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The Best Place to Buy Gold: 5 Options with Pros and Cons

It’s easy to see the value of owning a little gold.

The metal is a value-dense asset you can hold in the palm of your hand, there’s no counterparty risk in owning it, and its value is uncorrelated to the stock market, making it a great tool for diversifying your portfolio.

If you think about worst case scenarios, gold can be used as money if fiat currencies fail. And if you use a private storage facility, you never have to worry about a bank collapse or some other financial sector crisis threatening your investment.

Getting into the gold market is fairly simple, but it is important to understand how different dealers work and the pros and cons of buying from one type over another. This guide will explain your options when investing and tell you everything you need to know to determine the best place to buy gold.

Option 1: Your Local Dealer

It may seem a little old-fashioned, but there is something to be said for buying gold from a local coin shop. You can see exactly what you’re buying before you hand over any money. You can take your gold home with you instead of waiting for delivery. You don’t have to pay any shipping fees, and you can talk face-to-face with the guy you’re buying from.

Establishing a personal relationship with a shop owner can come with a few nice perks. For one, you have the opportunity to negotiate—especially when it comes to buyback fees. Most dealers will give repeat customers their best deal.

That said, local dealers aren’t always the best place to buy gold. Because they have overhead costs to recoup, you’ll typically pay higher premiums on gold products you buy locally than those you buy online (even after you factor in shipping and insurance).

Brick and mortar stores also don’t offer as wide a selection as what you’ll find online, and they may not be able to fulfill large orders.

Despite these disadvantages, don’t count out your local dealers. A relationship with them can be helpful if you need to make a quick sale. And they provide an easy way to pick up a few coins to keep on hand at home.

How to Choose a Local Dealer

If you’re located in the United States, the US Mint has a handy online dealer locator that’s a good place to start your search. If you’re in Europe or Asia, you can buy gold bars and coins at certain banks.

When buying from a neighborhood shop, you’ll probably have a better experience with a dealer who helps to educate you instead of someone who is just trying to close a sale. Avoid anyone who tries to steer you into rare coins, collectibles, or other products you didn’t ask for.

Above all, listen to your gut. If you feel uneasy about someone, move on.

The Pros and Cons of Going Local

Pros Cons
You can see and touch the product before buying. You’ll pay higher premiums (and earn lower buyback fees).
No need for delivery eliminates shipping or insurance fees. Insufficient liquidity to make large buybacks.
You can form a personal relationship with the dealer. Limited inventory.

Option 2:  Online Dealers

Two things make online dealers the best place to buy gold: convenience and cost savings.

Investing online gives you access to 24/7 trading and account management. An ideal dealer makes it possible for you to buy, sell, store, and request delivery of precious metals right from the comfort of home, all in one simple transaction.

Online dealers can also offer lower prices than you’ll find at a local shop. One reason is that they don’t have the overhead of a physical store. And if you’re trading on a platform that’s shared with institutional investors, you may be able to take advantage of volume pricing.

When checking out online dealers, look for transparency. Are prices displayed clearly on product pages? Are shipping and insurance fees listed? What’s their delivery process—do they give you a delivery timeframe before you place an order? You should be able to find all of this information.

How to Choose an Online Dealer

These days, there are dozens of online precious metals dealers to choose from. So how do you know which one to trust? The best place to buy gold will become clear when you do the following due diligence:

✔  Find out how long they’ve been in business

✔  Make sure they have a physical address

✔  Read customer and industry reviews

✔  Check consumer protection agencies for complaints

✔  If you plan to make a sizable investment, place a small test order for delivery first

In addition to comparing prices and premiums, look for a dealer that offers the following:

Feature Benefit
Option to automate purchases. Instead of chasing the market, automating incremental buys lets you dollar-cost average into your position.
Gold IRA program. A fully integrated IRA program lets you buy gold online, arrange storage, and assign custodial services in one simple transaction.
Buy-and-store program. A dealer that offers fully allocated, non-bank, third-party storage saves you from having to source vaults and coordinate delivery yourself.

One of the biggest advantages an online dealer can offer is a buy-and-store program.

Several large dealers have arrangements with private, non-bank vaults and will transport any metal you buy directly to this third-party depository. If you buy gold bars, this becomes important because when it’s time to sell some, you won’t be burdened with authenticating the metal since the chain of custody remained constant.

Buy-and-store programs make storing your gold easy and convenient. With some online dealers, you can even diversify your holdings internationally in vaults around the globe. 

If a dealer doesn’t have a buy-and-store program, it doesn’t mean you have to count it out. But in addition to the hassle of sourcing private storage and coordinating delivery yourself, consider the shortcomings of home or bank storage:

Home Storage
Keeping some gold in a home safe is fine as long as you understand the risk you are assuming. If your safe is not bolted to the floor, it can easily be stolen—and even if it is secured, a home invader can still force you to open the safe and take your gold.

