What Investors Need to Know about Buying Gold Bars

As an experienced gold buyer, I understand the allure of investing in gold bars. With the volatile economy being experienced in the United States and the ever-changing opinions given by financial advisors regarding when the stock market will collapse, many investors are turning to gold as a safe haven asset.

Gold bars, a sought-after form of gold bullion, have gained immense popularity in today's market. Bars today offer investors a wide array of choices, including varying sizes, manufacturing processes, and reputable refiners or producers. 

From small to large, hand-poured to struck, sealed to raw, with or without an assay card, and featuring or lacking a serial number, the options are plentiful. With numerous producers and manufacturers in the market, it becomes crucial to distinguish the reputable ones from the rest.

Having an abundance of choices might initially appear overwhelming, particularly for those new to investing in physical gold. In this blog post, we aim to address the multitude of questions we've encountered over the years, providing you with invaluable insights to help you navigate the complexities and make informed decisions about buying or selling gold bars and bullion. 

Our ultimate objective is to equip you with the knowledge necessary for a successful venture into the world of gold bullion.

What Are Physical Gold Bars?

Let's get started by learning what Gold Bars are...

In various parts of the world, gold bars are the preferred form of investment. Some cultures even refer to them as "gold biscuits" and an alternative name is gold ingots.

It's worth noting that gold bars are not limited to rectangular shapes alone. Over the years, there has been an assortment of shapes, including squares, hexagons, circles, ovals, and even pendants. Although these items technically fall within the category of gold bullion, they are still commonly referred to as gold bars by the general public.

What is Gold Bullion?

Gold bullion refers to any form of pure gold or gold products that are valued primarily for their precious metal content. It can take various forms, including gold bars, coins, ingots, or even gold nuggets. These bullion products are typically manufactured by reputable refiners or government mints, ensuring their authenticity and purity.

Gold bars are a prominent type of gold bullion. They are recognized as tangible assets made of solid gold, usually with high purity levels such as 24-karat or .999 fine gold. Gold bars are produced in various weights and sizes, ranging from small fractional bars to larger ones weighing multiple kilograms. The value of gold bars primarily depends on their weight and purity.

Gold bullion, including gold bars, holds intrinsic value due to its rarity, durability, and universal acceptance. Investors often turn to gold bullion as a means to preserve wealth and diversify their investment portfolios. Unlike stocks or currencies, which can be subject to fluctuations and uncertainties, gold bullion provides a tangible asset that has stood the test of time as a store of value.

When investing in gold bars as a form of bullion, it is crucial to consider factors such as the reputation of the refiner or manufacturer, the weight and purity of the bar, and the prevailing market conditions. By acquiring gold bullion, particularly gold bars, investors can gain direct exposure to the underlying value of gold and potentially benefit from its price appreciation over time.

It's important to note that gold bullion, including gold bars, can be purchased from reputable dealers, online platforms, or even directly from mints. Ensuring the authenticity and integrity of the gold bullion products is paramount, and obtaining a certificate of authenticity or assay from recognized sources provides further assurance of the gold's purity and quality.

Photo courtesy of Atlanta Gold and Coin

What Size Do Gold Bars Come In?

Investing in gold, whether within your IRA or with retirement savings, you have the choice to purchase gold bars of various sizes. The opportunity to have these different sizes will give an investor a choice between placing all their retirement in a few bars or one larger bar. 

Gold bars are produced in a variety of weights and sizes. Bars can be 1 gram up to 1 Kg or 1000 grams. 

Typical Size Gold Bars:

• 1 gram
• 5 gram
• 10 gram
• 20 gram
• 1 ounce
• 50 gram
• 100 gram
• 5 ounce
• 10 ounce
• 1 Kilo (1000 grams)

Having several options is good for making decisions based on how much you wish to invest. But not all sizes are good for when it's time to liquidate your investment. Some dealers report that the smaller size and large size bars are the hardest to move and therefore when they are buying these items back, they get a lower price per troy ounce. 

Fractional gold bars are a good source of investment, but consider both the cost to purchase and the potential buy price when liquidating. A good question for a gold dealer is once you know your price to buy, ask them what they would pay you for the same item today. You will be amazed at their responses. 

