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By: Jeff Clark
Sr. Precious Metals Analyst
If you’re looking to invest in physical gold at the lowest possible price per ounce, there’s no better choice than gold bars. Coins may be more attractive, but all that manufacturing and packaging comes at a price. Gold bars, on the other hand, are the stalwart of the industry, what everyone from average investors to central banks buy and store. In other words, you can’t go wrong buying gold bars—provided you follow four tips.
The Advantage of Buying Gold Bars
Tip: You’ll get more ounces for your money with bars than coins.
The primary reason investors choose a gold bar is that it’s less expensive than a gold coin. Premiums are lower because coins have a more intricate design and thus greater labor and machining costs. Coins may be prettier, but you’ll pay extra for that appeal.
The other advantage of gold bars is that they’re easier to store. A gold bar takes up less space than the same number of ounces of coins. In fact, bars were originally designed specifically for ease of storage.
Buying gold bars doesn’t compromise any of the core advantages of gold: they’re portable, private, liquid, and will last forever.
Pick the Best Gold Bar Size for You
Tip: Buy one-ounce gold bars to meet future needs as they come up. If you have a high net worth, buy both small and large bars.
One of the first decisions you’ll have to make when buying gold bars is what size to purchase.
Gold bars come in different sizes and weights. They’re as small as one gram (sometimes called wafers because they’re so thin), and as big as 400 ounces. It’s these larger sizes that central banks, exchanges, and ETFs buy.
But that doesn’t mean you should buy the heaviest bar you can afford. Just the opposite, in fact…
• Big bars do not offer the divisibility smaller ones do. When you sell a big bar, you are liquidating a sizable investment. It’s more practical to sell multiple smaller bars to exchange the exact amount of gold for the exact amount of currency you need.
• Fewer potential buyers. Not many investors can afford to buy, say, a 100-ounce bar. If you have smaller sized bars, you have a greater pool of customers.
• Lower counterfeiting risk. Counterfeiters prefer big bars, because they’re worth a lot more.
• Avoids the need for an assay. The bigger the bar, the more likely it will require an assay to be sold. An assay adds an extra expense, is inconvenient, and will delay your payout.
The advantage of buying a large gold bar is that the premium will be smaller. But you lose these other advantages when you purchase the biggest bar you can. High net worth investors could buy a large bar, provided they also have some bars denominated in smaller weights.
On the other hand, don’t buy gold bars smaller than one ounce, as the premiums are significantly higher. If you can’t afford more than one ounce of gold, consider buying several smaller bars so you capture the advantages above. Either way, owning gold is better than not owning gold.
So the first step in knowing what to look for when buying gold bars is this:
The second thing to look for when buying gold bars is the stamping and hallmark.
Gold Bar Brands Matter – Choose Wisely
Tip: Buy only gold bars with a recognized hallmark and proper stamping.
Proper stamping and a recognized hallmark mean you’re getting a reputable gold bar. There are some private mints in the world that don’t include all of this information, which could mean it’s not a pure gold bar or has low quality. It’s important that you know how to make sure your gold is real.
Stamping: a reputable gold bar should have its weight, purity, refiner, and a registration number stamped on it.
It’s important to buy gold bars with these markings. Without them you don’t know what you’re getting, and a future buyer will probably demand an assay.
There’s an easy way to assure your gold bar has proper stamping, and that’s to buy bars with a…
Reputable hallmark: A hallmark simply refers to the brand of the bar—the refiner or manufacturer that minted the bar. You want a well-recognized hallmark so that you know you’re getting a high quality bar, and also so that you’ll have no difficulties someday selling it. A good hallmark will allow you to sell the bar virtually anywhere in the world. It is highly liquid.
Here are some of the world’s most highly regarded refiners:
There are others, such as the Sunshine Mint and Republic Metals (this is not an exhaustive list).
The easiest way to avoid getting ripped off is to buy a reputable brand. And if you buy a recognized hallmark it will have all the proper stamping a pure gold bar should have.
Use a Reputable Dealer
Tip: Buy your gold bars from a reputable dealer only—one with plenty of positive customer ratings, a buyback policy, and no pushy sales people.
Perhaps the most important thing you can do is buy your gold bars from a reputable dealer. A trustworthy dealer can provide sound education, help you avoid pitfalls, and steer you toward the best products for your needs.
How do you know if you’re dealing with a reputable bullion seller? Look for these things…
• Strong Better Business Bureau or Trustpilot rating. Give preference to those with lots of experience. Check for repeat customers—buyers wouldn’t return if they had a negative experience. By the way, if you see the Better Business Bureau or Trustpilot logo on the dealer’s website, don't assume it's legitimate… search for the company on the website, since logos can be copied.
• An educational dealer or website. The biggest tipoff you’re dealing with a “salesy” dealer is if they promote only the most expensive products—for example, if they try to steer you away from gold bars and into rare coins, which have higher markups. Trust your gut here… if the dealer doesn’t feel right, there’s plenty more to choose from. A good example is our commitment to education through our popular YouTube series, “The Hidden Secrets of Money.”
• Larger dealers. Look for dealers that have strong volumes, because they will have greater flexibility. A small dealer, in contrast, may have limited product selection or be unable to fill a large buy or sell order. Be sure to ask about delivery times, too; it’s a red flag if they don’t ship within 24-48 hours of your payment clearing.
• A buyback policy. Will the dealer repurchase what you buy from them? If they don’t have this policy in place, I suggest you shop elsewhere. Not only do you want the dealer to still be around when you need to sell, you want some kind of guarantee that you won’t get stuck without a ready buyer (though any gold dealer should buy a gold bar from you). There’s another advantage to a buyback policy: these dealers tend to give customers who’ve bought from them the best resale price.
• Multiple forms of payment. Most dealers will accept a check or money order (or cash, if you buy from a local shop). Bank wires and credit cards come with extra costs, though the convenience is hard to beat. Some dealers now offer PayPal, Bitcoin and other digital means. Regardless of payment keep in mind that online dealers will wait until your payment clears before they ship your order.
• An online store. Once you’ve identified some reputable dealers, consider the advantages of online ordering vs. a brick-and-mortar store: it’s quick and easy, can be done any time of day, and allows you to lock in your market price at the precise time you want to buy. And believe it or not, many online dealers are cheaper than your local shop even after paying for shipping, since overhead is generally much lower.
If you’re new, I suggest you compare three dealers. Be sure to compare total cost—commission, credit card or bank wire fees, and shipping and insurance. And consider that cost isn’t the only factor when buying gold bars: ease of ordering, delivery promptness, customer service, and buyback policies are all important to consider in where you shop.
One effective method for first-timers is to buy from two different dealers, so you can compare service, delivery, and cost. It also provides you with two vetted sources for future purchases.
Gold bars are one of mankind’s most definitive forms of money—they’re a tangible asset, are highly liquid, and will protect your portfolio from financial crises. Owning gold bullion at this point in history is a wise move.