Because the insurance and safety risks of keeping gold at home are high, it’s not an option we recommend (beyond stashing away a couple of coins to have on hand for emergencies).

Bank Safe Deposit Box
Your neighborhood bank is close to your home, convenient, and keeps your safe deposit box items relatively secure. They can be a good, easy solution if you don’t own a lot of metal.

The downside is that the contents of your safe deposit box are not insured against fire, theft, or natural disasters like hurricanes or tornadoes. If the bank folds or a “bank holiday” is declared, access to your gold can be seriously delayed.

The Pros and Cons of Buying Online

Pros Cons
It’s as easy as  trading ETFs. You have to trust that the dealer will deliver your product.
Low overhead costs and, in some cases, access to volume pricing. You must pay shipping and insurance fees.
24/7 trading and account management. Product only ships after payment clears.

Option 3: eBay

eBay is not the best place to buy gold if you are new to the precious metals market. On the other hand, some more seasoned investors have great experiences when they buy from the site.

If you’re going to peruse the site, these two simple tips can help you determine whether something is a good buy and ensure a successful transaction if you decide to make a purchase:

  • Use the “Advanced Search” tool to find recently closed listings for the product you’re looking to buy. Seeing how much it has sold for in the past will give you a good idea of other sellers’ ask prices. This can help you determine whether the gold you’re thinking of buying is listed at a competitive price.
  • If you see a product you’d consider purchasing, vet the seller before you hand over any money. Check the approval rating, and if it is not 100% (or extremely close to it), you may want to rethink your purchase. Even if the seller’s rating is great, you should still read buyer reviews to be sure others have had a good experience.

That sounds simple enough—so why do we say eBay is not the best place to buy gold?

Well for one, it is easy for sellers to misrepresent their products, and inexperienced buyers often wind up getting something completely different than what they thought they were buying.

eBay is also notorious for being a target for counterfeiters, especially from China. People have lost thousands upon thousands of dollars buying gold from eBay; they only find out their “gold” is fake when they have it assayed.

Finally, there’s nothing stopping a dishonest seller from artificially inflating prices by bidding up their own listings. This risk can be avoided if you purchase products with a “Buy Now” option rather than the traditional auction format. Even then, it still doesn’t inspire a whole lot of confidence in the site.

If you’re an investor who knows exactly what you want—with sufficient experience to recognize a good deal—there’s nothing wrong with buying gold from eBay. But if you’re just getting started in the precious metals market, it probably isn’t worth the risk.

The Pros and Cons of Buying from eBay

Pros Cons
It’s convenient and shipping is often free. Not the best place to buy gold for inexperienced investors.
There’s no state sales tax. eBay is often flooded with fakes and counterfeits.
If you know what to look for, you can find products for less than you’d pay at a local shop. Unscrupulous sellers can artificially drive up bid prices.

Option 4: Gold Shows

If you plan to attend a gold show, be prepared to see a lot of coins (and collectible coins). There may be some sellers offering bullion coins or bars, but you can expect only a small selection.

Because you’re face to face with dealers, there is the opportunity to bargain on price if you find something you like, but at the end of the day, we can’t see much reason to spend the time and effort involved in going to a gold show.

Pros and Cons of Gold Shows

Pros Cons
Opportunity to negotiate your price. Features mostly numismatic coins.
You may find other items you like. Not the best place to buy gold bullion; extremely limited selection of products.

Option 5: TV Dealers

We’re not going to go too deep in discussing TV gold dealers, because it’s just flat out a bad idea to buy gold from them.

They pay exorbitant advertising and celebrity endorsement fees, which they then recoup by pushing lots of product and selling at high premiums.

If you call in, you’re likely to get hit with a high-pressure sales pitch—often for a product you haven’t expressed any interest in buying. They also engage in sleazy sales tactics like offering layaway plans that charge high interest rates until you’ve paid in full.

Bottom line: there are much better places to buy gold.

Final Thoughts: The Best Place to Buy Gold

Investors have many reasons for preferring one type of gold dealer over another—after all, everyone has individual tastes.

But for the majority of investors, we feel confident declaring one category of dealer as the best place to buy gold: online dealers that offer full-service investing as well as a buy-and-store program.

With ease, convenience, and automation, plus competitive pricing and the security of private vaulting, online dealers with a storage program give gold investors the very best value for their money.

Free Ebook: Investing in Precious Metals 101: How to Buy and Store Physical Gold and Silver

Download Investing in Precious Metals 101 for everything you need to know before buying gold and silver. Learn how to make asset correlation work for you, how to buy metal (plus how much you need), and which type of gold makes for the safest investment. You’ll also get tips for finding a dealer you can trust and discover what professional storage offers that the banking system can’t. It’s the definitive guide for investors new to the precious metals market. Get it now.

 

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