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How Not To Buy Gold

With everything going on in the world, the gold industry has still managed to sell billions worth of gold in 2020-2021. Much of the gold has been sold to people interested in investment assets to hedge against the inflation we are currently experiencing. Most of the gold has been invested in mutual funds or exchange-traded funds. But some investors who like the idea of ​​holding it still bought it in coins and bullion, and the growing number of investors has led to the growth of gold bullion traders in Melbourne. They can be found virtually anywhere. However, Buyer Beware! Not all gold dealers have good intentions so do your homework.

Here’s some simple advice to follow when buying gold bullion especially if you are more interested in the precious metal’s investment value)

#1. Don’t overpay

If you invest in gold, remember that it is a commodity and it’s up to you to make sure you don’t overpay. On the day you buy, check the spot price of gold (available on many websites.) Do not pay more than  5% – 8% markup on the spot price.

#2. Don’t buy coins for their historical value

Some gold traders devote themselves to a classic bait-and-switch trickery: they offer gold coins or bullion, and then try to sell coins with historical or numismatic value to customers. These coins usually have little or no additional value above their “melt value” – the value of the coin if it were melted down and sold as metal. In addition to the American Gold Eagle, the most well-known coins typically bought and sold for their gold value alone are the Canadian Maple Leaf, the Australian Gold Nugget, and the South African Krugerrand.

#3. Do not pay a premium for proof coins

Gold proof coins are special editions minted for collectors and often mounted in a special case. The molds used to make them are often finely polished and produce particularly beautiful pieces with a mirror finish. Proof editions are generally rated more regular collectors coins. The premium you pay for these can be inflated, depending on the market.

Gold coins are also produced as commemorative limited edition coins that are sold directly to the public. These often come with a higher markup. The Mint increases the price of coins to cover the value of gold and actual minting, as well as shipping and other costs. Retailers say the margin is usually around 3%. Then the mint’s authorized buyers, some of whom sell directly to the public and all of whom sell to other retailers, add their own mark-up, as do the retailers. 


Some gold traders engage in a bait-and-switch method: They offer gold bullion coins or bullion bars and then attempt to sell coins with historical or numismatic value to customers. In fact, these coins generally have no additional value above their “melt value”. 


Some of the most popular gold bullion coins are the American Golden Eagle, The Canadian Maple leaf gold coin, the Krugerrand and the Australian Gold Nugget. If you are new to buying gold, it is much safer to choose these popular coins. They are easier to sell. 


Proof editions are generally more expensive than regular coins by collectors. The premium you pay for proof coins may be inflated and may disappear, depending on the market. So, for investment purposes buy normal bullion coins instead of numismatic coins. These are easier to sell when you need to.

#5. Buy fractional gold bullion

These coins are available in fractions of an ounce, such as a half-ounce, a quarter ounce, and even a twentieth ounce. You will pay a higher markup for such coins than for one-ounce coins. The only real reason to own them is if you believe in a future collapse of society, how unnecessary paper money will be, and how handy they can be when you need small a small amount of money to buy, for example, a concert ticket, petrol, frozen-dried food, or a cappuccino.