Article Hero

How to Buy Gold Online in South Africa

13 minutes
beginner
How to Buy Gold
Cristian Cochintu
Cristian Cochintu
16 November 2023

Before buying gold online, it is important to understand some of the factors that make gold unique and what moves the price of gold.

Gold's attractiveness has made it a tempting asset for those seeking diversification and the spreading of their risk. There are many ways to buy gold, both for decoration and as an investment. To many, it's also a hedge against economic upheaval, war, inflation, and global uncertainty. 

Physical gold has been a form of financial and traditional investment for centuries. But in today’s time and age, you might as well buy digital gold, which has no safety or purity worries and is easier to sell. If buying digital gold as an investment sound appealing, enough to get started, follow our quick guide.

How to Buy Gold Online in South Africa - Quick Guide

  • Open an account – You’ll first need a brokerage account, which you can set up in about 15 minutes. Then, once you’ve deposited funds, you can access the global gold market and purchase gold assets.
     
  • Choose your Gold markets – You can buy gold ETFs that aim to track the domestic physical gold price, or buy gold mining companies & funds and collect any dividends that are paid.
     
  • Take your position – Pick an order type, the amount you want to invest, and buy gold assets in your brokerage account.  

For a more comprehensive overview of why, where, and how to buy gold in South Africa, including gold bars, coins, and jewellery, follow our in-depth guide below. 

Gold as an Investment 

For generations, gold has been a valued commodity. Gold has been used as a currency and a symbol of prosperity and power throughout history.  

This long-term value indicates gold's consistency and desirability throughout time. Investors believe gold to be one of the safest investments, as it quickly recovers its value during economic downturns. Its price often moves in the opposite direction of the stock market or economic fluctuations. 

When investor confidence is shaken, gold prices rise as worried investors seek a safe haven for capital removed from the market. In times of inflation, gold is also a safe haven since it holds its value far better than currency-backed assets, which may arise in price but fall in value. 

Before buying gold, it is important to understand some of the factors that make gold unique: 

  • Newly minted coins are typically 90% to 99% gold. 
  • Gold provides no income stream unless you own stocks or mutual funds that pay dividends. 
  • Owning gold stocks does not entitle you to possession of the metal. 
  • You may incur a cost to store physical gold. 
  • While the current supply is limited, as the price rises it makes more mining economically feasible, which could increase the supply. 
  • Because much of the metal is not used for any economic purpose other than the creation of Jewellery, demand is not a function of genuine necessity. 
  • Due to the concentration of gold holdings within a few governments and central banks, gold is subject to significant price volatility when these institutions buy and sell. 

Investing in gold is not like buying stocks or bonds. You can take physical possession of gold by buying gold coins or buying gold bullion. Bullion is gold in bar form, with a stamp on it. The stamp contains the purity level and the amount of gold contained in the bar. The value of the bullion or coin comes from its precious metals content and not its rarity and condition, and it can change throughout the day.  

Sure, physical gold can be risky and comes with some cons, as is the case with all investments. For example… 

  • Returns on physical gold tend to be poor. If you purchase gold jewelry, for example, you may not earn as much when you sell it as you paid when you bought it. 
  • Safely storing gold bars or coins can be difficult, as it’s vulnerable to theft.
  • Physical gold will never be a passive, steady source of income. You purchase it and sell it, but it does not earn compounded interest like a stock, for example, could over time. 

You can also buy stock in gold mining companies, gold futures contracts, gold-focused exchange-traded funds (ETFs), and other regular financial instruments. If investors purchase a gold-backed ETF, they are purchasing shares of a trust's ownership in gold but have no claim to the physical gold itself. 

Buy Gold Online

Investing in gold with the idea it never loses value is the wrong approach. Like any investment or financial asset, gold is subject to supply and demand pressures that cause the price to fluctuate. 

Options to Buy Gold in South Africa

There are several types of gold assets available for you to trade or invest in, depending on whether your interest is in the physical asset or not. These include: 

Buying Gold Coins  

Several countries are actively minting uncirculated gold coins. They are all legal tender, but their meltdown value is significantly greater than their face value. Many numismatic (collectible) coins have even higher market prices. Collectors are drawn to coins due to the obvious potential for rising value because of their rarity and demand. 

Newly minted coins are affordable, and the government mints that create them guarantee their purity. The American Eagle, Canadian Maple Leaf, South African Krugerrand, Vienna Philharmonic, Mexican Gold 50 Pesos, British Sovereign, Australian Kangaroo, and United States Mint 24K Gold Buffalo are also popular choices. Some of these coins come in a variety of sizes to suit both large and small investors. 

Buying Bullion or Bars  

While many people associate bullion with the massive bars stored at Fort Knox, the term refers to the stamped weight and quality of gold. It can take the shape of a bar, a coin, or any other shape that represents a transferable and practical size and shape. Bullion prices often include the cost of the metal, as well as the costs of refining and shipping, as well as the dealer's commission. 

