Buying gold has long been a trusted strategy, offering stability during uncertain times. Its enduring value makes it a popular choice for investors looking to diversify their portfolios. However, the gold market, like any industry, has its share of pitfalls. To ensure you get the gold you want without overpaying, here are three key things to know before making a purchase.

1. Know the Spot Price

The spot price is the current market price of gold per ounce, and it’s your starting point for any gold purchase. You can easily find the spot price on reputable financial websites or directly on most gold dealer platforms. Knowing this price helps you calculate a fair value for your purchase and avoid inflated costs. For example, if the spot price is $3,715 per ounce, use this as your baseline to evaluate any deal.

2. Understand Gold Purity

Not all gold is created equal. The purity of gold significantly affects its value. Purity is often listed as a percentage or in karats, with 24-karat gold being .9999 fine (99.99% pure). For instance:

• A 2025 1oz American Gold Buffalo is .9999 fine, meaning it’s nearly pure gold.
• A 1/10oz American Gold Eagle, however, is only 91.67% pure (.9167), as it contains other metals for durability.

To calculate the true value of less pure gold, multiply the spot price by the purity percentage. For example, with a spot price of $3,715:

• For a 1/10oz Gold Eagle: $3,715 × 0.9167 ÷ 10 = ~$340.55.

This gives you the base value of the gold content, which you can compare to the seller’s price.

3. Watch Out for Markups

Gold dealers add a markup to cover their costs and profit, but these markups vary widely. To assess whether a markup is reasonable, compare the seller’s price to the calculated value based on the spot price and purity. For example:

• A 1/10oz American Gold Eagle with a base value of ~$340 might be listed for $442.
• To find the markup: ($442 ÷ $340) ≈ 1.29, or a 29% markup.

Is a 29% markup worth it? That depends on your goals and budget. Typical markups range from 5% to 30%, so shop around and decide what premium you’re comfortable paying for the convenience, reputation, or quality of the seller.

Final Thoughts

Buying physical gold can be a smart investment, but it requires diligence. By knowing the spot price, checking purity, and evaluating markups, you can make informed decisions and avoid overpaying. Take your time to research and choose a reputable dealer that aligns with your financial goals.

This article is written by Grayson Shaw, and investment advisor at Christian Values Investing in Statesboro. If you would like to reach out to him, make an appointment here.