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With gold prices sitting near all-time highs, it’s no surprise that investment interest in the precious metal is currently so elevated. If you took a moment to look at the spot price, though, you may have felt out of your league. It far too often seems as if there’s no cheap way to invest in gold.
This is an understandable assumption. The price for an ounce of gold skyrocketed from about $275 in November 2001 to over $2,000 in July 2020. When you calculate the premium above spot price that everyone pays, a single one-ounce gold bullion bar costs more than a new iPhone.
Fortunately, this doesn’t mean you can’t start stockpiling everyone’s favorite precious metal. There are plenty of cheap ways to invest in gold that won’t leave you broke. Once you figure out the best strategy for your situation, you can begin building financial security for the future.
Cheapest way to invest in gold items
Before diving into the many ways to invest in gold without breaking the bank, it’s important to learn a few basics if you really want to save money. If you’re looking to buy physical gold, your best bet is to look at bullion bars. This is because you’ll typically pay a lower premium.
While it may seem strange that a one-ounce bar of gold would cost less than a one-ounce coin, that’s often how it works out. This is because bullion bars are easier to refine, fabricate and even transport. That means less work goes into getting the item to you.
Additionally, you’ll avoid paying higher premiums based on rarity, collectability or artistic value. These higher costs are typical of gold jewelry, coins, statues and other items. If you’re looking for low-cost ways to invest in gold, it’s often ideal to start with bullion bars.
Always know the spot price of gold
Another primary rule when trying to buy gold for less is always know the spot price. While gold will forever have value, its price at any given time can vary. An ounce of gold on July 6, 2020, was worth $2,036, but just one month later, that same ounce was only worth $1,933.
Just because you see a great price for a gold item one day doesn’t mean it’s a great price the next. On reputable websites such as Silver Gold Bull, the price of physical gold products fluctuates with the spot price every few seconds. Unfortunately, this is not true for every site that sells precious metals online.
As long as you know the spot price of gold, your quest to find the cheapest way to invest in gold will be more fruitful. Everyone pays above spot when they purchase precious metals, but make sure you’re not getting taken advantage of through improperly high premiums.
Low-cost gold might not be gold
The last tip for buying low-cost gold before we jump into actual assets is this: Be careful. You’ve probably already considered some of your options, so you likely have discovered bullion and other items on sites such as eBay. When going this route, though, you could get burned.
A report came out in 2016 — when gold was about half its 2021 value — that found an influx of fake gold coins on the market. Researchers linked this to the high demand for these coins. Again, this was years before demand skyrocketed to its current level. One quote in this report was particularly troubling:
“It’s gotten to the point where even people who deal with coins all the time may not be able to recognize a counterfeit coin right away.”
When you think the cheapest way to invest in gold is via pawn shops, eBay, Facebook Marketplace and other lesser-regulated options, you might just be right. Unfortunately, it may not be gold you’re investing in at all. In the end, you could just end up with a pretty piece of shiny base metal.
The 4 Cheapest ways to Invest in Gold
Now that we’ve discussed the best ways to make sure you get a low price on gold items, it’s time to dive into the actual investment strategies. If you don’t like the idea of spending an entire week’s salary or more on a one-ounce bar, consider the following affordable ways to invest in gold.
1. Purchase paper gold
An old adage says, “Not all that glitters is gold.” As it turns out, the opposite is true as well. Not all gold glitters either — at least not when it’s paper gold. This term refers to investments in the precious metal that don’t result in the owner holding physical bullion.
By investing this way, you’re avoiding the premium that you’d typically pay with real gold items. Unfortunately, you may end up paying more in commission, trading and management fees. Still, this is one of the most popular ways to cheaply invest in gold.
There are a variety of paper gold assets available to regular investors:
- Gold futures contracts.
- Mining stocks.
- Shares of gold-related companies.
- Exchange-traded funds that own gold.
- ETFs that invest in other securities.
- Gold certificates from banks.
Unfortunately, most of these affordable ways to invest in gold have significant disadvantages. The biggest issue is that their worth doesn’t always increase as the price of gold goes up. There are many factors other than spot price that can affect the value of companies and trading funds.
In other cases, this paper gold is only as valuable as the word of those who issue it. A gold certificate from a bank that goes under, for instance, may not be worth the paper it’s printed on. Think hard before you opt for a paper investment when trying to buy gold cheaply.
2. Purchase gold by the gram
People are purchasing more gold right now. It’s a simple fact of life. Unfortunately, many of them are opting for cheap ways to buy gold, such as stocks and ETFs. This isn’t really buying gold, but folks get scared when they see the price of items available only in ounces or more.
In reality, there are far more options available. In fact, you can buy one-gram gold bars for a literal fraction of the cost of other commodities. It’s disappointing that many people don’t know this is an alternative, but as more find out, countless investors will no doubt flock to these affordable bullion bars.
3. Invest in certain gold coins
In order to cheaply invest in gold coins, you must first find those with minimal numismatic value. Unfortunately, an unpopular coin with an ounce of gold will still set you back a pretty penny. That’s why you should consider coins with lower weights of the precious metal.
Consider the following:
These are far from the only affordable gold coins available, but they are among the most popular. Keep in mind that you’ll still usually pay higher premiums with coins than bullion bars with the same amount of gold. If you want a bit of beauty with your investment, though, coins are the way to go.
4. Scrap gold
One of the more popular cheap ways to invest in gold is what we call scrap. A quick search of “scrap gold” on eBay returns thousands of items. One thing that might grab your eye is the gold bars that weigh about 10 ounces and somehow only cost $49.
If this sounds too good to be true, that’s because it is. These bars typically get listed as “gold recovery” and only contain a minimal amount of the precious metal. The items also have very low liquidity considering the amount of work necessary to extract the gold from the bars.
Investing cheaply in gold is possible!
There are some people who can go out and buy a 10-ounce gold bar without thinking twice about their bank accounts. Unfortunately, most of us don’t fall into that category. Considering the variety of ways you can purchase gold, though, it’s likely that investing in the precious metal is still possible.
There are pros and cons to each of these methods, but you’ll find that buying physical bullion carries the most benefit. Not only will your investment reflect a true rate of return based on the value of gold, but you’ll also have a tangible asset that can never become defunct.
If you’re looking for a cheap way to invest in gold, there are plenty of options available at Silver Gold Bull. Click here to view all the gold items we offer, and you can even sort prices from low to high when you get started. Everyone should have access to the gold market, and with Silver Gold Bull, you do.