How to Invest in Gold | A Step By Step Guide

Posted - February 23, 2024
how to invest in gold

Investing in gold for the first time can be daunting. Even seasoned gold stackers sometimes need a refresher on how to invest in gold. With thousands of gold products and hundreds of dealers, we’re here to help make buying gold simple. 

The good news is that investing in gold doesn’t need to be a hair-pulling, frustrating process. If you’re willing to put a bit of time and effort into your research. 

As long as you understand how gold prices are determined, buying your first – or next – cheap gold bar or coin can be as easy as making any other type of investment. Today’s Bullion Academy guide will teach readers everything they need to know about how to invest in gold. Let’s get started! 

So You Want to Invest in Gold – Here’s Where to Start

The first thing you need to do before investing in gold is learn a little bit about how gold prices are determined. Gold coins and bars are almost never sold for their melt value. That is to say, you’ll always pay at least a small premium over the spot price of gold when you buy new gold products. 

Gold Premiums Explained

Gold premiums are an important thing that new investors need to understand. Take a look at some of the gold bars available online. These gold products are made with .9999 fine gold bullion and don’t feature especially interesting or beautiful designs. 

You’d think that these products would be worth the same amount as the gold bullion they contain. This isn’t actually the case, though. 

The reason for this is something called a ‘premium.’ Precious metal premiums are small fees tacked onto the melt value of a gold coin or bar. Remember: premiums vary based on the product and the dealer you choose to do business with. 

How to Find Low Premium Gold

Obviously, comparing premiums across multiple dealers can help you save big on gold. But you can also maximize savings by doing some research into the cheapest types of gold to buy. The cheapest gold products are generally gold bars. 

Since gold bars don’t include the intricate, beautiful designs we find on most gold coins, they’re usually sold at a price pretty close to melt value. This doesn’t mean you can get away from paying premiums entirely, though. Even the simplest, most barebones gold bars on the market are sold with some sort of premium over spot price. 

By researching both the type of gold product you want and the dealer you’ll buy from, you can find some of the cheapest gold on the market. 

Online Vs. Local Gold Dealers

While you look for the best dealers to buy gold from, you’ll have an important decision to make. Do you prefer buying gold locally or online? 

Both online and local gold dealers have a lot to offer gold investors. As you learn how to invest in gold, it’s important to note the differences between online and local gold bullion dealers. 

Is Buying Gold Online Safe? 

Some old school investors are cautious about buying gold online. We totally get it. In the age of the internet, scams are everywhere. The good news is that you can avoid getting scammed by doing a bit of research into your online gold dealer before buying. 

2024 1 oz American Gold Buffalo Coin Reverse
2024 1 oz American Gold Buffalo Coin

Most popular online gold bullion dealers are extremely reputable. Reading up on reviews for sites like Hero Bullion can help you get a better idea of their reputation among gold stackers. Offering a stellar track record and industry-leading prices, Hero Bullion is a respected online gold dealer. 

Local Gold Dealers – The Traditional Choice

While online gold dealers have made it easier than ever for collectors to stack cheap gold bullion, local shops are also a good option. 

Some gold stackers prefer the personal touch of buying gold from a local coin store or pawn shop. We don’t blame them. Some local shops might also offer better discounts on popular gold coins and bars than online dealers are able to give you. 

But local coin shops also come with a major downside: inventory. Because brick and mortar stores can only stock so many gold coins and bars, it’s hard for your local dealer to compare to the variety offered by online bullion dealers like Hero Bullion. 

Ways to Invest in Gold

Unfortunately for new investors, the choices don’t stop there. We find two main ways to invest in gold: physical and paper gold. Physical gold is just what it sounds like – stackers buy gold coins and bars and physically own these precious metals. 

But paper gold may be a little more confusing if you’re a new gold investor. In short, paper gold refers to buying stocks or futures in gold. When you buy paper gold, you don’t ever actually own any gold; you’re just betting on its price movements. 

Physical Gold 

Physical gold is the most popular way to invest in gold. Generally, physical gold investors have two options: gold bars and gold coins. 

Gold Bars

Gold bars are often considered some of the most affordable options for gold stackers. Gold bullion bars are minted with a high purity of gold bullion – usually 99.99 percent. More importantly, these gold products are simple and to-the-point when it comes to designs. 

This means one thing for budget stackers: lower premiums. Low premiums over spot price might not seem like a lot, but these savings add up quickly if you start to build a large stack of gold bullion. 

Gold Coins

Gold coins are another popular option for physical gold investors. These products are frequently sold at a higher premium over spot price than gold bullion bars. This can be daunting for new investors; nobody wants to overpay on premiums for their gold investments. 

However, the upside is that you often recoup this inflated premium price when reselling your gold coins. This is because gold bullion coins have numismatic value, or value beyond their gold content alone. 

Paper Gold 

Paper gold is another option for investors wondering how to invest in gold. When you buy paper gold, you’re basically betting on the price of gold. When gold’s value goes up, your investment becomes more valuable. 

