How to Buy Gold in NZ: The Ultimate Investors Guide
This post was originally published on Jul 24, 2010, and last updated on Jul 20, 2022.
How to Buy Gold in NZ
Precious metals are tangible assets you can physically hold, unlike other asset classes such as company shares, bonds, or cryptocurrencies which are digital or paper representations of something. Across precious metals, gold and silver are the most popular in terms of investment and collectables. In particular, gold is seen as a key asset by individual and institutional investors looking to diversify their investment portfolios. Gold is viewed as an effective hedge against inflation as it historically performed well in holding its value during political uncertainty, economic crises, and disruptive global events. To illustrate this, the price of gold rose from NZD 1,252.69 at the peak of the Global Financial Crisis in mid-September 2008 to NZD 1,737.43 two years later - an increase of almost 39 per cent at a time when many other assets were barely recovering.
Many investors view metals as a better way to protect your money as they don’t require a central party, i.e. the government, to authorize. The value of gold, silver and other precious metals such as platinum is recognized globally. And they have an extensive history spanning centuries of being recognized as a store of value. In this post, we’ll provide an all-encompassing guide on how to buy gold in New Zealand, including an explanation of the types of gold you can buy, your storage options, how gold quality is determined and valued, and when to buy precious metals.
Table of Contents
How to Buy Gold in NZ (5 Easy Steps) Checklist For Buying Precious Metals The History of Precious Metals as a Commodity What is Gold Purity, and Why Does it Matter? Analysing Gold Quality The Colours of Gold Jewellery Determining the Value of Gold Gold Supply and Demand When is the Best Time to Buy Gold and Silver? The Different Types of Investment Gold to Buy Buying Silver and Other Precious Metals How to Store Precious Metals Precious Metal Terms to Know 7 Tips For Beginners Investing in Gold and Silver Resources for Learning More About Gold Investing
How to Buy Gold in New Zealand in 5 Easy Steps
- Decide on your budget: It helps to know how much you want to invest, as this makes it easier to select the products you want.
- Select your product: Choose from a wide selection of bullion products sourced from the world’s leading mints and refineries, as well as our own MyGold products.
- Contact us: Place an order online or call us. The team then confirms the price and sends you an invoice and payment instructions.
- Payment: You can pay by bank transfer or Eftpos. Your order is processed when funds clear.
- Delivery: Done! Depending on what you arranged with us, your gold is delivered or securely stored.
Investor's Checklist For Buying Gold and Silver
The History of Precious Metals as a Commodity
Long before we started using fiat currencies such as NZD, USD etc., people traded using gold and silver. Gold and silver coins had value linked to the metal itself and were recognized by almost everyone. Artefacts, beads and jewelry made from gold have been found in civilizations spanning the world. In fact, gold is one of the earliest recorded metals used by humans dating back to some found in ancient Spanish caves from 40,000 BC! It’s even mentioned frequently in various religious texts. The use of metals as a trading commodity and store of wealth is traced back to Ancient Egypt and Mesopotamian shekels around 3,000 BC. In China, bronze was used to form some of the earliest known “coins” around 2,500 years ago. They weren’t round in shape like the coins we think of today but were shaped in the form of spades and knives. The manufacture of coins appeared across China, India, and the Mediterranean independently. The switch from commodities such as cowrie shells is believed to be a result of the properties of metal - durable, portable, and divisible. Modern coins are thought to descend from the gold, silver, bronze, and electrum ones used in Lydia in western Asia Minor around 700 BC. The first Holy Roman Emperor, Charles the Great (Charlemagne), issued the silver penny as the first “standard coin”. A standard coin is one whose intrinsic value equaled its face value. This silver coin was the only denomination used in Western Europe for almost 500 years. It wasn’t until the seventh century that paper currency representing precious metals began to be used to avoid the weight associated with carrying metal coins, and the majority of coins themselves were stored away safely. Gold has long been considered a tradeable commodity and a safe currency.
What is Gold Purity, and Why Does it Matter?
Gold doesn’t have a uniform price - its value depends on its state, what work went into manufacturing it from its raw form, and its purity level. Naturally, gold in its raw form is often found amongst rocks. Its value is meager in this state - roughly NZD 30-100 per ounce (c. 28 grams). Once the gold is freed from the rock, its value increases slightly. Now, a refining process takes place using chemicals and heat.
