What’s involved in buying gold bars in USA? Get all the details on how to actually buy bars, the various gold bullion options, and why gold can help preserve your wealth.
If you are like 74% of Americans, you are concerned about the economy. Or, you might be one of the 82% of people worried about criminals using artificial intelligence to steal people’s identity. Whenever investors feel uncertain or at risk, they turn to gold.
When someone first goes to buy gold, they don’t always know what the process is or what they should look for. This article covers everything you need to know about buying gold bars, the pros and cons of investing in gold, and common mistakes to avoid.
How to buy gold bars in the USA
Many people aren’t sure what the process is to buy gold bars. Here’s how it works:
Step 1: Find a dealer
Look for a dealer like Swiss America that’s been around for several years and has great customer reviews.
Step 2: Buy gold bars
Work with the dealer to buy gold bullion bars. If you are setting up a Gold IRA, the IRS has rules on which gold bullion you can buy, and the Swiss America team can provide guidance on options.
If you are buying outside of a retirement account, you have more precious metal options to choose from.
Step 3: Receive and store your bars
Once you make a purchase, the dealer ships the gold bars or coins to you. If you buy inside of a retirement account, the gold goes to an IRA-approved depository for secure storage. You can’t actually take possession of the gold because the IRS considers it a distribution and imposes tax penalties.
If you buy outside of a retirement account, you direct the dealer where to ship your gold. You might store it at home, in a safety deposit box, or at a third-party depository.
Step 4: Monitor status
Swiss America customers can check the status of their investments through an online portal that provides real-time access to market value.
You can also use the portal to see purchase history and portfolio recommendations and get quotes for liquidation if you want to sell.
Types of gold bullion and bars
Sometimes, when people hear about buying gold, they aren’t sure if it’s actually owning gold or something else like gold mutual funds or mining stocks. When we talk about buying gold, we mean actual physical gold bullion bars and coins.
Both gold coins and bars are types of gold bullion.
Gold bullion
The term bullion itself applies to all kinds of precious metals in highly pure forms. Gold bullion includes bars and coins that are as close to pure gold as possible.
When you go to purchase gold, you’ll pay a bit more than the market price. The difference is called a premium, and it accounts for production and distribution costs. You might also have sales taxes and shipping costs.
Gold coins
Government mints make gold bullion coins in various weights, like 1 oz or 1/2 oz.
Some examples include:
South African Gold Krugerrand
Canadian Gold Maple Leaf
Australian Gold Kangaroo
Gold bars
Mints and refineries make gold bars in sizes ranging from 1 gram to 400 ounces. You’ll find that bars carry lower premiums per ounce compared to coins.
Why investors look at buying physical gold
Here are the reasons why investors buy gold bullion bars and coins:
Safe-haven asset
Central banks of many countries hold gold as a safe haven asset. Investors see this and turn to gold whenever they feel uncertain or at risk.
Major disasters, poor economic reports, stock market crashes or concerns about the value of the dollar all drive people to buy gold. And when they do, this increases prices which creates safety for investors.
More people are seeing the value in owning some gold as a safety net, including a user on the subreddit r/investing, who says, “I think a lot of people recommend 5-10 percent of portfolio as ‘insurance.’ I keep a little bit on hand myself for emergencys and to be honest I enjoy having it.”
As of this writing, gold hit record highs again around speculation that the Federal Reserve plans to cut interest rates. We discussed these variables and why gold prices could exceed $3,000 on our recent podcast:
Inflation hedge
Investors look at purchasing gold bars to preserve wealth against the effects of inflation. Usually, if the Federal Reserve cuts interest rates, investors buy more gold in anticipation of increased inflation. This drives up the price of gold and protects your wealth.
Just be aware that the relationship isn’t always a one-to-one dynamic, and sometimes gold prices rise even during normal inflation like right now.
In the charts below from usinflationcalculator.com and Gold.org, you can see the inflation spike in 2021 and how gold prices continue to rise despite normal inflation. The rising price is because there are other reasons for buying gold beyond inflation.
Diversified portfolio
One of the most common reasons investors buy gold bullion is to diversify their portfolio. Since gold doesn’t follow the same trends as the stock market, it’s a way to reduce risk of losing wealth. Many experts recommend putting 5%-15% of your total investment funds into gold as a way to offset risks from other asset classes.
