Buying and selling gold well comes down to three habits: know the purity and weight of what you’re trading, pay close attention to the premium over the spot price, and plan around the fact that the IRS taxes physical gold as a collectible at rates up to 28%. Everything else — dealer choice, storage, paperwork — flows from those three.
Purity, Weight, and Spot Price
Gold purity is measured two ways. Karat divides purity into 24 parts, so 24-karat gold is pure and 18-karat gold is 75% gold mixed with other metals. Fineness expresses the same idea in parts per thousand: investment-grade bullion is typically stamped .999 or .9999, meaning 99.9% or 99.99% pure.
The spot price is the current market rate for one troy ounce of raw gold on global commodity exchanges. It moves throughout the trading day and sits underneath every transaction. A troy ounce is about 31.1 grams, not the 28.35-gram standard ounce used for groceries. Mix those up and you’ll misprice your gold by roughly 10%.
Nobody pays spot for physical gold. Dealers add a premium to cover fabrication, distribution, and profit. Common one-ounce bullion coins like the American Gold Eagle or Canadian Maple Leaf usually run 5% to 6% over spot at retail. Bars generally carry lower premiums than coins because they cost less to produce.
To sanity-check any price, multiply weight in troy ounces by purity, then by the current spot price. A one-ounce coin stamped .999 at a $2,500 spot price contains about $2,497.50 in metal. If the dealer wants $2,700, you’re paying roughly an 8% premium. That quick calculation is the most useful skill in this market.
Choosing a Dealer You Can Trust
What separates a good dealer from a bad one is transparency. A good dealer discloses the premium per item instead of burying it in vague “handling charges,” posts the spot price alongside the selling price, and publishes a clear buyback policy. Most reputable dealers will repurchase what they sold you, usually at a small discount to spot.
Walk away from anyone who pressures you to buy immediately, claims inside knowledge about an imminent price spike, or pushes obscure numismatic coins with enormous markups over melt value. The Federal Trade Commission warns that precious metals scams often rely on manufactured urgency to keep buyers from comparing prices or checking facts.1Federal Trade Commission. Investment Scams
The Buying Process
Most purchases now happen online, though local coin shops still work for people who want to inspect coins in hand. Online, you create an account, choose a product, and lock in a price. That lock typically expires in 10 to 15 minutes because spot keeps moving; miss the window and the price resets.
Payment method matters. Wire transfers and bank ACH payments get the lowest price. Credit cards and digital payment services often carry a 3% to 4% surcharge to cover processing, which eats into your return before the gold even ships. On a $5,000 order, that’s $150 to $200 of avoidable cost.
Dealers who handle high-value transactions are subject to federal anti-money laundering rules and must maintain internal controls to spot suspicious activity.2eCFR. 31 CFR Part 1027 – Rules for Dealers in Precious Metals, Precious Stones, or Jewels Expect to show ID on larger purchases. If you pay more than $10,000 in cash, the dealer must file IRS Form 8300.3Internal Revenue Service. IRS Form 8300 Reference Guide “Cash” here includes currency, cashier’s checks under $10,000, and money orders, but not wire transfers, credit cards, or ACH.
Once payment clears, the dealer ships via insured carrier with signature required. Inspect the package for tampering before opening it, verify contents against the invoice, and keep that invoice permanently. It establishes your cost basis for when you eventually sell.
Coins or Bars
Government-minted bullion coins are the standard choice for individual buyers. The American Gold Eagle has been produced by the U.S. Mint since 1986 in one-ounce, half-ounce, quarter-ounce, and tenth-ounce sizes, each with a symbolic legal tender face value guaranteed by the government.4United States Mint. Bullion Coin Programs The American Gold Buffalo, also from the U.S. Mint, is 24-karat (.9999 fine) for buyers who want pure gold rather than the Eagle’s 22-karat alloy. Canadian Maple Leafs, South African Krugerrands, and Austrian Philharmonics round out the widely traded international coins.
Recognition matters because it affects resale. A well-known coin from a government mint sells faster and at a tighter spread than an obscure private-mint product.
