Gold has hit several new highs so far in 2024. The trend started in March when the price of gold hit a record high of $2,169 per ounce. Then, in late May, the price of gold climbed to another high of $2,450 per ounce. And, while the price of gold has cooled recently, with today’s price closer to $2,300 per ounce, the cost of gold per ounce is still up several hundred dollars from the start of the year.
The price of gold isn’t the only draw, though. The precious metal also offers unique benefits to investors, such as acting as a hedge against inflation. And, there are many gold investment options to choose from, including gold individual retirement accounts (IRAs), gold stocks or gold coins. But one in particular that may be worth considering right now is 1-ounce gold bars, as they are affordable and relatively accessible for most investors.
But despite the popularity of 1-ounce gold bars, experts say there are some expensive mistakes to avoid when buying in. Here’s what you should know.
4 expensive mistakes to watch for when buying 1-ounce gold bars, experts say
Be sure to keep an eye out for these big missteps if you’re going to add 1-ounce gold bars to your portfolio:
Not purchasing gold bars from a reputable source
One of the most costly mistakes you can make when buying a 1-ounce gold bar is getting one from a less-than-reputable source. Doing so could result in losing some or all of your hard-earned money.
That’s because gold bars can be counterfeit, and with today’s high gold prices, there’s a big incentive to do so. So, if you’re not ensuring that your gold bars are coming from a reputable source, you’re putting yourself at risk of big monetary losses.
“Counterfeiting is a real problem in the precious metals industry,” Brett Elliott, director of marketing at American Precious Metals Exchange APMEX, says. “Gold is often a target due to its high value. If you never buy gold from an unknown seller, especially one asking for less than gold’s spot value, then you will never be scammed.”
You can avoid potential scams by checking a company’s accreditation status, says Alex Ebkarian, COO and co-founder of precious metals dealer Allegiance Gold.
Ebkarian recommends looking for dealer accreditation from consumer protection agencies like the Better Business Bureau or Business Consumer Alliance. You may also want to look at other types of information about the dealer, too.
“Every state offers a free search to check registration dates and compliance with state requirements,” Ebkarian says.
Not shopping around
Another potentially expensive mistake is not shopping around for the best deal. You should shop around to get price quotes, experts say, and if you’re buying gold bars online, make sure the price includes shipping. Otherwise, the shipping costs could add a lot to the cost of your purchase.
In general, experts say you shouldn’t pay much more than $100 over the spot price of gold for 1-ounce bars. And, depending on the manufacturer and other factors, you may be able to buy 1-ounce gold bars for between $20 to $30 over the spot price.
According to Elliot, you may want to avoid buying from pawnshops, which he says often have the worst deals on 1-ounce gold bars.
Buying bars without seals
Purchasing a gold bar without a seal could also be a mistake, says Ebkarian.
“While you can buy a non-sealed bar and pay less than the normal market price, it’s very important for the bar to be sealed to give the confidence of the new buyer when the time comes to sell,” Ebkarian says. “The most reputable private mints provide a carded gold bar with an assayer number in the back for authentication purposes.”
Not researching the dealers to sell to
Before you invest, Nick Fulton, managing partner of USA Pawn of Mississippi, recommends finding a dealer who pays the most for 1-ounce gold bars. That way, you can get the most possible for your gold bars if you need to sell in a pinch.
“Depending on the premium, the buyer will be upside down from the start,” says Fulton.
Fulton recommends finding a dealer that pays as close to the gold’s spot price as possible.
The bottom line
Before you purchase a 1-ounce gold bar, it’s crucial to do your research and shop around. Doing these two things can help you avoid scams and get a good deal from a reputable dealer. And, doing that while avoiding the big mistakes outlined above may be the best approach to your investment into 1-ounce gold bars.