Premiums Attached to Gold Bars

As an investor in precious metals, you understand there is a spot price and that is not the price you pay for the gold bar or coin. You as the investor will pay spot + premium for a gold bar.  The premium represents the cost to take raw natural gold to a finished product like a gold bar. 

Gold bar premiums can sometimes be less than that of a coin or round. The primary reason is the cost of the finished bar is less than that of a finished coin or proof. We go into greater detail on the spot price and premium in our blog The Beginners Guide to Investing in Physical Gold. 

Investing in gold bars you would want to calculate any premiums to determine what premium prices you are paying. Typically, a premium will be higher for a smaller finished gold bar than that for a larger less finished option. 

Remember, you are buying the gold, and since this is a gold bar you want to pay as little premium as possible. But don't get caught up in the beauty of a gold bar or coin. Compare investments in 1 oz gold bars with that of 1 oz gold rounds or coins. Bullion is a term that gets interchanged between gold bars, coins, and rounds. 

What are the Best Gold Bars to Buy?

Choosing a gold bar for investment is like choosing which burger you want at a restaurant. There are so many options it's hard to know what is best to buy. Knowing the difference between the different types of gold bars is important. Check out our blog on What is the Difference Between Combi, Cast, and Minted Gold Bars for more information. 

The best bar for you starts with your intended investment amount. Knowing how much you are investing will determine the right mix of bars or coins for your portfolio. 

Today, most gold bars will come pre-packaged and are stamped with which mint they were produced along with .9999 purity and a serial or assay number. The serial number will come with a corresponding certificate of authenticity (COA) authenticating the item. The most advanced mints today also have updated their ability to authenticate and counter any counterfeiting measures by including a UPC or bar code that's available to scan for authenticity.

Older bars, even those produced in the 70s and 80s could be hand-poured and hand stamped. Those bars are still valuable, but they lack the current authenticity process. If you are buying a gold bar at a local dealer, at minimum check to see that it has a mint stamp and purity stamp and the size of the bar. Anything being sold without these items should be verified before purchase. 

So once you determine how much to invest you can choose the size of the bar. You could purchase 1/100th of a troy ounce or 1 ounce, the larger the bar size the fewer the bars you will ultimately purchase. This could be important depending on where you intend to store your gold. 

Gold storage can be done at home in a safe or a secured depository. The amount of gold being stored could impact the cost of storage. So choose wisely and know all your costs from storage before you buy. 

Here are a few different gold bars that are available to purchase today. These are just a few, not an all-inclusive list of the different bars available. 

Where Should I Go To Buy My Gold Bars?

You have several good options when buying your gold bars. We can suggest a few for you. But deciding where to buy also comes with the question of where the funds are coming from. Are you planning on opening a new Gold IRA with a reputable dealer? or are you looking to purchase individual gold bars for your home collection?

Here are our suggestions:

Two Ways to Buy Gold Bars

When we are talking about purchasing gold there are two main ways to purchase. 

Investment Savings:

First, you can purchase with investment savings, CASH. You can purchase the bars or any other precious metals using your saving and either have the bullion delivered to your home or office or have it delivered to a secured storage facility. 

If you decide to go this route there is the ability to keep your purchases private when limiting your transactions under the $10,000 required IRS reporting guidelines. If you choose to purchase or sell over $10,000 and you are using cash the dealer is required to report by filling out a 1099. 

Another consideration when purchasing with cash is where to store your gold. Depending on the quantity you could store it at home in a secured safe or if you are purchasing larger quantities you could store your gold in a secured storage facility or vault. Most banks today don't allow for storage in their safety deposit boxes, so make sure you have a good safe at home. If you are storing at home, consider adding insurance to your policy to cover your precious metals stored at home.

Gold IRA:

Second, you could open a new Gold IRA or Rollover from an existing IRA or 401(k) and purchase using current or future retirement savings. This is a great option to diversify your retirement money. With a Gold IRA, you can roll over any amount from a prior employer's 401(k) or current retirement Traditional or Roth IRA. Using a new Self-Directed IRA (Gold IRA) can be a good tax advantage for your investment portfolio. If you choose to start a new self-directed Gold IRA you can contribute the same annual amounts as a Traditional or Roth IRA. If you are under the age of 50 you can contribute $6,500 per year and those over the age of 50 can contribute $7,500 per year. 

