Buy gold with Bitcoin: your ultimate guide
From stablecoins to physical bullion in the post, here’s our in-depth guide on how to buy gold with Bitcoin
Gold and Bitcoin: they’re both assets that have gained a loyal following as a safe haven – a hedge against inflation, a sanctuary when there’s economic uncertainty. For some, BTC has now earned the title of “digital gold”, pointing to how it has been the world’s best-performing asset so far in 2020.
Some crypto traders are now looking to diversify after enjoying healthy growth in the aftermath of “Black Thursday” in March. But how do you buy gold with Bitcoin? Are there any pros and cons, or top tips to remember? Keep reading to find out.
How to buy gold with Bitcoin
If you want to buy gold with BTC, a plethora of companies can help. That said, it’s worth taking into account that there are some challenges associated with acquiring this precious metal at the moment. Just as toilet paper and flour became difficult to buy as a result of the coronavirus pandemic, investors hoping to get their hands on gold have faced an uphill struggle at times.
Should supply issues get in your way, do remember that you don’t necessarily have to buy gold with Bitcoin to benefit from movements in its price. Just like there are stablecoins backed by fiat currencies such as the US dollar, it’s also possible to purchase crypto assets that are pegged to the value of this precious metal.
One of the most notable examples was released by Tether in January. Imaginatively known as Tether Gold, it’s available on the Ethereum and Tron blockchains and represents ownership of one troy fine ounce of physical gold. It’s a novel approach for those who want to buy gold with Bitcoin – and to ensure there is confidence in the process, the fintech company has direct control over a Swiss vault and each ounce is linked to a specific gold bar.
Some say stablecoins are far superior to exchange-traded funds, another common method for gaining exposure to this precious metal. Not only do they allow investors to buy gold using Bitcoin, but they also tend to have much lower investment limits. There’s also less need to transport this precious metal around the world – a time-consuming and environmentally unfriendly process – and tokenisation can mean there are fewer regulatory hurdles to jump through once Know Your Customer checks have been completed.
Buy gold with Bitcoin in the UK
But what if you aren’t interested in a token or an ETF? What if you actually want to buy gold with Bitcoin and get bullion sent through your letter box?
There are firms that allow you to buy gold with Bitcoin in the UK. Before you commit to making a purchase, it’s crucial that you make sure that they are a reputable provider, as fraudsters have been known to operate bogus websites that simply look too good to be true. Next, you’ll want to verify that the gold they are selling is investment grade, otherwise your purchase could end up being worthless.
One company that’s operating in Britain is Sharps Pixley, which has won a five-star rating from Trustpilot. It allows its customers to buy gold with Bitcoin in the UK – and as an alternative, Bitcoin Cash can also be used as a crypto payment method if you so wish. A 0.5 per cent surcharge is levied on top of these transactions and limits are in place that dictate how much gold can be purchased. Orders must be worth £100 as a minimum but cannot exceed £300,000.
Another provider that allows you to buy gold with Bitcoin is Bitgild, a European company that’s registered with the Dutch Chamber of Commerce. Shipments are fully insured and, although deliveries are normally made within one to two business days, they have been slowed down as a direct result of the coronavirus. To facilitate cryptocurrency payments, Bitgild uses a well-known platform known as Bitpay. All prices in BTC are based on Bitpay’s rates – and, according to the gold retailer, exchange information is updated every few minutes.
One final option suggested in this article is Suisse Gold. As the name suggests, it’s based in Switzerland. The company says that it offers a streamlined process for purchasing precious metals using BTC, and transactions are normally confirmed within 60 minutes. Suisse Gold also claims that it was actually the first precious-metals broker to embrace cryptocurrency as a payment method.
Irrespective of which website you use, you’ll normally find that you’ll be emailed an invoice where a QR code is attached. Once you open the crypto wallet where you store your BTC, you’ll be able to scan this code so the right amount of Bitcoin goes to the right address. This can be a lot less nerve-wracking than copying and pasting a long address – or worse still, typing it out randomly – as this approach increases the chance of errors being made and your payment going to the wrong place, where it may be irretrievable.
If this is your first time investing in precious metals, you’ll want to do a little bit of research to find out more about the different types of gold out there and catch up on the latest predictions for how they are going to perform in the medium-to-long term. You’ll also want to check that your gold is from a trusted brand, such as UBS, Credit Suisse or Perth Mint RCM.
Don’t be deterred if you own a different cryptocurrency. Some gold merchants allow alternatives such as Ethereum to be used and, failing that, it’s easy to make an exchange into BTC inexpensively.
Diversification in an investment portfolio is healthy and to be celebrated but there’s some lively debate over whether Bitcoin or gold amounts to the better investment right now. Some analysts, such as the legendary investor Paul Tudor Jones, believe BTC is going to be the “fastest horse” over the coming decade, primarily because its fixed supply will provide a more effective hedge against inflation.
But even he admits that there’s one thing gold has that Bitcoin doesn’t: an established track record as a store of value. Whereas this precious metal has been around for thousands of years and has a storied history, BTC has just 11 years under its belt. The 2020s could be crucial in the world’s biggest cryptocurrency’s quest to gain some credibility.
FURTHER READING: How to start investing in gold
FURTHER READING: Is gold a good investment? Five ways to buy it – the pros and cons