Physical precious metals guide: ownership, costs, risks, and records

What to take away

Physical precious metals are gold, silver, platinum, or palladium. They are held as coins, rounds, or bars. They can be in your hands or under a written custody agreement.

What one troy ounce actually buys

Bullion sells on fine-metal content. A one-troy-ounce gold coin contains one troy ounce of gold even when alloyed with copper, so the coin weighs more than an ounce. A bar stamped 100 g and .9999 fine holds 99.99 g of gold.

Fineness is the purity fraction. Weight times fineness gives fine content, and that is the number every quote is really about.

Numismatic coins are a different market. Rarity, grade, provenance, and certification set the price, and it can move independently of metal. A buyer who wants metal exposure should treat a collectible upgrade as a second purchase with its own resale spread.

Price has four layers

Spot is a wholesale reference for metal. It is not the number on your invoice, and it is not the number you get back when you sell. Four figures sit between the two:

Subtract net sale proceeds from total acquisition cost. That gap is the round-trip spread, and metal has to climb past it before the position is even.

A 1 oz American Gold Eagle typically buys back at about 1% to 3% below spot from a large dealer. A generic 1 oz silver round can buy back at 5% to 10% below spot.

Premiums and buyback spreads widen when retail demand spikes and supply thins. The same coin can carry a very different premium in March and September.

What the sales call sounds like

The CFTC customer advisory on precious-metals sales practices states that precious-metals dealers are not licensed or registered to give investment or trading advice. They are commission-paid salespeople.

The advisory describes one-time and monthly fees that customers did not expect, and customers who reported losing half their investment to those fees. It also describes collectible-coin holders pushed back to the same dealer, bought out at a fraction of what they paid. Those are sales-practice findings, not a verdict on any product.

Physical ownership moves the risk

Metal can fall in price. It can also be stolen, lost, damaged, counterfeited, or delivered late.

FINRA's guidance on buying physical precious metals lists price loss, storage charges, financed purchases, high-pressure sales, and incomplete fee disclosure. It also notes that directly held metal is not a registered security and carries no SIPC coverage.

None of that makes every purchase wrong. It means the protections are different from a brokerage account.

Choose a custody model

Personal possession. You control access. You also carry the concealment, safe quality, fire, and water problems. You carry the household-access problems too. Home policies often cap precious-metals coverage, so get the limit in writing.

Many policies cap theft of precious metals at a low figure, commonly $1,000 to $2,500, unless you add a scheduled rider. A rider typically costs about 0.5% to 1.5% of the insured value per year.

Bank safe-deposit box. Access follows branch hours, identification, and the deposit contract. The contents are not a bank deposit. Ask what happens to access after death, incapacity, or a branch closure. A small box typically costs about $50 to $300 a year. The bank does not insure the contents, so buy your own policy.

Private vault or dealer storage. Ask whether the metal is allocated to you, segregated from other customers, identified by serial or inventory record, independently audited, and insured. Ask how it is separated from the operator's own assets in insolvency. A monthly statement is not an audit and not an inspection.

Allocated, segregated retail storage typically runs about 0.5% to 1.0% of metal value per year, often with a minimum monthly fee. Insurance is usually separate and can add about 0.1% to 0.5% of value per year. Operators such as Brink's and Delaware Depository publish terms.

Whatever the model, a written purchase policy keeps the decision out of the sales call.

Verify before money moves

Compare quotes on identical product, quantity, payment method, and delivery terms. Write down the spot reference and the minute you saw it. Walk away from guaranteed returns, countdown pricing, claims that risk does not exist, and pressure to move retirement funds today.

At receipt, photograph the sealed package, label, contents, and markings. Then photograph the weight. Use non-destructive checks first: weight against the stated figure, dimensions with calipers, a magnet, and a conductivity meter.

XRF confirms surface composition, not the inside of a bar. If results conflict, stop and get qualified examination before you open packaging or touch a collectible surface.

Records and reporting

In the United States, dealers file Form 1099-B for certain sales and Form 8300 for large cash transactions.

The 1099-B trigger is a product list and quantity, not a dollar figure. The current list includes 1 oz American Gold Eagles, 1 oz American Gold Buffalos, and 1 oz Platinum Eagles in any quantity, and 90% silver coins sold in $1,000 face-value lots. Form 8300 applies when a trade involves more than $10,000 in cash.

The thresholds and the products they cover are set by the IRS, and they change. Confirm the current rules with a CPA or tax attorney before you sell, and never split a transaction to stay under a reporting line.

Selling and exit

Where you sell matters as much as where you buy. Large online dealers such as APMEX and JM Bullion publish buyback prices. Local coin shops and auction houses are other routes.

A large online dealer typically pays about 1% to 3% under spot for a 1 oz American Gold Eagle, and about 5% to 10% under spot for a generic 1 oz silver round.

Timing moves the number. Buyback discounts widen when retail demand spikes and dealers are long on inventory. Get two firm quotes on the same day, and compare each against the spot price you record at the minute of the quote. Sell into calm markets.

A disciplined sequence

Common questions

Is bullion guaranteed to rise with inflation?

No. Metal prices respond to rates, currency, industrial demand, and positioning, and they have fallen in inflationary periods. Treat it as one asset with its own cycle, not a hedge that always works.

Is spot the price I will pay?

Almost never. Retail products carry fabrication, distribution, dealer margin, shipping, and insurance. Resale quotes can land below spot when a dealer needs room to resell.

Does a government mint mark guarantee the dealer?

No. A genuine coin says nothing about the seller, the price, the delivery promise, or the storage arrangement. Verify the seller separately from the product.

Should bullion be cleaned?

Usually not. Cleaning removes surface metal and can destroy collectible value. Store it in the packaging it arrived in and handle it by the edges.