The best option, if available, for starting a new Gold IRA is by rolling over your prior employer's 401(k) or a current IRA. You don't need to roll over all the amount in that retirement account, you can choose to roll over only the minimum required or you could roll over more and invest in gold by dollar cost averaging. Make sure you understand the rollover rules. There is no penalty for a rollover between retirement accounts, but sometimes you are only allowed one rollover per year. Check with your custodians to be certain. 

What to Look Out For When Buying Gold Bars:

We don't want you to purchase without being informed. So here are a few things we believe you need to consider before purchasing.

1. Find a reputable dealer - check BBB, Yelp, Trustpilot, TrustLink, Google Business Profile, and other sources looking for red flags.
2. Watch out for Fees - ask what their fees are. Yes, you will pay a premium (you need to know the premium) but ask what other fees you are expected to pay.
3. Secure Storage - be careful buying from dealers offering free secured storage in their vault. This typically means they don't own the product and you are only buying on paper.
4. Consider Purchasing Insurance - buy the insurance to get your product delivered and once home increase your insurance to cover the potential theft.
5. Investment is Illiquid - buying gold bars, rounds, or coins is thrilling. But, this type of investment is buying physical assets. When you buy physical assets there is a chance the investment will not have a buyer. The ability to sell quickly could be a negative here. 

How to Open a Gold IRA

Choosing to open a precious metal IRA is a great option, but what do you need to know before starting? These are the steps to open a Gold IRA.

1. Choose a Custodian - you cannot be the custodian for your IRA. The law states you must choose a trust or custodian company. There are several in the market to choose from - get more information by reading our blog The Best Custodian Review for Self-Directed IRA Investors. Don't be alarmed here, they will help do the paperwork and give guidance on how to properly manage your SDIRA. 
2. Fund Your SDIRA - once the paperwork is completed you will need to either deposit your yearly IRA contribution or better yet, you can rollover from a current retirement IRA or prior employer's 401(k). 
3. Purchase Your Metals - now that the money is in the account you can purchase your gold bullion using the money in the IRA. Working with a company experienced with this type of transaction is best for quick transactions and convenience. Make sure your metals are IRA approved to keep your SDIRA in compliance. 
4. Choose a Depository - a requirement of IRA metals is they cannot be stored at your home. You must choose a depository that is approved and provides safe secured storage. Storage facilities will vary in yearly storage fees. Fees may vary depending on the value of the account or if the metals are segregated or allocated. Segregated storage is when your metals are identified and stored separately from other investors. Allocated is when your metals are comingled with others and when you pull out your metals it is your allocation out of a larger group of metals. 
5. Deliver Metals to Depository - once the depository account is made you can have your Gold Dealer ship the metals to the depository. Keep track of the transaction and make sure your metals get physically delivered when the Dealer tells you they will be. 

Those are the steps to open a gold IRA. You can do these steps on your own or you could work with a Gold IRA Dealer. There are several dealers that specialize in Gold IRAs, we've mentioned three before. Check out our 5 Best Gold IRA Companies. We give you some good insight into each company and our opinions of which one is best for which type of investor. 

Advantages of Buying Gold Bars

Earlier we gave the pros and cons of buying gold bars. The advantages are similar but will include a few more specifics. 