The bars come in a variety of weights, starting at 1 gram. Heavy bars are ideally suited for major investors since they may be safely stored in a precious metals-specific facility that is insured. When you buy heavier bars, you also save money on the extras. The negative is that large bars are more difficult to sell and more expensive to buy, and they may be difficult to utilize in a barter. 

Buying Gold Jewellery  

Jewellery allows the investor in gold to also experience the enjoyment of wearing it. Gold is often combined with other precious gems and metals to enhance the overall value and appearance of the Jewellery. Pieces are often passed down to the next generation as family heirlooms, adding sentimental value beyond that of the piece itself. 

If you're looking for a long-term investment, Jewellery isn't the ideal choice because the price will usually well surpass the meltdown value. This is related to the quality of the work and the price markup. Before purchasing Jewellery, always check the purity of the gold to ensure that you aren't paying for 18 karats when you only receive a 14-karat item. Most homeowner insurance policies cover Jewellery, which is beneficial in the event that it is lost or stolen; however, you may want to consider purchasing a Jewellery floater to complement your coverage. 

Buying Gold Futures and Options  

For investors willing to take on more risk, futures, and options may be attractive. (If neither of those words means anything to you already, you should avoid these gold investments for now as they are highly speculative). With gold futures, you commit to buy or sell gold in the future at a specified price.

Under a gold options contract, you have an agreement with the option to buy or sell gold if it reaches a certain price by a predetermined date. 

Buying Gold Stocks and Exchange Traded Funds (ETFs)  

Stocks and ETFs have two main advantages: you do not have to store the metal and you might potentially earn dividends

By owning shares in an exchange-traded opened gold trust, you have fractional ownership in the underlying gold. The trusts are called open-end because gold shares are issued and redeemed to accommodate investor demand. As a result, open-end trusts closely track the price of gold. 

Gold Bullion is held by ETFs on your behalf. GLD is the ticker sign for the SPDR Gold Shares ETF. The ETF trades intraday, just like equities, and has low expense ratios.  

Another way to buy into the gold market is through gold stocks. Be aware that while a gold company’s stock price is linked to the price of gold, as it represents a major revenue stream, it is not a “pure play” on gold; it’s unlikely that a company’s value will directly replicate the price of gold.

Gold mining Exchange-Traded Funds (Gold Mining ETFs) are not a “pure play” on gold, but rather invest in a broad basket of gold mining companies. This makes it easier to access a wide range of gold mining companies with one investment.   

Because mining businesses thrive or fail based on their operating performance, gold stocks do not always move in lockstep with bullion prices. If the firms you acquire fail, you do not have the security of physical custody of the metal. 

Where to Buy Gold in South Africa

You can buy gold bars from dealers, and individuals, or online from sites like JM Bullion, the American Precious Metals Exchange (APMEX), or SD Bullion. And keep in mind that you may be on the hook for delivery fees—plus insurance—to assure the safe transport of your bullion. 

You can buy gold coins through dealers, pawnshops, and individual sellers that you trust. If you choose to buy your gold coins online, make sure to go through a listed dealer. Whether you buy your gold coins in-person or online, you don’t want to waste money on forgeries or gold that’s less pure than you’re led to believe. 

As with coins, you’ll want to be extra careful when buying gold Jewellery. Make sure the person you purchase your Jewellery from is reputable. You might start with jewelers who are members of the Jewelers organization and have signed a code of professional conduct requiring them to be honest and forthcoming about the nature of their pieces. 

Buying and selling gold assets like mining stocks, mining funds, or ETFs must be done through online brokers like CAPEX.com. We provide access to 5,000 stocks and stock funds, including the most popular Gold mining stocks, Gold mining funds, and Gold ETFs.

 

To buy gold futures or options successfully requires a brokerage account and an intense amount of industry knowledge. You will have to monitor your account and gold’s price closely to make sure you do not miss the chance to enact your options. You also may end up magnifying any losses you incur as futures and options involve taking on leverage, or using borrowed money to buy securities. 

With CAPEX you can also trade the most popular gold assets via CFDs, from gold stocks and ETFs to gold spot prices and Gold Rush Tematix, a basket of selected shares from companies that engages in the acquisition, exploration, and development of gold in different countries around the world. Trading means that you are speculating on a gold asset’s price movements with derivatives like CFDs (Contracts for difference) – without taking direct ownership. CFDs are leveraged products, which means that you will not need to commit to the full value of the position. But bear in mind that leverage can increase both your profits and your losses, so practice on a risk-free demo account before you commit any funds. 

Buy Gold on CAPEX.com

When Should You Buy Gold? 

Many proponents of gold suggest it is a good hedge against rising prices. The facts do not support this statement though. Gold is often a better hedge against a fiscal crisis, rather than a hedge against inflation. In times of crisis, gold prices tend to rise. But that is not necessarily the case during periods of high inflation. If there is a monetary crisis or recession on the horizon, it may be wise to buy gold. However, when there are concerns about the purchasing power of fiat currencies like the US Dollar and Euro, gold benefits the most. 