Bars make sense when you’re buying larger quantities and want to minimize premiums. A 10-ounce bar from a recognized refiner like PAMP Suisse or Valcambi typically costs less per ounce than 10 individual one-ounce coins. The tradeoff is flexibility. If you need to liquidate $3,000 from a 10-ounce bar, you sell the whole bar. With individual coins, you sell exactly what you need.
Storing and Insuring What You Buy
There are three real options: home, a bank safe deposit box, or a professional bullion depository.
Home storage gives you immediate access and puts the entire security burden on you. A safe rated TL-15, meaning it resists tool attacks for at least 15 minutes under laboratory testing, is the minimum worth considering for meaningful holdings, and it should be bolted to the floor or wall. Standard homeowners insurance typically caps precious metals coverage at $1,000 to $2,500 total, well below what most gold buyers hold. To close the gap you’ll need a scheduled personal property rider listing each item with an appraisal or receipt, generally running 1% to 3% of insured value per year.
Bank safe deposit boxes offer better physical security but aren’t covered by FDIC insurance, and access is limited to bank hours. If you need your gold during a weekend banking crisis, exactly the scenario some buyers are preparing for, you can’t get to it.
Professional depositories charge annual fees but provide high-security vaults, full insurance, and the ability to sell directly from storage. The key distinction is segregated versus unallocated. Segregated storage identifies your specific bars or coins by serial number and stores them separately, so you own those exact items. Unallocated storage gives you a claim on a general pool. If the depository fails, unallocated holders may be treated as unsecured creditors rather than owners of specific metal. For long-term holdings, segregated storage is worth the higher fee.
Preparing to Sell
Before you contact a buyer, figure out exactly what you have. Check for hallmarks or purity stamps, typically on the reverse of coins, stamped into bars, or inside jewelry bands and on clasp tags. Common stamps include 14K, 18K, 24K, or fineness numbers like 585 (14-karat) and 750 (18-karat). Weigh everything in troy ounces; a gram scale works if you divide grams by 31.1035.
What you’ll receive depends heavily on what you’re selling. Investment-grade bullion coins and bars from recognized mints trade close to spot, often at a 1% to 3% discount. Scrap jewelry is another story. Pawn shops may offer 20% to 40% of melt value while dedicated gold refiners typically pay 60% to 80% of spot. A gold chain with $500 in melt value could bring anywhere from $100 at a pawn shop to $400 from a refiner. Getting multiple offers isn’t optional here; it’s where most of the money is.
For numismatic coins with collector value beyond their metal content, an independent appraisal from a qualified numismatist is worth the cost. A bullion dealer will pay you melt value and keep the collector premium for themselves.
The Selling Transaction
Professional buyers test your gold to confirm purity. The standard tool is a handheld X-ray fluorescence (XRF) analyzer, which reads composition in seconds without damaging the piece. Some buyers also use electronic conductivity testers, and for scrap jewelry the traditional acid test on a touchstone is still common. If a buyer skips testing and names a price by eye, that’s a warning.
Once purity and weight are confirmed, the buyer quotes a bid price per ounce. Know the current spot price and your minimum before the conversation starts. Bullion typically trades a small percentage below spot; scrap sits at a steeper discount. Don’t hesitate to walk away from a lowball offer.
You’ll need to show government-issued photo ID. Dealers must keep records of who they buy from to comply with federal record-keeping rules and to deter trafficking in stolen goods.2eCFR. 31 CFR Part 1027 – Rules for Dealers in Precious Metals, Precious Stones, or Jewels Smaller sales are often paid in immediate cash or check; larger ones by wire. Whatever the method, get a detailed receipt showing date, item descriptions, weights, purity, price per ounce, and total payment. You’ll need it at tax time.
How Gold Is Taxed
The IRS classifies physical gold as a collectible, and that classification carries a higher tax rate than most investments. Hold gold longer than a year, and profit is taxed at a maximum federal rate of 28%, compared with the 15% or 20% long-term capital gains rate on stocks and real estate.5Office of the Law Revision Counsel. 26 U.S. Code 1 – Tax Imposed If your marginal rate is below 28%, you pay your regular rate. Sell within a year of buying and the gain is taxed as ordinary income at your marginal rate, which can reach 37%.
