How to Buy Gold Bullion Bars
Posted on March 29, 2022
Buying gold bullion bars is easy, but it is not always as simple or straightforward as you might think. If you are considering buying gold bullion bars, you may wonder which option is best and how to choose the specific products to buy. Does the refiner or mint matter? What about packaging? Is it better to buy one large bar or several small ones?
When selecting and purchasing gold bullion bars, many people ask the same questions, which we are happy to share our insider answers in this compact guide.
Why bars instead of coins?
Both bars and coins are great ways to gain some exposure to gold bullion. While bars have certain advantages over coins, you do not have to choose between one and the other and can own both bars and coins. Investors who prefer to buy gold bullion bars tend to do so for one or more of a few reasons.
First, gold bars offer a lower premium above gold’s spot price. Since bars do not have a face value and are made by non-government mints, they are one of the most affordable ways to invest in gold bullion. Bars are rarely considered collectible, so there’s less opportunity for aftermarket appreciation. However, you could consider that a disadvantage. Most people who buy gold bullion bars are much more interested in the weight of metal they own and would prefer not to get distracted by secondary concerns.
Second, gold bars are available in much larger weights and come in a much wider variety of sizes than coins. Gold bars range from the minuscule 1 g bar to the bulky 400 oz ingot. In comparison, gold coins are usually limited to a narrower range of 1/10 oz to 1 oz.
Finally, gold bars are almost always stackable, making them perfect for compact storage. That’s one major reason you’ll see central bank vaults stacked with gold bullion bars rather than coins or a less storage-friendly shape.
What are your options for buying gold bars?
Here are the main considerations when purchasing gold bars.
Size
With dozens of great options for buying bullion bars, where do you start?
For most people, size and price are a natural first step in narrowing down the choices. (Remember: since we’re talking about intrinsic value, size and price go hand-in-hand.) There is a gold bar for virtually every budget, starting with the 1 g, 5 g 10 g bars. (For comparison purposes, there are about 31 grams in a single troy oz.) The most common size of gold bars you’ll find for sale is 1 oz. This must be a sweet spot because the most-minted modern gold coins are also 1 oz.
Above 1 oz, the size increments increase quickly, typically to 5 oz, 10 oz, 1 kg (32 troy oz), and beyond. Central bank gold bars weigh in at about 27 lbs each.
Generally speaking, the larger the bar, the lower a premium over the spot price you’ll pay. In this sense, bigger is better.
Divisibility
Bar size is a personal choice and one that is likely based not only on your budget but also on your desired level of liquidity. For instance, small denominations of gold have higher markups, while large denominations are not readily divisible and cannot be sold incrementally.
Imagine, for a moment; you’ve sunk your entire emergency fund into a single 1 kg gold bar. Then an emergency comes up, and you need cash. You’d need to sell the entire gold bar to get that cash. You can’t just shave a few hundred dollars off.
This is a significant reason many gold bullion buyers diversify their holdings across a range of different weights. Smaller bars are more expensive per ounce, but they offer flexibility. Larger bars are more cost-efficient, though they might be more challenging to liquidate.
Some investors are willing to pay a premium for products like the Valcambi CombiBar, which is a single bar composed of interconnected 1 g bars that can be broken off and traded. Valcambi handily solved the puzzle of diversifying across different weights of gold bars!
Storage and stackability
Gold is a tangible investment, so you have to consider where to physically store the gold bars you buy. Therefore, stackability and storage can come into play, steering you away from certain products that may not be conducive to simple storage. Do you have sufficient space, adequately secure, for keeping your gold out of harm’s way?
Assay packaging
Assay packaging is an excellent way for anyone to verify the authenticity of a gold bullion bar. Gold bars with assay packaging are easier to sell thanks to their authenticity card built right into the protective packaging. It’s like a certificate of authenticity direct from the refiner or mint and is excellent provenance for your gold.
Good Delivery certification: required features
A London-based bullion market trade association, the foremost independent authority on bullion maintains a Good Delivery-certification list. To receive a Good Delivery stamp of approval, refiners must adhere to specific quality standards. Requirements include stamping markings (like a serial number) on the bars, a high purity content, listed weight, the name of the refiner and assayer, and so on. Most if not all gold bullion bars we sell at BullionMax meet these Good Delivery requirements.
Brand
Gold bars can differ significantly depending on the brand. For example, gold bars made by top brand names fetch the best prices and are ideal for quicker sales. Some premier brands include:
Where to buy gold bullion bars?
One of the best places to buy gold bullion bars is from a reputable bullion dealer online, mainly because it offers the largest selection of gold, some of the best possible pricing, and low-cost or even free shipping.
Some people also choose to buy at bullion auctions or online auction sites like eBay. We’re not super-keen on that for a few reasons. Many auction and reseller sites are full of scams, misleading product descriptions, and sometimes outright fraud. Sellers in such places are like the traveling snake-oil salesmen of the Wild West: they set up shop, sell as much as possible, and then pack up and flee with a crowd of angry customers/victims on their heels.
For those who prefer to buy gold in a face-to-face transaction, coin shops and pawn shops may be an option, depending on where you live. However, they tend to have higher prices over the spot price than online bullion dealers simply because they have higher expenses (renting and insuring a storefront, that sort of thing).
What else should you consider?
There are several other factors you should be aware of when buying gold bullion bars. As an investor, you will want to pay close attention to the purity of the gold since this can directly impact the bar’s price and liquidity (Good Delivery-certified gold must be a minimum of 0.995 pure).
Next, you want to ensure that you are not overpaying for shipping since that can significantly increase your costs. Before your bullion ships, be sure that it is being packaged and shipped correctly to protect from damage or loss.
Experienced gold dealers will always use discreet packaging to avoid attracting attention and deter theft. If you are not buying from an individual or a company with anything less than a stellar reputation, exercise extreme caution and do your diligence to avoid buying fraudulent bullion or falling victim to a scam. Consider paying with your credit card, so you have some recourse if you aren’t treated fairly and the seller doesn’t get the issue sorted out in a hurry.
As always, regardless of where you buy or store your gold bullion, purchasing insurance to protect your investment is a must.
What bar do you want to add to your collection?
By now, you probably have a pretty good idea of what bars you want to consider adding to your collection. Though you may know precisely what you want, it may not be available immediately, so you have to decide whether or not time is of the essence for you.
If the product you want is available, you also must ensure the cost is within your budget. For most buyers, availability and cost are the perfect places to help you choose the bar that is best for your collection.
