The Cheapest Way To Buy Gold

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The cheapest ways to buy gold:

Buying gold in bulk.
Purchasing pre-owned gold.
Investing in gold ETFs.
Buying gold coins to avoid capital gains tax.
Utilizing gold mining stocks.
Gold futures contracts.
Best-value gold bars and coins.

Gold is often seen as a secure investment, especially during economic challenges. Whether you're looking to guard against inflation, add variety to your investments, or own a physical asset, gold can be a solid choice. However, getting the most out of your gold investment depends on keeping your costs low. This article will explore the most cost-effective methods for buying gold, providing practical advice for both new and experienced investors.

The cheapest ways to buy gold

When it comes to purchasing gold affordably, the methods vary widely, from buying physical gold in bulk to investing in digital assets like ETFs. Below, we break down the most cost-effective strategies, highlighting their advantages and potential drawbacks.

Buying gold in bulk

Purchasing gold in bulk is one of the most straightforward ways to reduce the cost per ounce. By buying larger quantities, you benefit from economies of scale, which significantly lowers premiums. This approach is ideal for investors with significant capital who are looking to get the most gold for their money.

Here are some ways to buy gold in bulk:

Purchasing gold bullion bars
Example: A large investment firm decides to diversify its portfolio by purchasing 100 gold bars, each weighing 1 kilogram, from a reputable gold dealer. The firm pays close to the spot price, with a small premium added by the dealer. The total weight is 100 kilograms of gold, which is then stored in a high-security vault provided by the dealer, who also handles the insurance and storage.
Buying gold coins in bulk
Example: A private investor buys 1,000 one-ounce American Gold Eagle coins from an online bullion dealer. This purchase is made in multiple shipments to reduce risk during transit. The investor keeps some coins in a home safe for quick liquidity and stores the rest in a bank’s safe deposit box. The investor pays a higher premium per coin compared to bars but prefers the liquidity and collectability of coins.
Buying gold rounds for a jewelry business
Example: A jewelry manufacturer buys 10,000 gold rounds from a supplier specializing in providing gold for industrial use. The manufacturer benefits from bulk pricing, which offers a lower premium compared to retail purchases. The gold rounds are then melted down and used to create custom jewelry pieces, maximizing the cost efficiency of the bulk purchase.

Purchasing pre-owned gold

Another cost-effective option is purchasing pre-owned gold, such as second-hand coins or bars. These items often come at a discount compared to newly minted products. However, it is crucial to verify their authenticity and condition before making a purchase.

Buying pre-owned gold jewelry
Example: A buyer visits a local pawn shop and purchases a pre-owned gold necklace that is priced based on its weight and current market value. The necklace is tested for purity, and the buyer acquires it at a discount compared to a new piece of jewelry from a retail store. The buyer might choose to wear the necklace or hold it as an investment.
Purchasing gold coins from a collector
Example: A coin collector sells part of their collection of pre-owned gold coins to another collector or investor. The transaction takes place through a numismatic dealer who verifies the authenticity and condition of the coins. The buyer purchases the coins at a price that reflects both the gold content and any collectible value, often at a lower premium than newly minted coins.
Purchasing gold through an auction house
Example: An investor participates in an auction held by a reputable auction house where pre-owned gold artifacts, jewelry, and coins are being sold. The investor bids on several items, acquiring them at prices lower than what similar new items would cost. The auction house provides authentication and documentation for the gold items.

Investing in gold ETFs

Gold ETFs offer a low-cost alternative to buying physical gold. These funds allow you to gain exposure to gold prices without the need for storage or insurance, making them more liquid and often less expensive to manage. ETFs track the price of gold and can be traded like stocks, with some funds having very low expense ratios. For instance, ETFs such as the iShares Gold Trust (IAU) and GraniteShares Gold Trust (BAR) are known for their low costs and ease of trading. However, keep in mind that with ETFs, you don’t own the physical metal, which means you miss out on the benefits of holding a tangible asset.

Buying gold coins to avoid capital gains tax

This strategy not only reduces your tax burden but also provides a tangible asset,but it is necessary to carefully examine the tax rules and restrictions of the country in whose jurisdiction such income will be declared. For example, investors in the UK and other regions where certain gold coins are exempt from Capital Gains Tax (CGT), buying coins like Sovereigns or Britannias can be a highly tax-efficient way to invest.

Utilizing gold mining stocks

Gold mining stocks offer another way to invest in gold. By purchasing shares in companies like Newmont Corporation (NEM) or Barrick Gold Corporation (GOLD), investors can see gains not only from rising gold prices but also from the growth and success of the mining companies. However, this approach comes with added risk, as your investment is linked to both the price of gold and how well the company performs.

The value of these stocks can be affected by various challenges, such as production costs, political risks in mining regions, and environmental laws. For instance, while Newmont might benefit from efficient mining operations, it could face setbacks due to political instability. Similarly, Barrick Gold’s stock price may be impacted by its ability to manage costs and expand its operations. To reduce these risks, some investors choose to spread their investments by purchasing a gold mining ETF, like VanEck Vectors Gold Miners ETF (GDX), which includes a range of companies in the industry.

Gold futures contracts

For more experienced investors, gold futures contracts offer a speculative way to invest in gold. These contracts allow you to buy or sell gold at a future date at a predetermined price. While this method can lead to significant profits, it also carries a high level of risk due to market volatility.

