Is it Worth Buying Gold Bullion?

You’re thinking about investing in gold, and now you have a question: Is it worth buying gold bullion? The dynamics that typically support higher gold prices – falling interest rates and rising inflation – are muddled. Yet, gold prices are continuing to rise. This unusual time can leave investors questioning their next move. 

Here’s a look at the advantages and disadvantages of investing in gold bullion to help you decide whether you want to own it.

What Is Gold Bullion?

Gold bullion is gold in its purest physical form fashioned into bars, coins, rounds or ingots. It is typically 99.5% to 99.99% pure. So, its value is mainly determined by the current market price of gold, its weight and fineness.

Gold bars, coins, ingots and rounds are primarily produced for investors, who can buy gold bullion in different sizes, weights and denominations. It’s a physical asset you can purchase to diversify your investment portfolio and protect your wealth.

Investors often turn to gold during economic uncertainty. Faced with high inflation, market volatility and geopolitical turmoil, gold generally holds its value or rises in price.

Types of Gold Bullion

Physical gold bullion is produced as gold bars, coins, rounds or ingots and it is valued on its weight and purity, making the form less important. However, the differences in the bullion you buy can impact the premium (the markup charged on bullion gold), storage, handling and liquidity.

Gold Bars

At the mention of gold bars, you probably think of a block of pure gold shaped like a rectangle with rounded edges. The bars can range in size from one gram to one kilogram and sometimes larger. Typically, the bars carry the stamp of the mint or refinery that produced them, along with the purity and weight. 

>> Learn how to buy gold bars

Gold Coins

Government mints produce gold coins, and they often are legal tender. You can buy gold coins in different designs and sizes, including one-ounce, half-ounce, quarter-ounce and a tenth and twentieth of an ounce. Some of the most popular gold coins are the American Eagle, Australian Kangaroo, Canadian Maple Leaf and South African Krugerrand. 

>> Learn how to buy gold coins

Gold Rounds

Gold rounds are similar to coins but have no face value. They are generally produced by private mints and may appeal to collectors and investors.

Gold Ingots

Gold ingots are similar to gold bars, although they are often larger or may come in a custom shape or size. Their heavier and larger size makes them more cost-effective for bulk investments. Unlike gold bars, gold ingots may not be stamped with their weight and purity, so they may not be traded as much.

The streamlined design and lower production costs can make gold bars more cost-effective than gold coins.

Advantages of Investing in Gold Bullion

As an investor, you can find several advantages to investing in bullion gold. Buying bullion gold can diversify your investment portfolio because it isn’t generally correlated to other assets. It can safeguard your wealth against the devaluing effect of inflation and offer tax advantages if purchased through a gold individual retirement account (IRA).

Considered a haven by investors, gold has maintained or risen in value over time. Investors look for stability in gold during economic instability and geopolitical upheaval. Gold also is tangible, so you can hold it. And you can sell gold bullion relatively easily.

>> Learn the advantages of investing in gold

Disadvantages of Investing in Gold Bullion

When you ask, “Is it worth buying gold bullion?” you can also consider some of the disadvantages. Gold bullion prices can be volatile, and you may have additional costs when buying physical gold. Gold doesn’t generate any income until it is sold, and you may be unable to quickly convert your gold to cash.

Gold’s price can fluctuate significantly over a short period. It can seem risky unless you buy and hold gold bullion long-term. When you buy gold bullion, you must store it securely and insure it. You also may have to pay for shipping and handling or to transport your gold to a storage facility. These costs can add up.

Gold doesn't generate any interest or dividends compared to other assets, such as stocks and bonds. You might also find gold bullion less liquid than other assets. It may take you longer than you’d like to sell your gold if there are few buyers in the market; gold needs to be authenticated, and when counterfeits enter the market, it sidelines potential buyers who fear being scammed.

How to Buy Gold Bullion

You may feel a little trepidation if it’s your first time buying gold bullion. But there are just three steps, and with some research, you’ll find yourself investing in bullion gold in no time. Here’s how to buy gold bullion:

1. Decide on the Gold Bullion Type

There is no right or wrong bullion to invest in. The type of gold bullion you buy is up to you. However, deciding what you’re looking for can help you focus as you seek a precious metals dealer.

2. Find a Reputable Dealer

Working with a reputable dealer can go a long way toward safeguarding your transaction and getting a fair deal. You can find dealers in your local community and online. Not all dealers are the same, so research them, read reviews, and learn about the quality of their products and services. Compare gold bullion prices. The gold spot price will be the same, but the premium may differ from dealer to dealer. 

>> Discover online gold dealers

3. Store and Insure Your Gold

Once you’ve made your purchase, you must store your investment to keep it safe. You can purchase a safe for your home, place your gold in a bank safety deposit box, store it in a vault or bury it in an airtight, waterproof container.

Consider buying insurance to safeguard your gold from theft or damage.

Alternative Investment Options

Gold belongs to a loose group of assets known as alternative investments. If you’re looking for an alternative to gold, consider real estate, cryptocurrencies, collectibles, fractional art shares, music royalties, wine, whisky or tequila.

Alternative investments often offer the potential for higher returns. However, alternative investments also have a higher risk.

>> Find other alternative investments

Frequently Asked Questions