5 Hidden Costs Of Buying And Selling Gold

There are many reasons you should buy gold, particularly gold bullion. First, it’s good as money, and it will always be superior to any other currency, regardless of country. Second, it’s a tangible asset, and you can’t easily lose it because of flooding, fire, and earthquake. The value of an ounce of shattered gold is almost still equivalent to an ounce of gold bullion. Third, it’s easy to sell, which makes it as good as currency. And those are just three of the reasons.

However, many people who don’t believe in the usefulness of gold in trading and investing may counter all reasons in favor of gold. One of their favorites when detracting gold is the hidden costs of buying and selling gold. While they may have negative feelings and unreal opinions about gold, the hidden costs are true. If you want to know more about them, continue reading.

  • Scams

It’s unfortunate, but many people out there intentionally or unintentionally sell fake gold. And you can’t easily avoid them. You need to learn what true gold is and how to spot a fake. You can quickly lose hundreds of dollars with fake gold coins alone if you’re not careful.

And then there are some ‘services’ or ‘companies’ that will let you virtually own gold, particularly most that do the rollover scam. While there’s actual gold, you don’t own it. They have it, and you can’t get it even if you try. And the funny thing is that they’ll have the money as well. Don’t get into that kind of scam since you’ll regret it.

  • Tax

One of the biggest concerns of buying gold is tax. When you buy and collect gold, expect that there will be long-term capital gains taxes waiting for you. Compared to equities with a 15% capital gains tax, gold has 28%. Even if you sell gold for twice the amount you bought them, which can be a feat, you’ll only gain 72% of the profits, which other hidden costs can further reduce.

  • Depreciation

Yes, you read that right. The price or value of gold depreciates as well. While some individuals or organizations may tell you otherwise, gold’s value can trickle down from time to time. It’s not immune to price fluctuations. And gold dealers can testify to that.

Picture this, in August 2020, it peaked at US$2,063. However, months before that, it was at a low of US$1,474. While depreciation isn’t exactly a hidden cost, it can greatly reduce your profit to nothing if you sell yours at the wrong time or price.

  • Commissions

Everyone knows that gold is highly valuable. Regardless of form, whether used in earrings, rings, or other jewelry, people selling it will often try to gain some extra commission or profit from you. Aside from commissions, sales tax can also inflate the price of the gold you’ll buy.

Speaking of people and organizations selling gold, you have pawnshops as well. They can easily devalue your gold and buy yours at a very low price, which can easily make you lose money if you let them do that to you. You might want to ensure that you’ve achieved financial freedom before trading gold to avoid dealing with pawnshops.

  • Storage

Storing gold is another problem in itself. While it’s completely up to you if you want to spend money on gold storage, it can still be a pain that your gold is unprotected.

For one, robbers and burglars can easily take your gold away if you store them in your home. Another thing to worry about is the government. If you’ve done your research, you may have read or heard of Executive Order 6102. This order, signed by then US resident Franklin D. Roosevelt, prohibited the hoarding or storing of gold in the country. This order forced people to surrender some of their gold collection in exchange for money.

So to protect your gold against the government and malicious groups or individuals, it’s a good idea to store gold in a safe and secure place. However, if you do that, you’ll incur a recurring expense—another hidden cost of buying and selling gold. So weigh your options. But know that even with that kind of cost, it doesn’t change the fact that gold is still one of the best investments you can make.


There are hidden costs in buying, owning, and selling gold. While they seem unfair, it’s part of the game. Thankfully, most of these hidden costs are risks that you can mitigate. As long as you know what you’re doing, you can eliminate those hidden costs and profit from trading gold.

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