Best-value gold bars and coins

Certain gold bars and coins, known as "best value" items, are sold at lower premiums, making them an affordable option for investors. These products are usually less expensive because they are pre-owned or come from less popular mints. However, they still offer the same gold content and purity.

We have analyzed for you the brokers that offer the cheapest methods of buying gold, and here are their conditions:

Brokers that offer the cheapest methods of buying gold
	Min. deposit, $	Max. leverage	Open an account
Plus500	100	1:300	Open an account Your capital is at risk.
Pepperstone		1:500	Open an account Your capital is at risk.
OANDA		1:200	Open an account Your capital is at risk.
FOREX.com	100	1:50	Study review
Interactive Brokers		1:30	Open an account Your capital is at risk.

How much money do you need to invest in gold

Here's a table summarizing the investment options for gold and the amount of money typically needed for each:

Investment options available for gold and the associated costs
Investment method	Typical min investment	Details
Physical Gold (Coins/Bars)	$200 - $300 (1/10th oz coin)	Small investments start with gold coins. Larger investments include 1 oz bars ($2,000+) or 1 kg bars ($65,000+).
Gold ETFs	$100 or less (1 share of ETF)	ETFs offer an affordable entry point with shares costing around $100, allowing easy diversification.
Gold Mining Stocks	$10 - $500+ (per share)	Invest in gold mining companies with the cost of a single share, which can range from $10 to several hundred dollars.
Gold Futures Contracts	$10,000+ (initial margin)	High-risk and complex gold futures require a significant initial investment, usually starting in the tens of thousands.

This table gives a quick overview of the investment options available for gold and the associated costs, helping you decide which approach aligns best with your financial situation and investment goals.

Considerations for beginners and advanced traders

For those new to gold investing, it is important to start with a clear understanding of the basics. Beginners should focus on straightforward options like physical gold or ETFs, avoid speculative investments like futures, and ensure they are buying from reputable dealers. Storage and insurance costs should also be considered to avoid unexpected expenses.

Advanced traders, on the other hand, can explore more complex strategies such as futures contracts or options. Diversifying with gold mining stocks and using tax-efficient options are also strategies that can be leveraged to maximize returns. Keeping up with market trends and geopolitical risks is crucial for those involved in advanced trading.

Finding the cheapest way to buy Gold based on your needs

When looking for the cheapest way to buy gold, one tactic that’s often missed is buying directly from local sellers or auctions instead of going to big-name dealers. Local sellers, especially those liquidating estates or small businesses, might sell gold at prices close to the current market rate or even below if they’re in a hurry to sell. Estate sales, auctions, and even local classifieds can sometimes offer gold coins or bars for less than you’d pay at a store. Just be sure to check that the gold is real — bringing along a gold tester or a trusted jeweler can help.

Another option is using platforms like eBay, but with a bit of a twist. Instead of just bidding on gold bars or coins, look for gold jewelry that might be priced below what the gold inside is actually worth. Some sellers might not know the true value or just want to sell quickly, which could save you a lot of money. After buying, you can keep the jewelry as is or have it melted down into bars. This approach takes some research and a good understanding of gold purity, but it can help you get gold for less than its market price.

Summary

The cheapest way to buy gold can vary depending on several factors, including the investor's objectives, the amount of capital available, and their comfort level with different types of gold investments. Buying physical gold in bulk, such as gold bars or large quantities of coins, typically offers the lowest cost per ounce due to reduced premiums. However, this method requires secure storage and may involve additional costs like insurance.

Alternatively, gold ETFs (Exchange-Traded Funds) present a cost-effective solution for those looking to avoid the hassles associated with storing physical gold. ETFs generally have lower management fees and offer greater liquidity, making them suitable for both short-term and long-term investors who are comfortable with a more hands-off approach.

For those seeking tax efficiency, purchasing specific gold coins that are exempt from capital gains tax can also be an economical choice. Meanwhile, advanced investors might explore gold mining stocks or futures contracts as more speculative, yet potentially rewarding, options.

Ultimately, the cheapest way to buy gold depends on balancing upfront costs, ongoing expenses, and personal investment goals. Whether through physical gold, ETFs, or other financial instruments, each method offers its own set of advantages and challenges that should be carefully considered.

FAQs

What is the most cost-effective way to buy gold for beginners?

The most cost-effective way for beginners to buy gold is often through gold ETFs.

Is buying gold in bulk really cheaper?

Yes, buying gold in bulk is generally cheaper on a per-ounce basis.

Are gold ETFs a good alternative to physical gold?

Gold ETFs are a good alternative to physical gold for investors who prioritize lower costs and liquidity.

Can I avoid taxes by investing in specific types of gold?

In certain regions, such as the UK, investing in specific gold coins, like Sovereigns or Britannias, can help avoid capital gains tax.

Team that worked on the article

Parshwa is a content expert and finance professional possessing deep knowledge of stock and options trading, technical and fundamental analysis, and equity research. As a Chartered Accountant Finalist, Parshwa also has expertise in Forex, crypto trading, and personal taxation. His experience is showcased by a prolific body of over 100 articles on Forex, crypto, equity, and personal finance, alongside personalized advisory roles in tax consultation.

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Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data. He is also an educator in the field of finance and technology.

As an author for Traders Union, he contributes his deep analytical insights on various topics, taking into account various aspects.

Mirjan Hipolito is a journalist and news editor at Traders Union. She is an expert crypto writer with five years of experience in the financial markets. Her specialties are daily market news, price predictions, and Initial Coin Offerings (ICO).

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