• Lower Premiums - bars are bullion and typically not finished and minted with the same attention to detail as that of a gold coin or round. Therefore the premiums for a bar typically are lower.
• Secured Information - bars typically come with a tamper-evident assay card to guarantee weight and purity. In addition, the bars are stamped with the mint and their purity level. A bar stamped .9999 pure qualifies for an SDIRA and depending on the size of the bar you could get one bar or a combi with multiple 1-gram bars combined. 
• Fewer Products - when buying a larger quantity of 5 or 10 ounces or even 1 kilo bar you can purchase one bar versus several bars or coins. When you buy larger bars you get savings on the premium, but you also get the ability to have one item versus 5 or 10 1 oz bars or coins. 
• Gold Bars are an Inflation Protection - when the value of the dollar declines then the gold can be an inflation protection as it will hold its value. 
• Less Likely to Sell - holding gold for the long run is an investment. As an investment you want to limit the ability for you to sell at a moment's notice. Owning gold bars will likely keep you from selling and allow you to hold and gain appreciation and security over time.
• No Maintenance - physical assets sometimes require a lot of maintenance. Gold is a great investment as it just "sits there" and does nothing. No daily, monthly, or yearly worry. Just purchase and forget about it. Let time do its job.
• Easily Passed To Family - owning gold outside of an SDIRA you can give gold bars to your family as gifts. Take advantage of the appreciation of the value of your gold inside your IRA and give the gold in trust to your dependents. 
• Supplement to Stock Market Investments - take some of your money out of the volatile stock market and put it in a physical asset. 
• Value Appreciation - over time gold has increased in value. In the past 30 years, it has gone up by 400%. This is an investment in physical gold bars and you need to hold for the long term. 
• Maintains Value - low volatility than the stock market. Gold is stable and a good choice for those investors looking to safeguard their retirement savings and park their cash. 
• Easy to Sell - Gold bars are easy to sell. For the most part. Larger bars can be difficult and smaller bars like 1 gram can be less desirable in the market. Find that sweet spot of 1-10 ounce gold and you will find buyers throughout the market. 

Disadvantages of Buying Gold Bars

Like all things in life, there are advantages and disadvantages to making a choice. There is always an alternative opportunity on the other side of the fence. Here are a few for Gold Bar buyers.

• Performance Lag - if you purchase gold bars and don't see the spot price increase you will be unsatisfied with your decision. Physical gold is a long-term investment and should not be considered a day trading option. Gold will not always outpace other investments you may choose in the stock market. 
• Complexity of Pricing - as an investor in precious metals you need to know and understand how bullion, coins, and proofs are priced. In addition, there can be additional fees not disclosed unless you ask. Fees could include an IRA custodian yearly fee, a depository yearly fee, a premium fee, and hidden fee commissions. Your end product value may be less than expected because of all the fees. 
• Ability to Sell - buy too much gold you may have difficulty in finding a buyer. Buying too small of an item that is not in demand or too large of an item hard to sell could influence your overall return. Local coin dealers are good options for education and selling your gold. Consider going back to the original dealer that sold you the product.
• Sell Price Below Spot - okay, here is a tricky one. When you sell the bullion is worth what a willing buyer is willing to spend. Many times a buyer will offer some number below the spot. Then they will mark up the price to retail prices to sell. Don't be shocked here, the buyer has to make some money too. 

7 Alternatives to Buying Gold Bars

When it comes to investing in gold, gold bars are not the only option available to you. Several alternative opportunities allow you to diversify your gold holdings and tailor your investment strategy to your preferences. In addition to gold bars, you can explore a range of other avenues within the realm of gold investments. These options include buying gold coins, gold rounds, numismatics and rare coins, gold ETFs (commodity ETFs), gold stocks, gold mutual funds, and even gold futures.

Each of these alternatives offers unique advantages and considerations, allowing investors to navigate the diverse landscape of the gold market and find the approach that best aligns with their investment goals. In this segment, we will delve into these alternative gold investment choices, shedding light on their characteristics and helping you make informed decisions as you consider the various options available to you.

Buying Gold Coins:

Another popular option for investing in gold is purchasing gold coins. Gold coins offer several advantages as an investment choice. Firstly, they are often smaller in size compared to gold bars, making them more affordable and accessible to a wider range of investors. Additionally, gold coins can carry historical or collector value, especially if they are rare or have numismatic significance. This dual nature of gold coins as both an investment and a collectible can provide potential upside in terms of value appreciation.

However, it's important to consider a few potential disadvantages when investing in gold coins. Unlike gold bars, some gold coins may carry a higher premium due to their collectible or numismatic value, which could impact the overall cost of investment. Furthermore, the availability and liquidity of certain rare or limited-edition gold coins may be more limited compared to standard gold bars. Investors interested in gold coins should also carefully evaluate the authenticity and condition of the coins they are considering to ensure they are getting genuine and high-quality pieces.

Buying Gold Rounds:

Another option for investing in gold is purchasing gold rounds. Gold rounds are similar to coins but lack the legal tender status and intricate designs typically found on coins. They are typically minted by private mints and come in various weights and designs, making them more accessible to investors seeking smaller gold increments.

