You can buy gold in several forms: physical coins and bars from a dealer, shares of a gold ETF through a brokerage account, or digital gold through an online platform. The right choice depends on how much you want to invest, whether you want to hold the metal yourself, and how quickly you might need to sell. Here’s what you need to know about each option and what it actually costs.
Physical Gold: Coins and Bars
The most straightforward way to buy gold is to purchase the metal itself. Investment-grade gold comes in two main forms: bullion coins and bullion bars. Both are valued primarily by weight and purity rather than design or rarity.
The U.S. Mint produces two main gold bullion coins. American Eagle Gold Bullion Coins come in four sizes: one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce. American Buffalo Gold Bullion Coins are available in one-ounce size only. Other widely traded coins include the Canadian Maple Leaf, South African Krugerrand, and Austrian Philharmonic. All of these are recognized globally and easy to resell.
Gold bars range from one gram to 400 ounces, though most individual investors buy bars between one ounce and ten ounces. Bars generally carry lower premiums than coins because they cost less to produce, but they’re harder to sell in partial amounts. If you own a ten-ounce bar and only want to sell half your position, you can’t split it. Coins give you more flexibility.
You can buy physical gold from online bullion dealers, local coin shops, or at coin shows. The U.S. Mint does not sell bullion coins directly to the public; it distributes them through a network of authorized purchasers who then sell to dealers and the public. When choosing a dealer, compare prices across at least three or four sellers before buying. Premiums vary significantly from one dealer to another.
What You’ll Pay Above Spot Price
Gold’s “spot price” is the current market price for one troy ounce of pure gold. You will never pay exactly the spot price when buying physical gold. Every dealer charges a premium on top of spot to cover the costs of mining, refining, minting, packaging, shipping, and the dealer’s own profit margin.
Premiums are not uniform. They vary by product type, dealer, and market conditions. Coins typically carry higher premiums than bars because they cost more to mint. Smaller denominations carry higher premiums per ounce than larger ones, so a one-tenth ounce coin will cost you proportionally more than a full ounce. During periods of high demand and tight supply, dealers charge steeper premiums because buyers are willing to pay more. Shopping around is essential, as the difference between two reputable dealers on the same product can be meaningful.
When you sell physical gold back, the process works in reverse. A dealer will typically offer you a price below spot. The gap between what you pay to buy and what you receive when you sell is the total round-trip cost of owning physical gold, and it’s worth factoring in before you purchase.
Gold ETFs and Digital Gold
If you don’t want to store physical metal, a gold ETF lets you gain exposure to gold prices through a standard brokerage account. A gold ETF is a fund that holds physical gold (or gold derivatives) and issues shares that trade on a stock exchange, just like a stock. You buy and sell shares through your broker during market hours.
Gold ETFs charge an annual expense ratio, which is a small percentage of your holdings deducted automatically. You’ll also pay your broker’s standard trading commission, if any, plus the bid-ask spread on each trade. There’s no storage to arrange, no shipping to worry about, and you can sell your position in seconds during market hours. The tradeoff is that you never hold actual gold. You own shares in a fund.
Digital gold platforms let you buy fractional amounts of gold online, sometimes for as little as a few dollars. The platform or its partner stores physical gold in a vault on your behalf, and your account shows your holdings in grams. Some platforms let you request physical delivery of your gold, and most let you sell back through the app. Costs can include a goods and services markup, buy-sell spreads, and ongoing storage fees that may be built into the quoted price rather than shown separately. Read the fee disclosure carefully before buying, since costs aren’t always obvious.
How to Store Physical Gold
Once you own physical gold, you need somewhere secure to keep it. The three main options are a home safe, a bank safe deposit box, or a private vault facility.
A home safe gives you immediate access but carries the highest risk of theft. If you go this route, bolt the safe to the floor, don’t tell people you own gold, and check whether your homeowner’s or renter’s insurance covers precious metals. Many standard policies have low limits on valuables, so you may need a separate rider or floater policy.
A bank safe deposit box costs roughly $70 to $100 per year for a large box. Your gold sits inside the bank’s vault, and you need your ID and key to access it. The downside is that safe deposit box contents are generally not insured by the bank or by FDIC coverage. You’d need your own insurance policy to protect against loss.
Private vault facilities specialize in precious metals storage. They typically charge 0.5% to 1.5% of the value of your gold holdings per year. That means storing $50,000 worth of gold could cost $250 to $750 annually. These facilities usually carry their own insurance and offer segregated storage (your gold kept separate from other clients’ holdings) or allocated storage where your specific bars and coins are identified as yours.
Tax Rules for Selling Gold
The IRS classifies physical gold as a collectible. When you sell gold you’ve held for more than one year at a profit, the gain is taxed at the collectibles capital gains rate, which maxes out at 28%. That’s higher than the 15% or 20% long-term capital gains rate that applies to stocks and bonds for most investors. Gold held for one year or less is taxed as ordinary income at your regular tax rate.
Gold ETF shares backed by physical gold are also taxed at the collectibles rate, even though you never touched actual metal. This is a detail many investors miss.
As for reporting, dealers are required to file IRS Form 1099-B for certain precious metals sales, but not all. A sale is only reportable if the gold is in a form approved for trading by regulated futures contract and the quantity meets or exceeds the minimum lot size for that contract. Sales below those thresholds, or of gold forms not approved for futures trading, are not reported by the dealer. That does not mean the gain is tax-free. You’re still responsible for reporting any profit on your tax return regardless of whether you receive a 1099.
How to Spot a Fraudulent Dealer
Gold scams are common enough that the Commodity Futures Trading Commission publishes specific warnings about precious metals fraud. The most dangerous schemes involve “financing agreements” where a dealer offers to sell you gold with only 15% to 25% down, with the company arranging a loan for the rest. In many of these cases, the company never actually purchases any metal and charges fake interest on a loan that doesn’t exist.
Red flags to watch for include salespeople who create urgency by claiming limited supply, companies that can’t clearly identify where your physical metal is stored, agreements that don’t name the financial institution providing the loan, claims of low-risk high returns, and difficulty verifying the company’s license. Be skeptical of cold calls from brokers promoting gold purchases, and of anyone who asks for personal information upfront before you’ve initiated contact.
Before buying from any dealer, verify their registration and disciplinary history. For futures-related transactions, you can check the CFTC’s records or the National Futures Association’s background affiliation database. For general dealers, look for established businesses with years of verifiable track records, clear return policies, and transparent pricing that lets you compare their premium to the current spot price. If a dealer won’t show you exactly how their price relates to spot, move on.
Deciding How Much to Buy
Gold doesn’t pay dividends or interest. Its value comes entirely from price appreciation and its role as a hedge against inflation, currency weakness, or stock market downturns. Most financial strategists suggest keeping gold to a modest slice of your overall portfolio, often in the range of 5% to 10%, rather than concentrating heavily in a single asset that produces no income.
If you’re buying physical gold, start with widely recognized coins or bars from sovereign mints. They’re the easiest to verify and the easiest to resell. Avoid numismatic (collector) coins marketed as investments. Dealers earn much larger margins on rare coins, and the collectible premium you pay has nothing to do with the gold content. Stick with bullion-grade products where the value tracks the metal itself.