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Is buying gold from Banks a good decision?

buy gold decision

Banks existed even when the ancient civilizations were around. Humans always needed to protect their assets against theft, fires and other potential dangers. Nowadays, banks serve more goals than those we have just named it.

They provide convenient spending, give loans to businesses, mortgages to homebuyers, and offer interest to savers.

These are all good reasons why we may want to work with a bank. However, this doesn’t mean all the services offered by the traditional banking system are fine. There are some services banks offer yet may not be the best option for a retail investor.

Selling gold is one of these services. Banks are not gold dealers, custodians or precious metal investment companies. They sell gold to offer a convenient experience to retail investors buying precious metals.

A side note, banks in the US don't sell physical gold, at least not routinely. Some bigger banks may store gold bullion in their vaults as financial reserve or for the institutional investors.

Banks may also use gold to trade with the other banks but definitely not to directly sell to retail investors.

Assuming even if you can find a bank in the US that sells physical metals it may not be a good decision to make.

There are not a lot of large capital investors going to banks to buy gold, therefore they don’t sell a lot. For this reason only, buying gold from the banks would bring a high markup.

This is applicable to both physical precious metals like coins and bars, and gold derivative products like gold ETFs. If you want to buy a coin or two keep aside you can visit your local coin dealer.

However, if you plan to invest in gold either with cash or from your IRA you need a more professional solution.

Here are a few reasons why buying gold from a bank is not a good idea.

  • Higher premiums when buying precious metals, therefore it is very hard to get a fair price.
  • Most banks don’t hold physical precious metals, you will need to contact them in advance to verify if they have your selected item or precious metals in their inventory.
  • Banks don't buy back precious metals since they are not licensed professionals to assess the quality of the items you are selling back.
  • Most banks sell metals with cash, and will not accept a credit card, or other payment method you may want to use. 
  • They don’t sell online, and most probably you will need to visit the bank location in order to buy from them.
  • You need to plan safe transport of purchased metals back to your home or your storage facility.
  • They will not deliver your metals to your home or selected depository location.

There are really many reasons why buying gold or any other precious metals from banks is not a good idea.

Since selling precious metals is not one of banks’ primary operational areas, they do everything to maximize profits, not caring if customers would purchase metals from them or not.

If you buy gold and store it in bank’s safety boxes, you are doomed to lose your assets. I have mentioned it in my earlier post about depository storages. I also recommend checking out my other post explaining the most common mistakes investing in precious metals

If you want to buy gold for investment purposes you need to plan everything in advance. The amount of gold, the form of gold, storage options should be considered to maximize your chances of profiting from your investment.

Investing in anything is a risky thing by itself. We really don’t want to bring in other risks sourced from a wrong decision that we could make right at the first place.

If we look from a larger perspective banks sell gold since they may offer gold derivative products like gold ETFs or gold mining stocks.

Is this something we can work with a bank to invest?

Yes, you can work with a bank to invest in gold ETFs.

However, gold ETF is nothing but a piece of paper, and will not guarantee physical gold ownership.

Investing in a gold ETF, the ETF has the money and you have a piece of paper promising to pay you back.

Also, derivative products are not typically exchanged on international markets, nor even they are accepted. 

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