One advantage of gold rounds is their relatively lower premium compared to some gold coins, making them a cost-effective choice for acquiring physical gold. However, as they lack the collectible or numismatic value associated with coins, their potential for substantial value appreciation may be more limited. Their value is closely related to that of the spot price similar to that of gold bars. As with any investment, thorough research and an understanding of the market dynamics are essential before purchasing gold rounds.

Buying Gold Numismatics or Rare Coins:

Another alternative to investing in gold bars is acquiring gold numismatics or rare coins. These coins hold historical or collector value beyond their gold content, making them unique and sought after by collectors.

While gold numismatics or rare coins can be intriguing for enthusiasts and collectors, they present some challenges as an investment. One difficulty lies in accurately valuing these coins, as their worth is influenced not only by their gold content but also by their rarity, condition, and historical significance. Determining their precise value requires specialized knowledge and expertise. Additionally, the market for these coins is primarily driven by collectors, and their value may fluctuate independently of the underlying gold market.

Therefore, investors focused solely on the gold content may find it challenging to assess and predict returns solely based on the value of these coins as precious metal assets. As such, careful consideration of the collector market dynamics and extensive research are necessary for investors interested in gold numismatics or rare coins.

Buying Gold ETFs:

Investing in Gold ETFs (exchange-traded funds) provides an alternative avenue for gaining exposure to gold without directly owning physical bars. Gold ETFs are investment vehicles that track the performance of gold prices and trade on stock exchanges. They offer several advantages, including ease of trading, liquidity, and the ability to invest in smaller amounts.

However, it's important to note that Gold ETFs are influenced by the stock market, and their prices can be influenced by factors beyond the underlying gold market, such as investor sentiment and market conditions. Therefore, investors must be aware that the performance of Gold ETFs may not perfectly align with the price movements of physical gold.

Additionally, it's essential to consider that not all Gold ETFs carry sufficient physical gold to back their investors. Some ETFs may hold derivative instruments or invest in gold futures contracts rather than physical gold. Consequently, investors should carefully review the prospectus and understand the specific methodology of the ETF to ensure that it aligns with their investment objectives and desired exposure to physical gold.

Before investing in Gold ETFs, investors should assess their risk tolerance, research the available options, and consider consulting with a financial advisor to make informed decisions based on their circumstances and investment goals.

Buying Stock in Gold Companies:

Another alternative to purchasing physical gold is investing in the stock of a gold company. By buying shares in a gold company, investors gain ownership in the business rather than directly owning physical gold. This investment choice allows individuals to participate in the potential success and growth of the company.

It's important to note that investing in gold company stocks is distinct from investing in the actual commodity, and the performance of these stocks can be influenced by various factors beyond the spot price of gold. Factors such as company management, operational efficiency, market conditions, and overall industry performance can significantly impact the stock's value.

Therefore, investors must conduct thorough research, analyze the company's financial health, and understand the inherent risks associated with investing in individual stocks. This alternative provides an opportunity to align with the gold industry and potentially benefit from the success of gold companies without the need to physically own the precious metal.

Buying Gold Mutual Funds:

Another alternative to acquiring physical gold bars is investing in gold mutual funds. Gold mutual funds allow investors to participate in the gold sector by purchasing shares in a fund that holds positions in various gold-related companies. Unlike owning physical gold bars, investing in gold mutual funds exposes individuals to the performance of the companies within the fund, rather than the direct value of the physical metal itself.

It's important to note that gold mutual funds can be influenced by market volatility and the performance of the broader stock market, as the value of the fund's holdings is tied to the performance of gold-related companies. Therefore, investors should be aware that the returns from gold mutual funds may not directly mirror the price movements of physical gold. However, gold mutual funds provide an opportunity to gain exposure to the gold sector and diversify one's investment portfolio beyond physical assets.

Buying Gold Futures:

The final alternative Gold investing option is buying gold futures contracts. Gold futures are derivative financial instruments that represent an agreement to buy or sell a specified amount of gold at a predetermined price and future date. They are typically traded on commodities exchanges.

It's important to note that buying gold futures contracts is not equivalent to purchasing physical gold itself. Instead, investors are speculating on the price movement of gold and seeking to profit from the price fluctuations. Gold futures are highly leveraged and involve a significant level of risk due to price volatility and market dynamics. Unlike owning physical gold, gold futures do not provide direct ownership or possession of the precious metal.

