How To Buy Gold In Australia

Gold is valued by reference to its purity and weight. This is then multiplied by the gold spot price to calculate the value.

The ABC Bullion updates its live gold prices feed in real time, refreshing every five minutes. The feed runs 24 hours a day, allowing buyers and sellers the ability to monitor the market.

All that glitters is not necessarily gold, with manufacturers adding other metals and alloys to the mix.

Carats measure the proportion of gold relative to other metals. The number of carats is often stamped on the gold, ranging from zero to 24.

The higher the carat, the higher the proportion of gold compared to other metals, such as copper, silver or palladium. Pure, or effectively 100% gold, is 24 carats.

Here’s how purity varies by carat:

Despite Australia using the metric system, the weight of gold bullions is still measures in ounces. But to add a further layer of complexity, that ounce measurement isn’t an imperial ounce. Instead, it’s a ‘Troy’ ounce.

An imperial ounce is 28.35 grams, whereas a troy ounce is 31.1 grams—making a troy ounce heavier by almost 10%.

ABC Bullion group communications manager Shae Russell says that most bullion dealers assume people know the difference between troy and imperial ounces, and therefore will often only show prices ‘per ounce’.

Hence, it is important to know the correct weight measurements if you are interested in buying gold.

You can buy physical gold in the form of bullion, coins or jewellery from mints, precious metal dealers and banks.

1. Bullion bars

Gold bullion bars—often pictured stacked in bank vaults—can range in weight from one gram to over 10 kilograms. The bars are stamped with the purity level and weight.

Since 1978, the ABC Refinery in Victoria has been involved in refining and processing precious metals, and is the exclusive producer of the ABC Bullion product, sold through ABC Bullion.

ABC Bullion sells bullion bars and bullion minted tablets at sizes ranging from 1 gram to 400 troy ounces, the equivalent of just over 11kgs.

2. Gold coins

The Royal Australian Mint is the sole producer of Australia’s circulating coins and, since opening in 1965, has produced over 15 billion coins.

The three types of coins made at the Royal Australian Mint are common circulating coins (used for everyday cash transactions), collector coins (which have legal tender, but are produced to be used as gifts or collections), and investment coins.

Investment coins, which are produced in large quantities, are an inexpensive and easy way of entering the gold markets, the Royal Australian Mint explains on its website.

Gold coins typically have a lower gold content than bullion bars, making it a cheaper investment option. At the time of writing, the lowest-cost gold coin available from the Royal Australian Mint shop is marketed at $360, while the most expensive is $3750.

Other Australian mints also produce and sell non-circulating coins made of various metals, with pure gold coins available to purchase from the ABC Bullion, The Perth Mint, The Melbourne Mint and more.

As there is a strong international market in historic and unique coins as collectors items, these coins are typically sold at a premium compared to their gold content.

The 1933 “Double Eagle”, one of the last gold coins minted in the US, sold at auction last year for $18.9 million—equivalent to more than $29 million Australian dollars. It contains 0.9675 troy oz of gold.

3. Gold jewellery

Jewellery, especially antique pieces, is another avenue for buying gold. However, like gold coins, you will typically pay a mark-up relative to the content of the gold.

This mark-up is generally upwards of 20%, and can often be far higher depending on the manufacturer, which exists to cover the labour cost of the design, manufacturing and the retail margin.

You should be able to calculate this mark-up if you know the weight and carat, together with the current spot price of gold. That said, some retailers are reluctant to advertise the weight of jewellery for this reason.

For example, an 18-carat gold wedding ring from a luxury designer brand is retailing at $2600. If the current value of the gold content is $398, that means you’re paying a mark-up of over 6 times for the craftsmanship and retailer’s profit.

By comparison, you could buy an 18-carat gold wedding ring from a high street retailer for $580, a mark-up of about two-thirds on the underlying gold value of $398.

Jewellery also declines in its value upon purchase, making it a less stable investment. If you are looking to invest in jewellery, keep any sales documentation and proof of value as it will make it easier to resell in the future.

If you decide to buy physical gold, you’ll want to keep a few things in mind:

• Storage: Physical gold requires secure storage, preferably not in your home. It should be stored away from damp, corrosives and metals such as silver, which can tarnish it. Various mints around Australia offer storage, as do specialised vault companies; however, third-party storage will incur additional fees.
• Insurance: If you decide to store your gold at home, you should ensure that your home insurance policy covers this. Similarly, if you’re using a third-party storage facility, you should check they hold adequate insurance.
• Reliability: Whatever type of gold you’re looking to buy, it’s important to use a reputable dealer such as the Royal Australian Mint or ABC Refinery. If you’re looking to buy from an alternative source, make sure to do your research as to whether the seller is legitimate.
• Purity: The gold content in the bar, coin or jewellery determines its value. A high carat (21 carat or above) is preferred as it contains a higher proportion of gold and is less likely to tarnish. That said, the higher carat gold is less durable and requires more care to be taken so that it’s not scratched or damaged.

Buying gold in physical form can be difficult in terms of ensuring its authenticity, storing it securely and selling it on. Investing indirectly can provide investors with potential upside if gold prices rise, without the hassle of owning gold directly.

So what are the options for investing in gold? Here’s a quick overview:

• Buying gold and commodity funds: specialist commodities, mining and exchange-traded funds (ETFs) can provide you with exposure to gold. These range from funds investing in gold mining companies to ETFs that directly track the price of gold and other precious metals.
• Buying shares in gold mining companies: companies that mine gold have enjoyed bumper profits over the last year due to the rise in commodity prices. Mining companies include BHP Group, Rio Tinto and Newcrest Mining. They also provide a potential income for shareholders via their traditionally high dividend payouts.

As with other assets, any profit or capital gain made from investing in gold, whether directly or indirectly, will be potentially subject to capital gains tax (CGT). You may be required to pay capital gains tax if your investment grade bullion has a greater value at the time of sale compared to the value at the time of purchase, ABC Bullion explains.

If you’re looking to strike it rich with a modern-day gold rush, you’re probably in the wrong place.

Why? The answer lies in holding gold in times of economic volatility. Some investors view gold as a safe haven during stock market dips, along with a way of preserving wealth when inflation is high.

Yet gold prices can also be very volatile, meaning gold isn’t a safe investment. If you want some of that golden gleam in your investment portfolio, aim for it to occupy only a small percentage of your overall investments.

As with other investments, your investment in gold can go down as well as up, and you may not get your money back. If you are unsure as to the best option for your individual circumstances, you should seek financial advice.

Gold may offer investors a safe haven and a way of preserving wealth in a high inflation environment. As with shares, the price of gold is volatile, however it has delivered an increase in value over the last 30 years.

Depending on your preference and appetite for risk, you may choose to invest in physical gold, mining shares or gold-based funds and ETFs. However, it is important that any investment in gold forms part of a diversified portfolio.  And, as always, make sure it’s the right choice for you.