Gold Jewelry Purity
If gold is used to make jewelry, other metals - alloys - are added to refined gold to increase its strength, which is where the term carat (karat) comes in. The higher the carat or purity of gold jewelry, the higher its value. 24-carat gold, or pure gold, is the highest quality gold, so it is worth the most in value but is much softer than lower carats, limiting its uses. Carats are calculated as a percentage of 24. For example, to determine how much gold is in 10-carat gold, divide ten by 24, then multiply by 100 to get 41.7%. Nine-carat gold is very strong because it contains 37.5% gold and 62.5% other metals - you’ll likely find 375 stamped on nine-carat gold for this reason. 18-carat gold is of higher quality, containing 75% gold and 25% alloys, and often stamped with 750. Both are commonly used in gold jewelry because the alloys make them strong enough to handle everyday wear and tear.
The Colors of Gold Jewelry
- Yellow gold is 24-carat gold mixed with metals like copper, silver, and zinc. It is the most popular color choice used in jewelry.
- White gold is yellow gold mixed with another metal such as nickel, silver, or palladium.
- Rose gold is 24-carat gold mixed with metals such as copper and zinc, tinting it pink.
Gold Bullion Purity
All gold bullion, both coins and bars, sold by MyGold is of the highest quality - 99.99% pure, 24-carat fine gold. We’re an authorized distributor of bullion produced by The Perth Mint, the Royal Canadian Mint, the Royal Mint, and PAMP (Produits Artistiques Métaux Précieux).
Analyzing Gold Quality and Spotting Fake Gold
There are many different methods for testing if something is made of fake gold or real gold and, if it is real, checking its purity. Here are some quick and easy ways to test your gold items at home, as well as some of the professional methods used by MyGold.
One of the first things to do when assessing the quality of gold, particularly gold jewelry, is to look for hallmarks. Hallmarks are stamps used to identify the manufacturer, the date, the Assay Office, or the quality (fineness) of precious metals. Hallmarks of the carat system commonly include 9k, 10k, 14k, 18k, and 22k (24k is pure gold). The millesimal fineness system uses stamps such as 375, 417, 585, 750, 916, and 999. Manufacturers' hallmarks (also known as marker’s marks) include an acronym or the full name, and, additionally, you’ll see symbols representing the Assay Office which tested the gold article.
Gold isn’t magnetic, so if a magnet sticks to your “gold” item, it indicates that it isn’t real gold but is likely plated. This method isn’t foolproof by a long shot but is helpful as a quick test on something small like jewelry.
X-ray fluorescence, or XRF, is a non-destructive method used to determine the elemental composition of something. An XRF spectrometer measures the secondary X-ray fluorescence emitted from a material after it has been subjected to an incoming, or primary, X-ray. Based on the difference in energy, the machine can identify different elements and their concentrations.
The GoldScreenBox produced by Goldanalytix is an industry-leading, non-destructive device for testing precious metals up to 50 grams. It measures eddy currents which are loops of energy formed around an object in a magnetic field. This device measures the conductivity of metal at surface level and a depth of up to 650 µm within seconds. The main benefit of this tester is that it can read through gold or silver plated items to determine their true composition.
For testing larger items or antiques, ultrasonic methods measure how long a wave of sound takes to move through the object or be deflected. Ultrasound tests are perfect for determining a metal item's composition and spotting flaws such as air pockets in a gold bar.
Determining the Price of Gold
Now that you understand the quality of gold, how does this transpose into its value? Gold is fascinating because it has been prized for millennia by many civilizations, with its primary use cases being decoration and a store of value.
“Gold's value is ultimately a social construction: it is valuable because we all agree it has been and will be in the future.” Carla Tardi - Investopedia.
Multiple factors contribute to the price of gold with supply and demand, the reserves held in central banks, and the value of the US dollar being some key ones.