Investing in gold futures requires a thorough understanding of market conditions, technical analysis, and risk management strategies. It is typically pursued by experienced traders and institutional investors. It's crucial to recognize that trading gold futures involves complex financial instruments and can be subject to substantial losses.

Therefore, investors interested in gold futures should carefully evaluate their risk tolerance, possess adequate knowledge of futures trading, and consider consulting with a financial advisor before engaging in this alternative investment approach.

Should I Buy Gold Bars For My Investment Portfolio?

Making investment decisions requires careful consideration, and this includes deciding whether to buy gold bars for your investment portfolio. It's important to remember that all investments carry a level of speculation, including gold bars. The suitability of gold bars for your portfolio depends on your individual financial goals, risk tolerance, and the composition of your current investments.

One key principle of portfolio management is diversification. Having a diversified portfolio helps spread risk across different asset classes and can potentially enhance long-term returns. When considering gold bars as an investment, it is often recommended to allocate a portion of your portfolio, typically in the range of 10-15 percent, to physical gold or other precious metals. This allocation can act as a hedge against stock market volatility and concerns over inflation, as gold has historically demonstrated resilience during uncertain times.

By including physical gold in your portfolio, you can potentially safeguard a portion of your wealth and mitigate the impact of economic uncertainties. It's important to note that gold bars are tangible assets that can be securely stored and provide a sense of stability amidst market fluctuations.

One option to consider is a Gold IRA (Individual Retirement Account), which allows you to hold physical gold within a tax-advantaged retirement account. A Gold IRA provides an additional layer of protection for your wealth and helps ensure that your investment in gold remains aligned with long-term financial goals.

Ultimately, the decision of whether to buy gold bars for your investment portfolio should be based on a careful evaluation of your circumstances, objectives, and risk tolerance. Consulting with a financial advisor who specializes in precious metal investments can provide personalized guidance and assist you in making informed decisions.

Final Thoughts on Buying Gold Bars

I want to wrap up this blog by saying thank you for reading this information. Not that I appreciate you reading my content, but thank you for being an informed investor looking to gather all the information necessary to make informed investment decisions.

While The Plug is pro on Physical Gold Investment and precious metals in general, we don't want any of our readers to rely solely on our information. We should be part of the process and we thank you!

In conclusion, gold bullion and gold bars serve as popular investment options for individuals looking to diversify their portfolios and protect their wealth. These physical pieces of precious metal, typically made of 24k or .999 fine gold, offer investors a tangible and historically valuable asset. While gold bars lack legal tender status and face value, they are sought after by individuals around the world as a reliable store of value.

Investing in gold bars provides several advantages, including their potential as a hedge against inflation, market volatility, and economic uncertainties. They offer an opportunity to preserve wealth and maintain purchasing power over the long term. Additionally, gold bars come in various sizes, allowing investors to choose the option that best suits their budget and investment goals.

However, it's important to consider the potential disadvantages of investing in gold bars, such as the need for secure storage, potential liquidity constraints, and the necessity for careful evaluation of reputable sources and sellers. Investors should also be aware of alternative options, including gold coins, gold rounds, gold ETFs, gold stocks, gold mutual funds, and gold futures. Each alternative has its unique characteristics and considerations, making it crucial for investors to conduct thorough research and seek professional advice when building their investment portfolios.

For individuals seeking a secure and tax-advantaged solution for their retirement savings, a Gold IRA rollover presents a compelling option. By transferring funds from existing retirement accounts into a Gold IRA, individuals can hold physical gold within their retirement portfolio. This offers an additional layer of protection and potential growth, ensuring that their retirement savings are safeguarded against market volatility and inflationary pressures.

In summary, gold bullion and gold bars represent a valuable asset class for investors aiming to diversify their portfolios and protect their wealth. Understanding the benefits and risks associated with investing in gold bars, as well as exploring alternative investment choices, empowers individuals to make informed decisions aligned with their financial goals and risk tolerance. Considering a Gold IRA rollover further strengthens the security of one's retirement savings.

Nowhere in this article did we engage the reader to buy a product or service. We provide information and resources to educate our readers. All investments can lose value and investors need to do their due diligence before investing.