How to Buy Gold: an Ultimate Guide

In the words of Nomad Capitalist Event speaker Robert Kiyosaki, Gold and Silver are God’s money. They were here before us and will be here long after we are gone. 

Are you interested in protecting your wealth and diversifying your portfolio by investing in gold? 

In this guide on how to buy gold, we will give you what you need to know about buying and storing physical gold. 

We work with experts across a variety of financial sectors, and to give you the best advice in this guide, we reached out to our gold experts, J. Rotbart & Co.

This highly sought-after and liquid precious metal offers long-term stability and diversification and is a safe haven asset in times of crisis.

When you become a Nomad Capitalist client, we will create a bespoke strategy using our unique, tried, and true methods, helping you protect your wealth, diversify your asset portfolio, and reduce taxes.

Basics of Buying Gold

Firstly, let’s look at the basics of gold and its cultural significance. 

Pure gold is a rare commodity. Just 0.003 parts per million of the earth’s crust is gold, compared to iron, which makes up about 50,000 parts or 5% of our planet’s crust. 

The yellow metal’s rarity, desirability, and limited supply drive its value in the global financial markets, making it a long-standing investment choice. 

Gold Bullion

As global trade grew, there was a growing demand for a standardized form of currency that could be easily traded and recognized across borders, so gold bullion was born. 

Gold bars are also referred to as gold bullion and are typically sold by weight, either in grams or ounces. An authentic pure gold bullion bar should have a stamp indicating its purity, manufacturer, and weight.

For investment-quality gold bars, a minimum purity of around 99.5% is best. Would you like to own physical gold in an IRA retirement account? 

Gold bullion is a great choice, but you will need to be sure that the purity is at a level that meets the requirements. 

Gold Coins

When it comes to gold content, coins typically have a lower percentage than gold bars. For instance, a one-ounce American Gold Eagle coin is only 91.67% gold, while the remaining percentage is made up of silver and copper.

Gold coins also often come with a higher price tag compared to the same amount of gold in bullion form.

Some of the best gold coins on the market include the Canadian Maple Leaf produced by the royal canadian mint, Gold Britannia Coin produced by the Royal Mint, and the Krugerrand from the South African Mint (Rand Refinery).

If you decide to purchase gold coins, it’s advisable to do so from reputable dealers or trusted individual sellers. 

Whatever form it takes, whether bullion bars or gold coins, always ensure that the gold you buy and mint is approved by the London Bridge Market Association and should generally be at least 99.9% pure, which is the standard investment grade. 

Whether you decide to buy bullion bars or bullion coins is, of course, a personal decision largely based on the motivation for your investment. Each investor’s goals and circumstances will differ. 

Gold Jewelry 

Jewelry, particularly antique pieces, offers an alternative option for purchasing gold. However, the price of gold jewelry includes a premium that can often be considerable. 

Gold jewelry manufacturers often use alloys, which are combinations of gold and other metals. These alloys enhance the durability or alter the color of the jewelry. 

As with buying gold coins and gold bullion bars, caution is needed when purchasing gold jewelry. Make sure that the seller is reputable and trustworthy, providing documentation that authenticates the quality of the gold jewelry.

Gold is often measured in terms of purity, denoted by its karat value. 24 karats is considered pure gold, but since it is too soft for most practical applications, it is often mixed with other metals to increase its hardness and durability. Most jewelry is around 18 karats or 75% purity. 

Weigh up the value of your investment against the premiums associated with the product, the duration of your investment, storage options, taxation implications, and how you plan to liquidate your gold coins or gold bullion bars down the road if need be. 

Cultural Significance of Gold

Gold holds massive cultural significance for many nations, but nowhere more than in India, where it has played an integral part in the culture for centuries. 

According to the World Gold Council report of January 2023, China is now the world’s biggest consumer of the precious yellow metal jewelry, followed by India, and together bought 1,284 tonnes worth in 2021. 