Gold Supply and Demand
The supply of gold is somewhat static as only a finite amount exists, and extraction and production are limited by how much is easily accessible to miners and gold hunters. It's becoming increasingly more challenging for miners to obtain, driving up gold mining production costs. On the other hand, demand for gold fluctuates regularly, directly impacting prices. As demand increases, so does the price of gold; when demand lessens, the price lowers. Jewelry consumption drives almost half the global demand for gold, with the predominant markets being China and India. Geopolitical events such as Russia’s 2022 invasion of Ukraine increase the demand for gold as investors seek safe havens. The growing use of gold in electronics increases the technology sector's demand. Finally, as central banks add more and more gold to their reserves, this also pushes the price up. These aspects contribute to helping determine the current price of gold. Predicting the future price of gold is more complicated and depends on the above, global currency fluctuations, and other factors. For more info, see this article that covers estimating the future value of gold in more detail.
Gold Spot Price Versus Retail Price
It is essential to recognize the difference between a market's spot price and the retail price you pay for a precious metal when buying it. The difference in the two prices comes down to factors such as production and shipping costs, testing, overheads, and the quality of the gold in question compared to the pure, 24-carat gold that the spot price reflects. Generally speaking, only central banks purchase gold at prices almost matching the market’s spot rate, and even they have to add in security and transportation costs. The best way to think of spot prices is as a benchmark for pricing a single troy ounce of .999 gold. Check out our historical and current gold price charts to learn more.
Geopolitical and Economic Factors
As mentioned earlier, geopolitical factors can influence the demand for gold. This point is clearly demonstrated in the graph below, which shows significant peaks and troughs in gold prices over the past 50 years. Each of which precedes or follows significant global events.
When is the Best Time to Buy Gold and Silver?
Traditionally, the value of gold has an inverse relationship with equities prices. As prices in the stock markets dip, the value of gold and other precious metals tends to increase, and vice versa to a certain extent. Many private and institutional investors turn to precious metals for financial stability during global recessions and economic pullbacks. The effects of COVID-19, high inflation rates, and the Russia-Ukraine war are currently seen across various markets. During times of financial crisis, the value of precious metals may initially dip as people start selling some of their holdings to increase their cash flow. However, once the situation stabilizes, prices tend to rise steadily as more and more investors look to buy again. All financial markets naturally have cycles of rises and falls; bear markets follow bull markets and vice versa. As with most investment assets, the best time to buy is usually when they're losing value - in other words, "buying the dip." Goldsilver.com crunched some numbers, analyzing the average gain and loss for both gold and silver between 1975 and 2021. From their research, they discovered that the best time of the year to buy gold is usually January, March, April, June, and July. These months are when gold has historically had the lowest price. The best time of the year to buy silver is usually March, June, and October. Of course, trying to time the markets perfectly is easier in theory and can be very stressful. Remember that the future is unpredictable, and we can only infer something based on historical data. That's one of the reasons many investors prefer to purchase at regular intervals regardless of market prices.
The Different Types of Investment Gold to Buy
Choosing the best form of gold to buy can initially seem overwhelming given the array of shapes, uses, and styles. The first question to ask yourself is whether you are looking to buy gold as a collectable or to buy gold as an investment. When thinking of gold as a collectable, two primary forms come to mind; jewelry and certain coins. For private investors, physical gold - coins and bars (ingots) - is the best choice. Other gold investment options include digital gold, a gold ETF, gold stock, gold futures etc.
Gold coins are the most straightforward investment form of gold regarding practical aspects such as trading and storing. Because of this, many investors consider gold coins the best way to invest in precious metals. Generally, they come with a standard issuance for dimensions, gold quality, and value. They contain hallmarks allowing the owner to identify them quickly and can be traded easily in many countries. When it comes to collectable coins, value's determined by the worth of their metal, plus the rarity and desirability of the coin itself. There are many minters of gold coins worldwide, so I'll only touch on a few prominent mints and coins in this section. Krugerrands, South African bullion gold, have been a popular form of premium quality consumer gold for decades. The Krugerrand made up almost 90 per cent of the global coin market by 1980 despite being banned in several Western countries for a few decades. Currently, there are around 46 million ounces of gold across the entire supply of these coins. They are still considered legal tender; however, their true value lies in being a collectable 22-carat gold bullion coin. Each year, the amount produced differs, adding extra sentimental and monetary value to Krugerrands from specific years. The most valuable coin in the world is the United States Mint's 1933 Saint-Gaudens Double Eagle $20 gold coin, with one selling for over USD 18.8 million in 2021! The seller originally purchased the Double Eagle in 2002 for USD 7.8 million. The first recorded sale of this particular coin was in 1937 for USD 500.
