How to Buy Gold Direct

There are now many sophisticated ways to invest in gold, from gold-backed electronic accounts, to gold futures, to exchange-traded bullion on the stock market. Still, for some, there is nothing quite as satisfying and secure as buying real gold. You can buy gold---in nugget form or in bars or coins---directly from mines, from online sources, or from local dealers.

Things You'll Need

• Post office box or secure location for receiving shipments
• Secure storage facility

Instructions

Buying Gold Nuggets

1. Locate several reputable, convenient mines. A paper by the U.S. Geological Survey (USGS) identifies California, Nevada, South Dakota, and Alaska as major mining states. Locate mines closest to you, and contact them to determine whether they sell gold directly.

2. Consider buying online. A number of websites compile mines that sell gold directly. Pay attention to sites specializing in Australian gold. Because Australia is the second-largest gold producer in the world behind China, according to a Mining Weekly article, prices there may be able to compete with and even edge out the cost of U.S. gold.

3. Identify the nugget you desire. Note that each nugget is valued on its own terms, with the shape and overall appearance of each specimen giving it added or detracted value. The primary factor in the gold nugget market is the rarity in relation to size.

4. Perform a gravity test on the nugget to determine gold content. This is the most important element in ensuring that you do not get defrauded. First weigh the nugget. Then, put a container of water on a scale and zero the scale. Submerge the nugget, and make a note of the weight.

5. Plug the numbers into the specific gravity test equation: 3.1 x the weight in water, minus 1.9 x the weight in air. (If the nugget weighed 15 grams dry, and the zeroed scale registered 20 grams when the nugget was in the water, the equation would be 3.1(10 gram wet nugget) - 1.9(15 gram dry nugget) = 31 - 28.5 = 2.5 grams of gold contained in nugget).

6. Buy the nugget if you have determined the gold to be genuine.

7. Find a secure place to store your gold, such as a depository or a safe deposit box in a low-risk, reputable bank or other financial institution.

Buying Gold Bars or Coins

1. Locate a reputable online or local dealer. Look for a dealer who has been in business for a while. If it is an online company, make sure it has complete addresses and other contact information displayed. Companies authorized by the U.S. Mint are a good bet.

2. Buy either bars or coins, depending on how you wish to store or transport them.

3. Find a secure place to store your gold, such as a depository or a safe deposit box in a low-risk, reputable bank or other financial institution.

Tips & Warnings

• Buying gold nuggets direct is more subject to regional considerations---such as proximity to a mine and transportation---than buying bullion or gold stocks.

• The price per ounce actually tends to increase when you buy nuggets directly from the mine. Larger intact nuggets are more rare, and therefore more valuable, than smaller nuggets.

• Verify the reputation of the mine by talking to other investors or looking at review sites.

References

• USGS: Propecting for gold in the U.S.
• Gold nuggets: specific gravity test

Resources

• Gold Nuggets: Rarity chart
• Mining Weekly: Australia ousts U.S. for second biggest gold producer