A Guide to Buying Gold With Bitcoin: Gold Bars, Nuggets, and Jewelry

With the arrival of Bitcoin as a new viable payment option, there are some great investment and buying options out there that can be acquired with the digital currency. In this guide, we will focus on gold items that are offered online, which can be bought with Bitcoin. This guide will offer a potential buyer of gold items some much-needed tools to distinguish the genuine articles from the fake items.

Gold Bars and Nuggets

Gold bars are the most obvious items that can be bought with Bitcoin. These bars are quick and easy ways to convert digital currency into something that is tangible. There are different weights of gold bars available, and nearly all of them are issued with security stamps, serial numbers, and are accompanied by authenticity certificates. Buying gold directly from the mine is also an option, but it comes with more risk.

Things to Watch Out for When Buying Gold Bars

Although the certificates, serial numbers, and security stamps are supposed to indicate legitimacy, these safeguards can be circumvented by crafty scammers. The bigger the gold bar, the easier it is to pull off some kind of scam or fraud. These frauds might range from metal bars that are simply gold plated to the more amateurish gold painted bars.

There are also more insidious and crafty scams in the gold bar business. Some bars do have every security label and certificate imaginable, yet can still be holed out. The top of the bar will remain untouched while the scammer drills into the side of the bar, holing it out, and replacing the gold with Tungsten. Tungsten is a metal that has nearly the same density as gold and is hard to detect. After the holing out process is finished, the scammer seals the drilling hole in such a way that makes it undetectable. There might be some difference in weight, which can often be blamed on faulty scales or manufacturing processes.

Buying gold directly from a mine may be extremely risky. Buying gold on a Bitcoin auction site from a mine in Africa, for example, comes with an insanely high risk. Usually, these bars or bullet-type gold nuggets don’t have any security attributes to validate that it is gold. For all you know, you are buying gold-painted rocks—which has been offered quite frequently on Bitcoin auction sites.

Detecting Fake Gold Bars: Some Pointers

There are some detection methods that can tell you if your gold bar or gold nugget is genuine or fake. Using a magnet is one of the most popular methods of detecting fake gold. Unfortunately, that technique usually only works on bars and nuggets from the early 1900’s, and will probably not detect modern-day forgeries. A rock that has been painted gold might not respond to said magnet. There might also be impurities in the gold bar, especially when it is procured from a small gold mine.

Another option is the sound test. This test is simple: you hit the gold bar and listen to the sound vibrations. This technique was used a lot in the past, but since tungsten has nearly the same density as gold, the difference in sound vibrations might not be as obvious. Even experts and highly respected sellers and buyers of gold bars can be fooled if they only focus in on sound.

One of the cheapest, easiest, and most reliable tests is using a touchstone and acid to determine if your item is real gold, as well as what karat it has. You need to rub your gold bar or nugget on the touchstone slate to get a trace of gold to test. The rubbing might damage your bar a bit, so it is a choice you will have to make.

The last testing method I will mention is the handheld laser detection scanner. This technology allows the operator to detect every kind of metal, be it precious or not. These scanners are probably the best way to detect fake gold at the moment, but they are quite expensive.

To Buy or Not to Buy?

Every investment holds a certain risk. You should research your potential gold purchases before making the financial commitment. The least risky gold investments are the small gold bars. The risk of a small gold bar being drilled into and holed out is fairly low; it is difficult to drill such a small hole, and the reward is low relative to the risk.

Gold nuggets, on the other hand, are extremely high risk, especially when you buy them from a “mine” over the internet. Gold nuggets usually don’t have any identifying markers or serial numbers, making them easy to fake (especially the very small ones). Of course, you can collect a heap of little gold nuggets and have them melted down to a brick. However, that might also hold some risk, especially when you aren’t witnessing the melting process.

For those who want to invest in gold, I suggest doing ample research and contacting the person who is selling the gold. Using common sense is also mandatory. If a deal is too good to be true, it usually is. Nobody is going to sell 50% under the current gold price and if they do, something is probably not right. The “I need the money” excuse has been used many times in the past and a lot of people have walked into that scam.

Gold Jewelery and Antique Gold Items

You can also buy gold jewelery with Bitcoin. Jewelery might be a better investment option than gold bars or nuggets. Every real gold chain or ring has identifying marks. These marks, also called Hallmarks, can be researched—and there are some excellent researching tools out there.

Antique items also have hallmarks, regardless how old they may be. To be certain that a piece isn’t a forgery, you need to have some knowledge about hallmarks. However, relying solely on hallmarks can be risky. The best way is to test your jewelry is to use the touchstone method.

Gold necklaces, chains, and rings are the excellent for testing with the touchstone method. A rubbing on the touchstone will not devalue a piece of gold jewelry. However, do not use acid directly on gold material—that will damage your gold item.

Jewelery does seem to be the best way for novices to invest their Bitcoin in gold. Jewellery’s genuineness can be easily checked with hallmarks and touchstones. It is more prudent to collect Jewelery from the seller’s home or shop. Buying these kinds of things using the internet is not a good idea; people have been scammed out of their Bitcoin because they trusted the seller.

What do you think about part one of the gold guide? Let us know in the comments below!

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