High earners may also owe the 3.8% net investment income tax on gold profits, and state income tax can pile on. A profitable sale can easily face a combined bite above 30%.
Your cost basis is what you originally paid, including premiums and shipping. Taxable gain is sale price minus that basis. Dealers generally don’t report cost basis to the IRS, so the record-keeping is entirely on you. Keep every receipt, invoice, and shipping confirmation.
Dealer Reporting: Form 8300 and Form 1099-B
Two IRS forms come up. Form 8300 applies when a dealer receives more than $10,000 in cash from a buyer in a single transaction or in related transactions within a year.3Internal Revenue Service. IRS Form 8300 Reference Guide That’s a dealer reporting obligation, not an extra tax on you, but the IRS knows about the transaction.
Form 1099-B applies when you sell certain types and quantities of gold back to a dealer. Thresholds depend on the product: sales of more than 25 Krugerrand, Maple Leaf, or Mexican Onza gold coins trigger a 1099-B, as do gold bars of .995 fineness weighing one kilogram or more. Not every sale triggers a 1099-B, but every profitable sale is taxable regardless. Report the gain on Schedule D whether or not you receive a form.
Sales Tax on Purchases
Over 40 states now offer full or partial sales tax exemptions on investment-grade gold bullion and legal tender coins. Some states used to require minimum purchase thresholds, though many have dropped those limits. A handful of states still charge sales tax on gold, and local taxes can complicate matters even in exempt states. Check your state’s rules before ordering; paying sales tax at purchase is a cost you have to overcome before you break even.
Gold in a Self-Directed IRA
A self-directed IRA can hold physical gold with tax-advantaged treatment, but the rules are strict. The IRS generally treats gold as a collectible that cannot sit in an IRA. Buying one triggers an immediate taxable distribution equal to the purchase price, plus a 10% early withdrawal penalty if you’re under 59½.6Internal Revenue Service. Investments in Collectibles in Individually Directed Qualified Plan Accounts
Federal law carves out an exception for specific coins and bullion meeting minimum purity. Gold bullion must have a fineness at least equal to the minimum required for delivery on a regulated futures contract, which in practice means .995 or higher. U.S. Gold Eagles are specifically exempted despite being 22-karat (.9167 fine), as are U.S. Gold Buffalos and certain state-issued coins.7Office of the Law Revision Counsel. 26 U.S. Code 408 – Individual Retirement Accounts Canadian Maple Leafs and Austrian Philharmonics also qualify, thanks to their .9999 fineness.
The gold must be held by a qualified trustee or custodian, not by you. Storing IRA gold at home or in a personal safe deposit box is treated as a distribution, triggering income tax and potentially the 10% penalty.8Internal Revenue Service. Retirement Topics – Prohibited Transactions A self-directed IRA custodian arranges for an approved depository. Annual fees, including custodian, storage, and insurance charges, run higher than fees on a conventional IRA holding stocks or funds. Factor those ongoing costs into any decision.
Scams to Avoid
The two most common schemes are overpriced products and leveraged deals that quietly drain your money.
On the product side, watch for dealers steering you away from standard bullion and toward obscure “rare” or “limited edition” coins with premiums of 50% to 100% over melt. That markup is the dealer’s profit, not your return. Legitimate numismatic coins can justify premiums, but only when sold by specialists to knowledgeable collectors, not pitched over the phone to first-time buyers.
Leveraged or financed gold deals are a different trap. The Commodity Futures Trading Commission warns about companies that offer to sell gold on a payment plan or with borrowed money, often promising to store the metal overseas. These operators frequently use client funds to pay themselves commissions, leaving little actual gold backing the account. Warning signs include agreements that don’t identify where the physical metal is stored or which financial institution is providing the financing.9Commodity Futures Trading Commission. Precious Metals Fraud
The short version of protection: buy recognized bullion products from established dealers at transparent premiums, take physical delivery or use a reputable depository, and treat anyone who says “you need to act now” as someone you need to walk away from.