Gold is considered a sacred metal in many Indian faiths and is associated with the goddess of wealth, prosperity, and abundance. 

Special occasions such as weddings and festivals also involve gold, with lots of gold jewelry worn by men and women during these events. It is common for families to pass down gold jewelry and ornaments from one generation to another, considering it a valuable asset and a method of creating generational wealth.

To help us understand the impact of culture on the gold markets, our gold experts, J. Rotbart & Co., said that they look at the monsoon season in India as an indicator of how good the crops will be later, which in turn, impacts how much gold the farmers would allow themselves to buy for weddings and the family.

Americans also love gold, despite its complicated history of confiscating this precious metal. With growing distrust of the government and mourning debt, gold is popular as a type of insurance. 

Malaysia and Asia generally have high per capita demand for gold, which is just one reason our gold experts maintain offices in the Philippines, Singapore, and Hong Kong.

Why Buy Gold

As already highlighted, gold acts as a type of insurance policy that maintains its value in the long term, making it a reliable store of wealth. 

Unlike other currencies, which are quickly devalued by inflation and financial instability, gold has proven to be a consistent source of value.

Stability and Security

During times of economic uncertainty or geopolitical instability, gold often serves as a safe haven asset. 

Gold offers one of the most stable and secure asset choices, appreciating, on average, 10% per year. Historically profitable, there is no doubt that in 10 or 100 years, gold will continue to hold tremendous value. 

If you compare the stability of physical gold to stocks, bonds, and other asset classes, it comes out on top regarding long-term asset and wealth protection.

As Joshua Rotbart put it during our recent chat, “It beats inflation every day of the week. It beats holding cash, and interestingly, not too many people know that gold performers are on par with the American Stock Exchange. So if you’re looking at a 20-year horizon, for example, gold is doing as well as the S&P, NASDAQ, and other assets. So it is really about safety and stability.”

Gold offers a hedge against the impacts of inflation because it’s an inverse correlation to the market, meaning when other assets are struggling, gold will usually be performing well. 

Liquidity

Gold is an unbelievably liquid asset, meaning it is easily bought or sold. If you choose the right method and location for your gold storage, you could liquidate a two-million-dollar pool of gold and have the money the next day. 

There is always demand for gold in today’s global market, so buying and selling it is relatively straightforward, making it extremely liquid. 

But if you make the most of its fluid nature, storing with a professional gold company is vital, as it is already in the system and with a professional who provides solutions for swift liquidation. 

Different Ways to Buy Gold

Depending on your preferences and investment goals for gold investments, there are a few options for purchasing gold.

Let’s focus on the difference between purchasing physical gold and paper gold.

Paper Gold vs. Physical Gold

Paper gold is exactly what it sounds like, not, in fact, actual tangible physical gold, but rather, it refers to a type of investment instrument that represents ownership of gold.

Common forms of paper gold include exchange-traded funds (ETFs), gold futures contracts, and gold certificates, and is essentially a financial derivative that tracks the price of gold.

Paper gold options do offer the advantage of being easily tradable on financial markets in the short term. However, we do not advise our high-net-worth clients to invest in paper gold.

It all comes down to your incentive for the investment. If you’re looking at gold as an insurance policy as part of your wealth protection or wealth preservation strategy, stay away from the paper gold products because you don’t get the actual asset and expose yourself to increased risks. 

These paper financial instruments are subject to government regulations and can be easily accessed by central banks, with authorities reporting them through CRS and FATCA.

Our high-net-worth clients prefer to hold physical gold for various reasons, including hedging against economic uncertainties, diversifying investment portfolios, or personal possession.

What to Consider When You Buy Gold

Firstly, it’s all about your motivation for buying gold. Are you looking for a long-term investment, a hedge against economic or political uncertainty, or just diversifying your portfolio? 

Once you have decided on what type of gold investment you would like to pursue, you need to examine the pros and cons of each gold coin and gold bullion bar before deciding.

