How to buy gold for wholesale prices?

By Altay Gursel | October 8, 2020

Buying gold from a wholesale or bulk pricing

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Everyone wants to buy gold from a wholesale price rather than a retail price. In my opinion, it is a very valid concern especially if you plan to buy gold in big amounts.

As a market rule, anything bought in bulk comes cheap, and gold is no exception. That said, there is only a certain amount of profit to be made from the sales transaction per unit gold. Therefore, custodians set their spread (price difference between buying and selling price) accordingly to maximize their profits. 

You may buy gold from the market price and count that as a fair price. But market price is usually not what most institutional investors are not willing to pay. There is really not a lot of things to do to buy gold from a wholesale price unless you buy a substantial amount.

1 – Buy substantial amounts

In order to get a good gold price buy substantial amounts. The investor who plans to buy gold bullions worth $500K will naturally have more bargaining power than an investor who brings in only $10K. If you believe you have a substantial amount of cash only then your effort for a wholesale price would be worthwhile.  

2 – Buy directly from the mints 

If you can try buying directly from the mints. The mints often don’t allow individuals to buy metals at wholesale prices. In certain instances, for example, the US Mint, you need to be an authorized buyer. In order to be an authorized buyer, you should be a company that is aligned with the very stringent financial and legal standards.

If this is not the case, find a reputable custodian that has completed billions of dollars transactions in the market. 

Local gold dealers are not the place to get a wholesale price for gold. These companies don’t sell a lot of gold. They need a larger profit margin to maintain their businesses. Also, smaller dealers usually don’t have a set of well-established processes. Therefore you may likely have an inconvenient purchasing experience with them. 

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3 – Verify the Gold Selling Counterparty is Legit

Even if you can guarantee a good price from a company, it doesn’t guarantee to be the best option for you. You should always verify the reputation of the counterparty you intend of buying gold. There are many counterfeit products from China that you may be having without knowing it.

Only deal with bonafide gold bullion products from government and private gold mints. These products are 100% original ones that are not counterfeit. Also, read the reviews of the gold investment company you plan to work with.

You want to invest in gold periodically throughout your life rather than at once. A good price doesn’t always guarantee the best customer support. Find a reputable gold company that you can work with for years. 

4 – Buy the most liquid gold 

Most small-scale investors buy coins which is a bad idea. Most coins come up with high premium markups. What that means you pay more for the unit weight of gold. 

Buying gold bullion the premium price you pay gets significantly smaller. When it comes to liquidity both coins and bars are liquid. Unless you buy some commemorative or antique coins you should be able to easily exchange when you want to.

However, the bigger size of physical gold is cheaper since it is easier to produce and requires less labor. One half a pound gold bar weighs 8 ounces, and it is cheaper than 8 gold coins weighs 1 oz. each.

If you plan to frequently exchange a portion of your investment, a larger size of metal may not be the best option for you. However, it is the best way to acquire gold paying the minimum premium.

5 – Buy with cash only

Using cash offers a lot of advantages over other payment methods. For instance, using a bank card may bring certain fees to the seller. In most cases, sellers add up these fees to your checkout price. Using cash you have the bargaining power since you remove any 3rd party (bank in this case) from the equation.

Similarly, if you use your IRA money to buy gold, you may not be getting an equally best offer as a cash transaction. I am not even bothering to mention Credit Card or PayPal payments since they will create additional charges sellers have to add up on your checkout price. They may or may not tell you about this fact that applies.  

6 – Always bargain the price

You have the money as a buyer. Assuming you want to buy a good amount of gold, you have the bargaining power. Have reasonable expectations yet ask your custodian the next cheaper price level.

For instance, you intend to buy 5 pounds of gold. Your custodian told you to get the best possible price. Ask your custodian if they could offer an even better price if you have purchased another pound of gold.

Don’t tell them you want to buy with cash even when you intend to. Only once you know you got the best possible price then use buying with cash as your bargaining tool. Most custodians should be able to give you another %4 discount for the cash payments. Cash payments should be able to be done with paper checks, bank wires, and ACH.

7 – Talk to the sales account manager

If you buy a good amount of gold you don’t only want to talk with a sales representative. Sales representatives have limited authority when it comes to pricing and discounts. Although they may want to give you a better price, they cannot since they are told not to do so.

Ask to talk with the sales account manager especially if your purchase is over $100K. I don’t know why but this number seems to be respected by most gold custodians. Ask for additional discounts to the account manager to get the most for your hard-earned money. 

Please note, precious metal prices change quickly. You may not be able to get the same price from the same gold company given you only a few hours ago. Ask the manager until when they can lock up the price for you? When would be the last time their current offer still counts? 

8 – Consider opening a precious metal IRA

If you intend to make large investments in precious metals you may consider setting up a Precious Metals IRA. Investors can also take benefits of bulk discounts with a precious metals IRA for their self-directed retirement account. 

After you have put your bulk order you are free to buy, exchange, or sell without having tax liabilities. The only exception is when you want to withdraw funds. Unless you meet certain rules set by the IRS your withdrawal would be subject to standard income tax charges.

Another benefit of setting up a Precious Metal IRA is that it helps us to directly transfer your larger metals to an off-site depository approved by the IRS. The ability to store your bulk buying of precious metals outside your home will minimize the risk of break-ins. 

9 – Don’t try to time the market

Timing the market is one of the biggest mistakes investors make. I want to buy gold when it is cheaper and sell when it is at the top. It is not only nearly impractical but also a very negative way of thinking about any investment.

If you buy gold today and sell it 2 years later with a profit you have achieved what most investors cannot. As it is said, most money in the markets made in the middle rather than on the edges.

10 – Don’t overthink

You may be overthinking having the best gold price wasting so much of your time. There is a very good chance gold prices will drop below today’s prices at some point in the future.

If you have a smarter buying strategy like dollar-cost averaging, you can make partial purchases once you see the price of gold is decreasing. Using such a strategy you keep buying not depending on what direction gold price moves. By doing so, you would probably not need to calculate the last few cents you can get from a gold custodian rather get a better market entry.

Conclusion

Although having a wholesale gold price important, it is not the only thing that would affect the profitability of your investment. The time you enter the market, your investment strategy, using dollar-cost averaging or not would make significant changes in your results.

Finally, I would work not with the company that offers the best price. I would rather work with the one that offers the best customer service, honest pricing, and after-sales support.

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