A renowned gold coin producer is the Perth Mint, Australia's longest-running minter, famous for the exquisitely high-quality six-nines fine gold they produce. The Perth Mint produces top-rated lines of coins such as the Kangaroo Gold and the Australian Lunar Gold. Perhaps the rarest and most valuable set is their Australian Trilogy featuring a .9995 platinum Kangaroo, 22-carat rose gold Koala, and a .9999 gold Kookaburra coin, each set with a colored diamond, which sold for AUD 1.8 million (almost NZD 2 million). MyGold has a stunning range of investment and collectable gold coins, including Perth Mint, Royal Canadian Mint, United States Mint, Austrian Mint, Royal Mint products, and more.
Cast Gold Bars
Cast bars are an excellent option for gold bullion investment as they have lower production costs than minted bars or coins, resulting in lower prices for the same weight of metal. Casting involves pouring melted gold into casts or molds. Once cooled, they're ready. There are no acid baths, polishing or other refinement methods necessary. With cast bars, no two are the same as the pouring process naturally creates irregularities and surface blemishes. MyGold has a range of cast bars available, including ABC, Perth Mint, PAMP Suisse, and MyGold's own.
Minted Gold Bars
Minted bars are essentially refined cast bars. The casting step was traditionally done via pouring into molds or, more likely nowadays, by passing a long strip of gold through a continuous casting machine. These bars are then put through various refining methods to wash, polish, and perfect them and remove blemishes. They are also pressed to include intricate designs. Minted gold bars usually come specially packaged and may include a serial number and certificate identifying them. It's essential to maintain the packaging's original condition and not open it to fully preserve the bar's value. MyGold has a range of minted bars available, including Canadian Mint, Perth Mint, and PAMP Suisse. Watch a video here
Buying Silver Bullion and Other Precious Metals
Of course, it's not only gold bullion that MyGold buys and sells; we also have an extensive range of silver and platinum products. Including precious metals in your overall investment portfolio is wise, and you can further diversify by choosing a mixture of gold, silver, platinum, and other metals. Silver is a very affordable precious metal available in many forms and with plenty of industrial uses. When it comes to investing in silver, bullion in the form of bars or coins is the best way to go, although ETFs and mining company stocks are other options. Platinum has many industrial uses, which greatly affects its value. When in high demand, prices soar and vice versa. Platinum is also scarce, with around 20 times less platinum available than gold. Platinum jewelry is also becoming more popular. Once again, silver and, to a lesser degree, platinum are recognized globally, and both are independent of centralized third parties like governments. It's worth mentioning that all precious metal values behave differently, with silver being one of the most volatile. To illustrate this, the value of silver rose 400% in the twenty years from Jan 2002 to Jan 2022, the value of platinum dropped nearly 40%, and the value of gold dropped almost 17% (when calculating this, I made no adjustment for inflation). As you can see, it's possible to make ridiculous gains with precious metals, but, as with any investment, you must realize prices can dip too.
How to Store Precious Metals
Buying gold and other precious metals is the easy part. The more difficult decision you have to make is how to store your gold and silver safely. There are two viable options; store the gold yourself, or use a trusted gold storage service provider. There are pros and cons to each, so you're welcome to chat with the MyGold team to get a recommendation on the best choice for your situation.
Storing Gold At Home
If you're going to store your gold at home, I highly recommend you consider purchasing a safe. Using a top-quality safe will protect your precious metals from damage caused by something like a house fire as well as from theft. MyGold recommends Chubb Safes, which offers a range of safes you can install at home or elsewhere. They range in price from around NZD 3,000 to over 15,000, depending on factors such as size, security grade, cash rating, and the type of protection they offer. Of course, you can store your bullion in your home without a safe, but it does present considerable risk. One of the most critical factors to consider when storing precious metals at home is whether your standard contents insurance policy covers it or not, as many either don't or only provide minimal cover. You can contact the MyGold team to discuss suitable safes and insurance solutions for your situation.
Custodial Storage For Gold
Certain banks in New Zealand, such as Westpac and third-party vault providers, can rent or sell safe deposit boxes to you. The benefit is that these providers will have additional security features that go well above and beyond what is available in a standard home. Of course, if you choose a bank-provided option, you need to realize that the government can technically seize control of those holdings - the primary reason we'd advise a non-bank alternative. MyGold offers fully insured custodial storage in Auckland for high-net-worth clients at competitive rates. Contact the team to find out more.
