Jeff Clark, Senior Analyst, GoldSilver
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 including where to buy gold bars.
In this gold bar buyers guide, we’ll cover:
Gold is not used as a currency today, but its role as money makes it superior to any currency. In fact, gold has been money longer than any currency in history. One of the crucial promises of money is that it serve as a long-term store of value. Gold fulfills this promise better than any fiat currency.
If you buy physical gold, you can hold it in your hand, something you can’t do with most any other investment. Real gold can’t be destroyed by fire, water, or even time. Gold is tangible, finite, and highly liquid. Gold is easily convertible to cash, and can go with you anywhere. Physical gold is one of the most ideal forms for long-term wealth preservation. It is also ideal for your heirs since it will outlast any currency they may use in the future.
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.
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. Generally speaking, the bigger the bar, the smaller the premium. That’s because it’s less costly to produce a kilo gold bar than a one-ounce gold bar. But that doesn’t mean you should buy the heaviest bar you can afford. Just the opposite, in fact…
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, premiums on smaller gold bars are higher, but they are still more affordable. And owning a little gold is better than not owning gold at all.
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.
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. So, now that you know which gold bars you should buy, let's cover where to buy them.
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…
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.
For most investors in North America, the answer is “no.”
If you live in the US, it is a common misconception that you can buy gold at a bank. Many people expect a bank to issue gold, harkening back to days when gold backed the currency, but today most physical gold is purchased from non-bank distributors. Even the US Mint requires retail customers go through an “authorized purchaser” (unless you want a proof product).
But if you’re in Europe or Asia, check with your bank. Some banks may offer gold products to retail customers. I know several people that have done this very thing in Switzerland, for example.
To find out if a bank offers gold bars for sale, just give them a call (it may or may not be well-advertised on their website, for security reasons). One caution: make sure you compare premiums, so that you’re not overpaying. Also, inquire if they offer lower rates to their existing bank customers.
Most gold bars are bought in one of two places: at a local coin shop, or online.
Believe it or not, you’ll likely find better pricing online than at a coin shop, even after factoring in shipping costs. That’s because the overhead at a brick-and-mortar store is higher. But that’s just part of the difference between them…
Here’s the pros and cons of buying locally vs. online. First, a local dealer:
|Can visually inspect product, and take immediate possession||Premiums are likely higher for purchase, and will likely be smaller when you sell|
|Dealer may be willing to negotiate on premium||Likely has limited product choices|
|Potential for greater privacy||May have less liquidity for large buybacks|
Even if you decide to buy online, I recommend checking with a local dealer, because a relationship with them can be helpful if you need to make a quick sale. If you inquire with them, see if they’ll negotiate on price.
Here are the pros and cons of buying online:
|Ability to order online and lock in price at your convenience, 24/7. Avoid talking to a salesperson||Must trust dealer to deliver precise product|
|Total cost is likely lower||Credit card and wire fees are extra|
|Greater selection||Product only ships after payment clears|
A good way to start is to compare prices of the same product among a few dealers.
Getting a low premium is good, of course, but price isn’t the only consideration… see if the dealer is educational in nature (or just a salesperson), and if they have a buyback policy.
Part of buying gold bars is where you’ll store them. While keeping some at or near home can be useful, you don’t want all your physical wealth vulnerable to one act of misfortune.
The ideal solution is to keep what you think you might need in an emergency close by—and then get the rest of your holdings out of the house, and yet still have it easily accessible at any time.
That option is available. Private, non-bank, fully allocated, fully-insured class-3 vaults offer the highest level of security and are the best way to keep bullion safe during times of financial and social crises.
GoldSilver.com is widely recognized for developing one of the most superior storage programs in the world. Check it out today if you’re looking to safely store large amounts of precious metals.