In times of economic volatility, investors often buy gold and/or silver bullion to diversify and protect their investment portfolios. While it can be tempting to buy bullion on convenience or impulse, it’s essential that you do your research first. Knowledge is power, and we encourage you to be in control of that power, so that you make the best decisions for your specific financial portfolio goals.
What is Bullion?
Bullion is an umbrella term, that refers to physical precious metals of high purity that are often kept for investment purposes. The name is derived from the old French word for “boiling.” It originally referred to the process of melting gold or silver to create coins.
These days, bullion is typically used as a safe investment or hedging tool.
Types of Bullion
Gold and silver bullion are the most popular choices for investors, but platinum, palladium, and rhodium are also traded. Your metal selection(s) should reflect your financial goals, current budget, age, and risk-tolerance. Bullion is manufactured in several forms; bars, ingots, and coins.
When buying bullion, finding a reputable precious metals broker is critical, to ensure you receive a worthy investment. Also, pay attention to the purity of the metal and the current market value or spot price.
What is Purity?
In the precious metal industry, purity is expressed in terms of “fineness.” This measures the amount of precious metals in an alloy – how much pure precious metal is present, compared to other metals.
For example, 24-karat gold is 100% pure gold, while 18-karat gold is 75% gold, and 25% other metals, typically zinc, copper, or nickel.
How is Purity or Fineness Determined?
The fineness of gold and silver bullion is usually determined by assaying the metal. This involves testing a sample of the metal, to see how much gold or silver it contains.
Precious metal brokers typically have their bullion regularly assayed to ensure it meets the required purity standards. By doing this, they can be confident that their products are of the highest quality.
How Do You Assay Silver and Gold?
Assaying is the process of testing gold and silver bullion to determine its purity. Assaying is a critical process for bullion dealers, because it helps to ensure that their gold and silver meet industry purity standards.
There are different ways to assay gold and silver, as well as other precious metals, but the most common methods are acid digestion, fire assay, and XRF analysis. As a premium precious metal broker, we use and prefer the latter when selling and buying bullion.
We use an XRF Spectrometer, a sophisticated piece of equipment that uses x-ray florescence to accurately measure up to 22 elements in one reading. XRF is a nondestructive testing technique that can analyze a metal sample in seconds with little to no need for sample preparation.
XRF analyzers deliver fast, accurate elemental analysis and karat amounts in seconds. In fact, advances in XRF technology have expanded to the point that today’s analyzers are capable of distinguishing alloy grades that are nearly identical in composition to one another.
And unlike the acid digestion and fire assay methods, the testing is non-destructive to the piece – another benefit to investors and collectors alike.
Top Tips for Buying Gold and Silver Bullion
While purchasing gold and silver bullion can be an excellent way to build financial security, it can also be challenging, especially for first time buyers. There are numerous factors to consider, from denominations to market trends. Here are nine secrets to buying gold and silver bullion that will help you get the best deal possible:
Know Your Options
There are many ways to invest in gold and silver bullion, so start by researching your options and finding the best fit. One way is to purchase it directly from a precious metals dealer or buy it indirectly through a mutual fund or ETF that invests in gold or silver.
An ETF is a highly liquid asset you can buy via your brokerage account. This lets you easily rebalance your investment portfolio and allows you to respond quickly to market changes. However, ETFs have their drawbacks. Because they function more like stocks than physical assets, they are assessed according to the ETF company’s value rather than the gold’s actual value, making them a riskier investment.
Investing in physical gold or silver bullion offers more market stability and is an excellent store of value. It also offers an easy way to dip your toe into the investment pool. The only drawbacks to investing in physical gold or silver are storage challenges and reduced liquidity compared to ETFs.
Consider Certified Coins
Certified bullion coins are legal tender and typically have a lower premium than uncertified coins, making them a more cost-effective option.
Certified coins are gold and silver coins graded by a professional grading service. These coins typically sell for a higher price than non-certified coins because they are guaranteed to be of a certain quality. You must decide if the extra cost to certify the coins is worth it.
However, before you purchase certified coins, keep a few things in mind. Make sure you are buying from a reputable dealer. Be aware that the grading services themselves are not always 100% accurate.
Certified coins are not necessarily more valuable than non-certified coins. For example, junk silver coins may not have any perceived collectible or numismatic value; however, they are still worth the bullion they contain and can often be bought for premiums lower than standard silver spot prices, which can make them an excellent asset for your portfolio.
Pay Attention to Premiums
You are usually charged a premium when you buy gold or silver bullion. The premium is the amount of money the dealer charges over and above the spot price of silver or gold.