But if gold becomes less expensive, then you lose some value in your investment portfolio. 

Valcambi 1 oz Gold Bar
Valcambi 1 oz Gold Bar

The downside to investing in paper gold is that you don’t actually own any physical gold. Instead, you’re placing a bet on whether or not the value of gold will increase or decrease over time. 

This is sort of the same way the traditional stock market works. When you invest in Apple stock, you don’t actually receive physical iPhones. Still, if demand for the iPhone increases, your investment becomes more valuable over time. 

Is Paper Gold Better Than Physical Gold? 

Most of our customers prefer physical gold to paper gold. Physically owning your investment gives you a greater level of control over your portfolio. Additionally, some investors laugh at the mere idea of investing in gold without taking physical possession of beautiful gold bars or coins. 

This doesn’t mean paper gold is a bad investment option. Some investors actually prefer to avoid having to store and secure gold bullion. If you’re not interested in gold itself but want to invest in the precious metal, paper gold could be a good option for you. 

How to Invest in Gold: A Step By Step Guide

If you’ve decided that physical gold bullion is a good investment for your growing portfolio, we’re here to help you out. 

To learn how to invest in gold, there are four steps: 

  1. Identify a product
  2. Choose a dealer
  3. Pay for your gold
  4. Take care of your new investment

By doing a bit of research, you can learn to invest in high quality gold coins and bars without paying an arm and a leg. 

Step One: Identify a Product

As we discussed earlier, gold bullion usually falls into two main categories: gold coins and bars. The best type of gold for your portfolio depends, of course, on your personal goals and preferences. 

As a general rule of thumb, gold bars are a better choice than coins if you prefer to pay low premiums for your precious metal investments. Because of their simple designs and low cost of production, gold bars offer some of the lowest premiums in the entire gold industry. 

Gold coins are another good choice, but for a different class of investor. When you buy gold coins, you’re betting both on the value of gold and the numismatic value of your coins. Doing a bit of research into the most popular and easy-to-sell gold coins can go a long way as you start investing in your first gold coins.

Finally, don’t discount the possibility of buying paper gold. If you want to invest in gold but don’t want to physically protect your bullion with a safe or depository box, paper gold could be a pretty solid option. 

2024 1 oz Canadian Gold Maple Leaf Coin
2024 1 oz Canadian Maple Gold Coin

Step Two: Choose Your Dealer

After you know which product you want to buy, the next step to investing in gold involves choosing a dealer. Online gold dealers will ship your products directly to your home, but they may charge additional premium and shipping fees. 

Local dealers are a great choice if you want to cut down on shipping fees. And if you’re smart, you may be able to find some hidden gems by searching through multiple gold dealers local to you. 

Remember: Compare Prices! 

We recommend comparing both local and online dealers to find the best prices on gold bullion. Smart stackers never stop researching the best gold coins and bars to buy. If you combine this research with a close look at gold’s price trends, you may save big on gold by successfully ‘buying the dip.’ 

With hundreds of online dealers in the gold industry, it’s extremely important for you to take some time and compare prices. 

To get a better understanding of where to buy cheap gold, try to pay careful attention to the total cost of your favorite gold bars and coins. Total cost includes a coin or bar’s melt value, as well as all applicable premiums and shipping costs. Both premiums and shipping fees can vary from dealer to dealer, so we recommend checking out the total cost of a coin before pulling out that credit card!

Step Three: Pay for Your Gold

Most online gold dealers make it easy to pay for gold coins and bars. Dealers like Hero Bullion offer several payment options, including eCheck, credit card, and more. Pay close attention to the sales prices offered for each payment method. 

Sometimes, dealers will offer discounts for eCheck compared to credit card payments. If you really want to save on gold bars and coins, try paying using a secure eCheck payment. Discounts for eCheck can be as high as 3% compared to credit card prices, so be sure to check out your dealer’s payment options for more information! 

Step Four: Take Care of Your New Investment 

Your investment journey doesn’t stop once you have your new gold coins and bars in your hands. If you’re not careful, improper handling can tank the value of your newfound gold portfolio. Gold is also a massive target for thieves and home invaders, so it pays to be cautious once you’ve purchased gold bars and coins. 

We highly recommend investing in a home safe to store your gold. Finding an affordable safe shouldn’t be too difficult, although we tend to prefer the slightly pricier temperature controlled safes. 

If you don’t want to worry about storing your gold at home, you could always store it securely at a bank depository box or at a bullion dealer’s vault. 

Final Thoughts: How to Invest in Gold the Right Way 

Learning how to invest in gold can be tricky – but it doesn’t have to be. Investors willing to put some work into their investment research process are in for a wonderful, profitable journey into the world of gold coins and bars. 

We’re always happy to help answer any questions you may have about investing in gold. Feel free to reach out to our dedicated customer service team for more personalized assistance. 

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About The Author

Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.