Joshua Rothbart also commented during our recent chat that the ideal percentage of a portfolio allocated for gold investment was around 5%-15%, although he had clients also invest upwards of 25%.

Investment Motivation

If your motivation is to make a quick profit in the short term, then gold investment is not the best option.

Are you looking for a long-term option to protect your wealth from market volatility and mitigate risk? Are you concerned with geopolitical and financial uncertainties?

Gold is preferred when things become unstable, whether it’s the war or the decoupling of the two major economic world powers.  

Demand for gold usually grows in times of inflation, and its value tends to rise when traditional investments, such as stocks or bonds, experience declines.

Understanding Gold Pricing

Gold pricing is pretty easy to understand. Gold spot prices refer to the current market price at which gold is traded, also known as the “cash price” or “spot market price,” it represents the real-time value of gold at any given moment. Spot gold prices are determined by various global financial exchanges, such as the London Bullion Market Association (LBMA).

Gold premiums convey the additional cost above the spot price you must pay to buy physical gold. Premiums fluctuate depending on market conditions, the type of gold product, and the seller.

Gold coins and gold bullion bars also come with fabrication, refining, and minting expenses, and coins are generally more expensive to produce. 

Rare and collectible gold coins, such as numismatic, come with a much higher price tag depending on each coin’s historical or aesthetic significance. However, if you are not a professional, experienced trader of rare coins and gold, stay away from this stuff. For more about rare gold coins, check out our article Why You Shouldn’t Buy Numismatics.

Especially during times of economic uncertainty or geopolitical unrest, prices and premiums can increase to meet the escalating market prices.

Prices are generally shown in US dollars per ounce (Roman Troy ounce), and gold items, bars, or coins are shown in the metric system in grams, kilograms, or ounces.

Storage and Transportation

We recommend using private vaulting facilities, such as the one Rotbart offers, but of course, other companies worldwide are doing it; the advantage of the private vaulting facility is that you store with the experts. 

As you can imagine, the logistics of hauling and transferring large or even small amounts of gold is no small task and requires extensive security measures. One of the greatest advantages of a professional gold storage company is the secure logistics. 

They know how to move gold around, with extensive experience securely transporting clients’ gold when leaving the US for another jurisdiction.

Use a Reputable Company

If you decide to purchase physical gold, find a reputable and trustworthy dealer with a track record, positive customer reviews, and relevant credentials. 

As a Nomad Capitalist client, you will gain access to expect a seamless and all-encompassing solution. Our partner, J.Rotbart & Co., is a prestigious company operating out of Hong Kong and Singapore, specializing in the trading and storing of precious metals. 

They meticulously source the finest items directly from world-renowned refineries and manage the transportation process to ensure the utmost security and peace of mind. Operating in 13 global locations, clients can select their preferred storage location, wherever they feel most secure. 

Offshoring and Storing Gold

It is prudent to hold your gold offshore as the ultimate insurance policy. When diversifying your assets, it is important to consider the allocation of gold and the storage jurisdiction. 

Having control and quick access to some of your gold is crucial, especially in the event of another black swan event.

We advise our clients not to store all of their gold nearby or in just one location. 

Switzerland, for instance, stands out as a secure jurisdiction. Even during times of war, Switzerland maintained a currency that could be exchanged for physical gold. The Swiss government has no authority to seize gold.

These days more high-net-worth gold buyers are choosing Asia as their preferred destination for gold storage, particularly Singapore and Hong Kong.

Conclusion 

Undoubtedly, buying gold is a wise investment strategy for those looking to protect their wealth. For more insight into how to buy gold, follow our 10 tips for buying gold in 2024. 

Our clients prefer to hold physical gold for a variety of reasons, including hedging against economic uncertainties, diversifying investment portfolios, or protection for when things go wrong. 

Are you ready to buy gold? Do you want to secure your wealth and store your gold offshore? 

Become a Nomad Capitalist client today, and we will help you create your holistic strategy to legally reduce your tax bills, diversify and protect your assets, including your precious metals, and maximize your freedom.