? Your choices, from most expensive to least expensive, are:
Copper is more of a "semi-precious metal" but its industrial uses make it worth mentioning here. Silver is the next cheapest and perhaps the most popular. Many millions of 1 oz American Silver Eagle coins are sold each year.
Platinum and palladium are mainly used in the auto industry. They are less common as bullion, but these products do appeal to a growing number of investors. These metals also offer some diversity for a portfolio that already includes gold and silver.
Gold is considered a traditional safe haven investment.
One key tip for budgeting is to regularly schedule your purchases and spread them over time. This is also known as dollar cost averaging. Using this strategy will lower the volatility of your metal costs, since the spot prices of the metals are fluctuating all the time, just like shares on the stock market.
Dollar cost averaging is more effective than trying to perfectly time your orders. Nobody has a crystal ball to tell you when the absolute best way or time to buy gold bullion is. Of course, if you see the price of a particular metal has been falling, "buying the dips" is also a good investment strategy.
3. Find a Reputable Seller
There's no better place to buy your metals from than a professional bullion dealer. They will always be your most reliable and trustworthy option.
That begs the question: How do you identify a trustworthy gold dealer? Here are some quick tips.
- Read customer reviews. What have past clients or customers said about this seller?
- What is their product selection? Make sure the seller has the type of products you're looking for.
- Do they have clear policies? You want to work with a company that clearly states its policies for returns, cancelled orders, etc.
It's also useful to comparison shop between several dealers. This will give you a sense of which sellers offer the best prices and the widest selection.
Whether you're shopping for silver products at your local coin shop or are buying physical gold bullion, comparing prices is the best way to understand the current market. You may also want to read up on the latest market research from the World Gold Council.
Product selection is an important consideration when you invest in precious metals.
4. Choose a Payment Method
This step may seem self-evident, but the importance of how you pay for gold or silver shouldn't be overlooked. Although your options will depend on the seller, ideally they should offer multiple payment methods. Be wary if a seller only accepts one type of payment, or doesn't accept online hours 24 hours a day.
Most precious metals dealers will take any traditional payment method: credit card, personal check, or cash. Online dealers may also accept cryptocurrency like Bitcoin as payment.
Paying by bank wire is often your best value if this option is available. Wire transfers are fast, secure, and avoid certain fees, making them especially useful for large purchases.
5. Pick a Storage Option
Once you have finalized your purchase, choosing a storage option for your precious metals is a crucial consideration.
Many who purchase precious metals choose to store them in a safety deposit box. However, the contents of a safe deposit box are not insured. This is not the ideal place for your precious metal assets, whether it's gold bullion coins, bars, or otherwise.
You can save some money by storing your metals at home. This may mean placing your gold in a safe or any other secure location in your residence.
View inside an empty vault.
Yet the trade-off with home storage is that you are taking on all the liability of theft (or worse) by yourself. You also cannot include any metals stored at home in a self-directed IRA.
Keeping your metals in a vault (sometimes called a depository) is the most secure way to store them. You get the peace of mind that your metals are protected, fully insured, and kept offsite. The drawback here is vault storage comes with fees, which are usually about 0.5% of the total value of your precious metals.
Storing your metals offsite also gives you the flexibility to sell your precious metals or withdraw them whenever you like. Otherwise, you can generally have your gold and silver shipped to your address or schedule to pick them up in person.
Start Buying Precious Metals from Gainesville Coins
Now you are equipped with the valuable know-how you will need to start investing in precious metals. Visit Gainesville Coins for excellent pricing and exceptional customer service when you buy physical precious metals. That includes gold, silver, platinum, and palladium.
We also offer secure vault storage and ship to over 40 countries worldwide. Call us at (813) 482-9300 and we will be happy to answer any questions you may have about buying gold and silver.
Check out the popular products for sale below:
More How-To articles from Gainesville Coins:
How to Find the Best Place to Buy Gold
How to Buy Gold Coins: Buyer's Guide
How to Buy Gold Bars: Buyer's Guide
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Everett Millman
Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.
In addition to blogging, Everett's work has been featured in Reuters, CNN Business, Bloomberg Radio, TD Ameritrade Network, CoinWeek, and has been referenced by the Washington Post.