Gold has long been considered a valuable precious metal. Used for everything from jewelry to currency, this product offers outstanding opportunities for investment. Gold bars are one of the simplest and most straightforward options for purchasing gold.
Why Would I Buy a Gold Bar?
Gold bars provide many benefits over other types of gold investments:
- Investment diversity: Investors often purchase gold bars to diversify their portfolios and minimize risk. Historically, gold has had a negative correlation to stocks, bonds and other types of investments. When stocks fall, as in 2008, gold prices stay strong. [5]
- Low price per ounce: Gold bars cost less per ounce than government minted coins. The premium on gold bars is lower because production is simpler, resulting in fewer machining and labor costs. [1]
- Easy to store: Gold bars stack easily for convenient and private storage, so you can easily hide your gold wealth. [1]
- Reliable value: The value of a gold bar is tied directly to the current value of gold. This is different from the value of a gold coin, which is impacted by its numismatic value as a collector's piece. [2]
- Strength against the U.S. dollar: Though the value of the U.S. dollar has declined, the price of gold nearly tripled from 1998 to 2008 and almost doubled between 2008 and 2012. While the value of American currency may decline, gold tends to retain its worth globally. [5]
What Properties and Characteristics Should I Care About With Gold Bars?
Gold bars are widely available from different dealers. There are several factors that you should consider before you purchase gold bullion.
Type
You can choose between gold bars that are minted and those that are cast. A bar that's minted is punched or cut from a flat piece of gold. Gold bars often have an artistic design and glossy finish.
Cast bars are produced when molten gold is poured into a mold. This process doesn't create the glossy shine seen on minted gold bars. However, many investors find this classic look preferable. [6]
Size
Typically, the per-ounce cost for a bar of gold is lower for larger bars than for smaller ones. If your primary goal is to purchase a large quantity of gold at the lowest price per ounce, purchasing bigger bars is the best approach.
Smaller bars serve you well if you want the option to sell a portion of your gold quickly and easily. You may find it easier to sell a 1-ounce bar of gold than a 10-ounce bar of gold that's far more expensive. [2]
Purity
Gold bars purchased for investment purposes should be at least 99.5% gold. Most mints produce gold bars that are 99.99% pure. The bars also contain small amounts of an alloy such as silver or copper for smelting purposes. [2]
Hallmark
Producers often include a hallmark on their gold bars. This is an identifying stamp that shows where the bar was made. You may find it easier to sell gold with a well-known and respected hallmark such as the Royal Canadian Mint, Johnson Matthey, Asahi or the Perth Mint in Australia.
Dealer
Consider the source of your gold bars carefully. You find gold bars for sale anywhere from eBay to gold vending machines. However, these are not usually the best options. If you purchase gold from a private individual, you don't have any guarantee as to the quality of the product. When it comes to gold vending machines or gold bars sold in shopping centers, you'll find the markup is exceptionally high.
It's best to purchase gold from a reliable and well-known dealer. Check reviews and ratings with third-party agencies such as the Better Business Bureau and Business Consumer Alliance. [6]
What Special Terms Do I Need to Know About Gold Bars?
Understanding a few key terms will help you understand the value of gold and how to make a wise investment in bullion gold bars.
Bullion
Bullion, or ingots, refers to bulk gold or silver that is valued by weight. This is the state that gold is in before it's coined. [2]
Spot Price
Spot price is the current price of an asset. [3] The spot price does not include additional fees associated with the shipping, handling, packaging, transaction, storage or production of the gold. Sellers may also adjust the price of their gold bullion bars in accordance with fluctuations in scarcity or demand. It's important to compare prices when you're deciding where to buy gold ingots. [4]
Troy Ounce
Gold prices are quoted per troy ounce in U.S. dollars. One troy ounce is slightly more than an ounce, equaling 31.1034768 grams. Though a price may say $/oz, it is referring to the troy ounce and not the standard ounce. [4]
Why Buy Gold?
Gold has been referred to as a 'crisis commodity.' When geopolitical tensions rise, the price of gold often rises with them, because investors flock to this safe investment. When confidence in world governments is low, the confidence in the value of gold stays high. [5] Investing in gold is a safe way to balance your portfolio and protect your wealth.
Understanding the basics of how to purchase a gold bar for investment purposes and where to buy gold ingots online will help you make a wise purchase so you can successfully balance your portfolio with the stable value of gold.
Article Sources
1. U.S. Money Reserve. 'Gold Bars vs. Gold Coins,' https://www.usmoneyreserve.com/blog/gold-bars-vs-gold-coins/. Accessed September 23, 2020.
2. Investopedia. 'How Do You Purchase Physical Gold Bars?' https://www.investopedia.com/articles/investing/072316/how-do-you-purchase-physical-gold-bars.asp. Accessed September 21, 2020.
3. Investopedia. 'Spot Price,' https://www.investopedia.com/terms/s/spotprice.asp. Accessed September 21, 2020.
4. U.S. Money Reserve. 'What Does It Mean To Buy Gold at Spot Price,' https://www.usmoneyreserve.com/blog/buy-gold-at-spot-price/. Accessed September 21, 2020.
5. Investopedia. '8 Good Reasons To Own Gold,' https://www.investopedia.com/articles/basics/08/reasons-to-own-gold.asp. Accessed September 21, 2020.
6. U.S. Money Reserve. 'How and Where to Buy Gold Bars,' https://www.usmoneyreserve.com/blog/how-to-buy-gold-bars/. Accessed September 21, 2020.
