Buying physical gold without overpaying
Buying physical gold is mostly one decision repeated: how much am I paying above the metal, and what am I getting for it. Everything else follows from that.
Coin or bar
A bar is the cheaper way to own gold. There is no mint, no legal tender status and no design to pay for, so a one-ounce bar almost always carries a lower premium than a one-ounce coin of the same weight.
Coins buy you recognisability. A Krugerrand or an Eagle is identifiable to any dealer in any country without testing, which matters on the day you sell. Whether that liquidity is worth two or three percentage points is a real question with no universal answer.
Size is the biggest lever you control
A refiner spends about the same on assay, packaging and handling whether the bar holds one gram or one kilogram, and that fixed cost is spread across the metal. So premiums fall steeply with size - frequently above 20% on a one-gram bar and low single digits on a kilo.
The counterweight is divisibility. A kilo bar must be sold whole; ten 100-gram bars can be sold in stages as you need the money. Cheapest per gram and easiest to sell are different objectives and you should know which one you are optimising for before you buy.
Checking a dealer
Published, live pricing that moves with spot is the first signal. A dealer whose prices are static through a volatile week is not pricing off the market. Look for a stated buyback price too: a dealer who will tell you what they pay as well as what they charge is showing you the full spread rather than half of it.
Be wary of heavy promotion of "rare" or "limited edition" bullion coins at large premiums over melt. Numismatic value is a genuine market, but it is a different one, and it is where inexperienced buyers lose the most.
Questions people ask
- Is it better to buy gold coins or bars?
- Bars are cheaper per gram because there is no mint, no legal tender status and no design to pay for. Coins are more recognisable, which makes them easier to sell anywhere without testing. If cost is the priority, buy bars; if liquidity is, buy well-known coins.
- What size gold bar should I buy?
- The largest one you can afford to sell whole. Premiums fall steeply with size because assay and packaging cost the same regardless of weight - but a kilo bar, currently $142,019 of metal, cannot be sold in pieces. Several 100 gram bars cost slightly more per gram and can be sold in stages.
- How do I know a gold dealer is legitimate?
- Live pricing that moves with spot through the day, a published buyback price as well as a sell price, and no heavy promotion of "limited edition" bullion at large premiums. A dealer who will only tell you what they charge and not what they pay is showing you half the transaction.