Research from the World Gold Council shows that adding just 5% of physical gold reduces a portfolio’s overall risk:
Tangible asset
When you own gold bullion products, you have a tangible asset. It’s something you can hold, that you own completely and you control the decision what to do with the asset.
There are good and bad times to buy or sell, and you decide what to do with your physical gold. Many investors like this level of control.
No counterparty risk
When you own gold products, you don’t need anyone else for your asset. This lack of counterparty risk means your asset’s performance doesn’t depend on third parties like:
- A company hitting their sales targets.
- A bank going out of business.
- Someone else not meeting their contract obligations.
No cyber threat
Recently, the Crowdstrike outage took down thousands of flights across the U.S. Meanwhile, every day we hear of some other cyber attack or stolen identity records.
If you own gold bullion as part of your investment strategy, cyber risks and attacks do not impact your portfolio. You don’t need an internet connection, an online portal, or any digital platform to access your gold.
Cyber risks aren’t going away anytime soon, and Statista predicts increasing costs of cybercrime to the tune of 13.82 Billion by 2028. Investors seeking safety from these risks turn to gold.
Drawbacks to owning gold
There can be a few drawbacks of gold to consider:
Costs
Depending on what storage option you choose, you may have costs for keeping your gold safe. You’ll also need to consider insurance costs as part of your overall return calculations.
No income
Gold doesn’t generate income, dividends, or cash flow. It’s more of a risk-mitigation investment that may appreciate over time. You can make a return on your investment, but it’s not the primary reason that people hold gold.
Other ways to invest in gold
Besides owning physical gold bullion bars or coins, you can also invest in gold paper assets. Examples include gold mutual funds or ETFs or investing in gold mining companies.
The drawback to these investments is that they don’t give the same benefits as owning a tangible gold asset. You are now relying on the stock market or a company’s performance to impact the value of your investment.
Safe way to buy gold bars
Investors looking to add gold bullion to their portfolios should look at these areas to choose the best dealer and safely buy metals:
Longevity
Look for a company like Swiss America that has been around for decades. This longevity means we’ve been through market volatility and understand how gold can provide wealth preservation.
It also means we’re not a fly-by-night company and we’re committed to the long-term success of our investors. We don’t make false promises and prioritize transparency and integrity in everything we do.
Customer reviews
Check out the dealer’s customer reviews and ratings. Look at testimonials, Google reviews and other review sites like the Better Business Bureau. People tend to be more forthcoming in writing reviews so this can give you a good sense of whether a company is legit or a scam.
Resources
The best gold dealers provide educational materials to help you make the best decisions for your situation. Swiss Amercia supports our customers with free guides, daily market news updates, educational podcasts and informational articles.
Buy-back program
At some point, you might want to sell your gold. It might be because you’ve reached retirement age and need to take distributions from your Gold IRA, or simply because you need cash. Either way, look for a company that offers a buy-back program to help you easily liquidate your gold. You don’t have to go this route but it can be a convenient option.
Credentials
Look for a company that participates in third-party industry groups that regulate compliance. Swiss America, for example, is an active member of organizations like the American Numismatic Association, the Industry Council for Tangible Assets, and the Numismatic Guaranty Corp, among others.
Gold for sale final thoughts
Gold can be a great way to help preserve your wealth in uncertain times. It’s not an income-generating asset but it’s a way to reduce your portfolio’s exposure to unknown risks. Purchasing gold bars is a step towards protecting your financial future with an asset that you control.
If you’re interested in exploring how gold might fit into your strategy, contact one of our specialists today.
Buying gold bars in USA: FAQs
Is it worth buying gold bars as an investment?
It depends on your situation, but most investors look at gold as a way to diversify their portfolio against risks like ups and downs in the stock market, inflation, crisis events, and even cyber risks.
Can I buy gold bars at the bank?
You might be able to go to a bank and buy a gold bar. But, it’s usually better to buy from dedicated bullion dealers like Swiss America. They have more options, better pricing, and more experience in the gold market.
How do beginners buy gold?
To start investing in gold, you can get in touch with a precious metals dealer to learn more about gold bullion options. From there, you’ll open an account, buy gold bars, and have them shipped to you or a secure depository.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