The spot price is the current market price for one Troy oz. of silver or gold.
Premiums can vary depending on several factors, including the bullion type, the order size, and the dealer’s reputation. In general, gold bullion has a higher premium than silver bullion. This is because gold is rarer and more challenging to produce.
If you want to buy gold or silver bullion, shop around and compare premiums before making a purchase. A reputable precious metals dealer will be upfront about their premiums and offer competitive prices.
Look for Reputable Dealers
Reputable dealers offer high-quality products and adhere to strict quality control measures. Dealers should offer a wide range of precious metal investment options, including bullion, bars, and coins. They should also offer in-house valuations using cutting-edge technology, including X-ray fluorescence (XRF), to identify gold and silver purity.
Research any dealer you’re thinking about doing business with. Make sure they have a good reputation and are properly licensed. AU Precious Metals in Rochester is a reputable dealer with decades of experience offering a wide range of gold and silver bullion products, including bars and coins.
Beware of Scams
Scammers have been targeting investors interested in gold and silver bullion for years.
The scams usually follow a similar pattern: the investor is promised that they will be able to buy gold or silver at a huge discount, often 20-30% below the market price. The scammer may even claim to have gold or silver bars that they are willing to sell at this cut-rate price. Of course, once the investor sends their money, the scammer disappears and is never heard from again.
Be suspicious of anyone offering bullion at a deep discount. Gold or silver that costs significantly below the spot price may have a high level of impurities. There have also been instances of counterfeit branded bullion and bars circulating the market and making their way into the hands of investors at a discounted price.
Avoid Paying via Credit Card
While paying for gold or silver bullion by credit card enables you to make speedy investment decisions, there are also several drawbacks. Credit card payments have higher processing fees than when you use your checking or savings account. There is also an increased risk of fraud, and many dealers do not accept credit card payments.
An excellent alternative to paying by card is using a wire transfer. Wire transfers are a form of traceable payment so that you can dispute the charges if you don’t receive your bullion.
Stick to Popular Denominations
Standard gold and silver bullion bars are referred to as Good Delivery bars. These bars weigh 400 Troy ounces, which is equivalent to 27.428 lbs. However, bullion and bars are also available in a wide array of sizes, from 1 gram bars to 1 kg bars, depending on the area in which it was cast or minted.
Gold and silver Good Delivery bars are an ideal choice for investors, while small gold and silver bars or coins are popular with people new to investing in silver and gold.
If you prefer to invest in gold and silver bullion coins rather than bars, it is essential to understand which denominations make the best investments and where to buy them. Governments typically mint gold coins, while private companies mint silver coins. However, the mints don’t normally sell bullion to the public; rather, they distribute the coins via a network of authorized purchasers in a two-way market.
You can purchase gold and silver bullion and coins online or from brick-and-mortar stores. Some popular denominations include the American Gold Eagle, the Australian Gold Kangaroo, the Chinese Panda, and the South African Krugerrand. These bullion coins typically have a purity level of over 90%.
Keep an Eye on Market Trends
Gold and silver bullion are two of the most popular commodities on the market, and their prices can fluctuate widely depending on supply and demand and inflation.
For investors tracking market trends, it is crucial to understand what drives these changes. One of the biggest drivers of gold prices is inflation. Gold becomes a more valuable store of wealth when the cost of goods and services increases. Another major factor is buyer demand, which can change due to central bank purchases or jewelry demand.
For silver, industrial demand is a significant driver. Silver is used to manufacture components in various industries, from electronics to photography.
By understanding the key drivers of gold and silver prices, investors can better understand how these markets work and make more informed investment decisions.
Stay Disciplined
The prices of gold and silver can be volatile, so it’s essential to monitor the market and only buy when the prices are low.
Consider the size of your purchase. If you’re buying gold bullion, you may be tempted to buy a larger quantity than you need to get a better price per ounce. However, this can tie up a lot of capital and put you at a higher risk of financial ruin if you are scammed. Experienced investors recommend investing up to 10% of your portfolio in gold or silver commodities.
You must also consider where to store a large gold or silver bullion purchase. You can keep it at home in a safe or lockbox. You can also store your bullion in a safety deposit box in a bank. However, you’ll need to consider the additional fees and whether your gold is easily accessible when you want to sell.
Buy Bullion from AU Precious Metals and Get Peace of Mind
AU Precious Metals streamlines the silver and gold investment process. We can facilitate remote deals using wire transfers and secure postal services for stress-free, contactless transactions. If you are interested in investing in gold or silver bullion, contact us using our online form or contact our customer service representatives at (877) 744-0972 to schedule an in-person visit.