In other words: 

  1. In times of optimism (aka risk appetite), gold can either appreciate if markets believe growth will lead to inflation, or it can fall if the desire for higher yields overrides inflation concerns and investors move into more classic risk assets which they believe will provide better returns.
  2. In times of pessimism (aka risk aversion), gold can either rise if markets believe that stalling growth will lead to rising deficits and/or money printing that could cause inflation, or it can also fall on fears of deflation or of a market crash that feeds demand for cash. In times of panic, traders seek cash either to cover margin calls or other obligations or to be ready to go bargain hunting. 

If pessimism turns to panic, then gold could either: 
– rise if markets are more concerned about the USD or EUR losing their purchasing power than about near-term liquidity needs, as was the case at times from 2009 through 2011. 
– fall if markets are more concerned about liquidity than the loss of purchasing power, as was the case in late 2011. 

When markets are not concerned about fading purchasing power, the major currencies tend to gain against gold. That can happen due to: 

  • Low inflation expectations, as we saw starting in late 2011. Concerns about the global economy kept inflation fears low, and so gold began a multi-month downtrend. 
  • Panic periods are when markets fear a financial crisis, and liquidity becomes the top priority. We saw gold sell-off during times of peak anxiety about the US or EU. During these periods, investors tend to sell gold to raise cash. 

Historical Prices of Gold 

Investors should start by looking at the spot price of gold, which is the current price at which it can be purchased and traded. The spot price of gold is expressed in terms of an ounce, gram, or kilogram of gold. For example, the spot price of gold was $1,903.00 per ounce, $61.18 per gram, and $61,181.45 per kilo at the end of the day on Monday, June 7, 2021. 

When you look at historical gold prices, you will notice that the price of gold skyrocketed in the 2000s. Gold prices ranged from $720 per ounce to over $1,000 per ounce in 2008. Due to investor demand and sentiment as the economy plunged deeper into crisis, gold prices rose to $1,895 in 2011. Gold prices had fallen from over a decade earlier by April 2020, but they had continued to perform well despite the economic crisis. 

Something similar happened in the late 1970s. After the price increase in the '70s, gold spent the next 20 years declining in value before going back up around 2000. During the pandemic crisis, demand for gold surged, and the price of gold increased. Investors could not be certain at that time whether the increase would continue or not because it is equally possible that the trend could continue, or the price would once again languish for a considerable length of time. While languishing, any gold investment would not produce any interest or dividends. 

Summary of How to Buy Gold in South Africa

Investing in gold, whether real gold or gold-related instruments, is a difficult decision that should not be taken lightly. Gold comes in many forms, so one may be better suited for your investment strategy than another. 

  • You could buy physical gold coins or bullion in South Africa, but they must be stored in a secure environment. This may involve paying a broker, bank, or another firm a fee, so make sure you deal with a reputable dealer.  
     
  • Unlike buying gold bullion, Gold ETFs can be purchased like shares on a stock exchange, avoiding the costs and inconvenience of markups, storage, and security risks of holding physical gold. Funds like SPDR Gold Shares ETF (#GLD) track the spot price of gold bullion and hold 100% physical gold assets in HSBC's vault in London.
     
  • Buying Gold mining stocks and funds are not a “pure play” on gold, as it’s unlikely that a company’s value will directly replicate the price of gold. You can invest in specific gold mining companies like Barrick Gold, Newmont Mining, and Franco Nevada or a broad basket of gold mining companies like Direxion Daily Junior Gold Miners Index. 
     
  • You can also buy options on gold futures contracts at an established strike price. 

Financial experts recommend that you keep gold to a small percentage of your total assets as a rule of thumb. This is believed to be good advice because it acts as an insurance policy. If all your other equities go down in value and crash, your gold should rise in value, preventing you from losing everything. But remember, that is not guaranteed, so proceed with caution when buying gold in South Africa. 

Free resources 

Before you start trading and buying gold assets, you should consider using the educational resources we offer like CAPEX Academy or a demo trading account. CAPEX Academy has lots of free investing courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you to become a better trader or make more-informed investment decisions. 

Our demo account is a suitable place for you to learn more about leveraged trading, and you’ll be able to get an intimate understanding of how CFDs work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for stock investors who are looking to make a transition to leveraged trading. 

Frequently Asked Questions (FAQs) on Gold Buying in South Africa

 

disclaimers_academy

course_share_title

article_rating_title

awful
ok
great
awesome

read_more

Cristian Cochintu
Cristian Cochintu
financial_writer

Cristian Cochintu writes about trading and investing for CAPEX.com. Cristian has more than 15 years of brokerage, freelance, and in-house experience writing for financial institutions and coaching financial writers.