Precious Metal Terms to Know
- Annealing - a process of softening precious metals with heat.
- Ag - the chemical symbol for silver.
- Au - the chemical symbol for gold .
- Bullion - refers to physical, high-purity precious metals, usually in the form of bars or coins.
- Carat (Karat = American English) - is a term used in the measurement of gold purity. Calculated as a percentage of 24, with 24-carat gold being pure gold.
- Electroplate - a process used to plate another metal with gold for jewelry.
- Gold standard - the system by which paper money was once interchangeable with gold.
- Ingot - (aka bar) is a block of metal that is usually rectangular.
- London Fixing Price - the global benchmark price of precious metals and derivatives set by London Gold Market Fixing Ltd.
- Numismatics - refers to the study or collection of coins, banknotes, and medals, and sometimes to the study of money in general. If you're interested in learning more, check out The Royal Numismatic Society of New Zealand.
- Precious metal - commonly refers to gold, silver, platinum, and palladium but also includes any other metal valued for properties such as rarity, strength, corrosion resistance, and beauty.
- Proof coin - a coin of the finest quality. Often, proofs are struck twice or more with a press die to produce a frosted design on a mirror-like background and come in a protective capsule with an authenticity certificate.
- Pt - the chemical symbol for platinum.
- Purity - a rating given to metal based on its composition. See this section for more info.
- Refining - purification processes that remove impurities and extract metals from mined rock/ore or other masses.
- Smelting - is a common refinement method that uses heat and chemicals to remove precious metals from ore.
- Sovereign - a government-issued gold coin, the most famous of which is the British Sovereign. The first gold sovereign was struck on 28th October 1489, and only two are in private collections.
- Troy ounce - one of the most common units of measurement used in precious metals and is part of the troy weights system. A troy ounce weighs 31.103 grams compared to the imperial ounce's 26.5 grams. Learn more about troy ounces here.
7 Tips For Beginners Investing in Precious Metals
- Buy Gold and Silver - both are globally recognized stores of value. Unless you have the experience and sufficient knowledge of other precious metals like lithium, iridium, osmium, and palladium, etc., your safest bet is to stick to gold and silver.
- Choose Physical Gold - Always aim to directly own the precious metals you invest in. Avoid proxy investing via ETFs and pool titles unless you fully understand their implications.
- Buy Bullion - Bullion coins and bars are the best form of precious metals for investment as they're usually a standard issuance and, therefore, globally recognized. And ensure you only purchase from reputable dealers.
- Never Borrow to Invest - Putting yourself into debt for an investment is not wise. You want your assets to be obligation-free.
- Store Securely - Don't put all your eggs in one basket. Store your bullion across multiple, secure locations to minimize the risk of loss.
- Stay Legal - Report your investment profits or losses in your tax returns and only buy from reputable dealers.
- Have a Long-Term Strategy - Use a long-term strategy to build your holdings over time - aim for at least 5-10% of your portfolio to consist of metals. Dollar-Cost Averaging involves purchasing a set amount at regular intervals regardless of market prices and is an effective strategy for maximizing profits.
- Extra Tip: Silver - Silver may be the answer if you are more interested in a more short-medium-term strategy. Silver's value is more volatile than gold's, which may appeal to those with a slightly higher risk appetite.
Visit this post for more detailed info on precious metal investing.
Resources for Learning More About Gold Investing
- Investopedia - https://www.investopedia.com/ Learn investing essentials, fundamental and technical analysis, portfolio management, and more.
- World Gold Council - https://www.gold.org/goldhub A wealth of research data and market insight for professional investors.
- MacroTrends - https://www.macrotrends.net/ This is a fantastic resource for analyzing 100 years of historical prices for various investment forms.
The gold market is a complicated one. That's where we come in. We know that if you're investing in gold or silver, you want the best value for your investment—and we provide it. At MyGold, we're here to make it easy for you to buy and sell physical gold and silver in New Zealand. We're always looking out for you, whether that means offering advice, help with insurance, storage services, or gold testing. Our expert staff will ensure your experience is exceptional every step of the way.