Guide to Buying Gold Online

  (approx reading time 8 min.)

There are two main types of precious metal ownership: a.) buying gold and silver for your personal possession and b.) buying gold stored with third party. Despite what some may think, buying gold online through trusted agent and storing it with them is, in many aspects  more advantageous, more convenient and safer than physical ownership, which is why we will discuss this type of ownership first. For the purpose of this tutorial we will use one of leading online agents as and example and to illustrate the concept.  Steps below will show you what is involved in buying gold and silver online and storing it with third party. We will guide you through the process of buying  precious metals from holding setup, to purchase and stock management in three easy steps:

Sign Up

In order to buy gold or silver online you need to create an account or in other words holding. Most of online services trading precious metals let you sign up for free account. If they don’t, it should raise first red flag. Investigate the service closely before providing personal information and initiating any financial transactions. Make sure that you fully understand the terms of service. Do you due diligence – it is your money that is at stake and there are many businesses that take advantage of high demand in precious metals sector. If you are not savvy or confident about the service or have any doubts  seek professional advice or at least stick to trusted and reputable companies which already proofed themselves like this one, which currently has over 18.000 customers for whom it secures over 1.8 billion USD in precious metals.

Setting up free account usually means providing basic personal information, choosing password and sometimes user name. In many cases, a proof of identity is required in a form of scanned photo-id as well as proof of residential address (gas bill, bank statement) which can be emailed, faxed or mailed.  Some services offer an option to open  sole  or  joined account. Additionally, this service also offers corporate account or one that you can open on behalf of a trust. This way you can preserve not only yours, but also your company’s purchasing power. It also offers to its UK and US customers  Gold and Silver Pension Plans.

Once your basic information is verified you can transfer funds to your holding and start buying and selling precious metals up to USD 150,000 (this limit is specific to the subject company). If you want to increase the limit or take advantage of advanced functionality like Metal to Metal Exchanges, Metal Payments, Currency to Currency Exchanges or link multiply bank accounts further verification of identity is required (certified copy of photo ID + original bank statement or utility bill, US and Canadian customers can verify their identity online using Equifax) To compare both, basic and full account click here.

After submitting required documents, you can expect account activation email in 24h – 48h (for email and fax submissions) . Once this is done, you can proceed to transferring funds into your holding…

Transfer funds

In most cases, funds must be present in your account in order to lock rate at which you wish to purchase the desired amount of gold or silver. What it means in practice, is that it is a good idea to transfer funds  to your holding as soon as you can (even if you do not intent to buy this very moment). This way you make sure that you are ready to buy when the time is right. Especially in today’s changing market  delay of one or two days (this is how long it usually take for wire transfer to be processed) can mean thousands of dollar difference. Once funds are credited to your holding, you will be notified by email.

To initiate the transfer you need to place an order in your holding’s online panel – specify amount and currency that you wish to add to your account. Once this is done you will receive details for wire transfer. These usually have to be made at your bank or financial institution in person. Most of the banks will charge you fee for wire transfers – find out beforehand what these charges will be to be able to correctly calculate your overhead costs. Once the wire transfer is completed (officially 2-3 days, usually around 24h) you can finally lock your rate and start buying gold and silver.

Buying Gold and Silver

First thing worth noting is the difference between SPOT PRICE and BUY RATE. To best illustrate this, go to this website. On the top right, you will see prices of gold, silver, palladium and platinum. The price that you see is the spot price which is lower than the actual buy rate. You can see the buy rate by clicking on the link under each set of prices or by clicking here. This rate is what you have to pay at the time of purchase. It is simply the spot rate + the agent’s sale margin. You will also notice that the buy rate depends on the amount of metal that you buy – the more you buy the less you pay. Some companies also charge commission when you sell your metal. This particular agent doesn’t (under regular circumstances – refer to agents customer agreement). Read more about gold and silver prices, rates and fees…

When you are ready to buy, you simply login to your account and place an order. You choose the metal, the amount and the location in which you want your metal to be stored. Choosing the right location is important because there is an annual or monthly fee which is charged for securing your precious metals. Some vaults are more expensive than the others. The amount varies depending on location and the type of metal that you buy (usually volume of silver will be more significant than gold etc.) Agent used as an example here, gives you a ‘hint’ during the process of purchase to which location is the most cost effective at any given time and for which metal.

Initializing the order will lock your rate for limited time (usually few minutes). You need to finalize your order within this time frame otherwise the rate will be adjusted to the live market value and the process will be reset. Placing an order, under normal circumstance, usually take less than a minute, so there is plenty of time.

Once you finalize your order, it usually take up to 24h before it shows in your holding,  but the rate is locked at the time of purchase. That’s it!

Selling Your Gold and Silver

Selling your silver and gold is as easy as buying it. All you need to do is login to your holding, select metal that you want to sell and currency in which you wish to receive funds from sale. Next what you need to do is  decide if you want the proceeds from sale be to credited back to your holding or withdrawn to your bank account.  You can sell portion or all of your metal.

What else can I do with my Gold and Silver

Goldmoney – agent who we used as an example in this tutorial offers some really neat advanced functionality for those who decide to undergo full verification of their account. These options greatly enhance flexibility of your account:

Metal to metal exchanges – allows you to convert precious metals and take advantage of constantly fluctuating metal to metal ratios. This is only available if you decide to store your metals with Goldmoney (as oppose to ordering physical delivery) Fees apply

Currency to Currency – Goldmoney allows easy exchanges between six currencies: US dollars, Euros, Canadian dollars, British pounds, Swiss francs and Japanese yen (not available to customers from Germany and USA)

Metal Payments -  Patented currency, allows you to make payments in metals to other customers electronically. This lets you make international payments to other Goldmoney customers at fraction of a cost of traditional bank transfer. To find out more click here