Investors looking to enjoy the touch, feel, and security of owning gold may wish to buy gold bars instead of intangible investments such as gold exchange-traded funds (ETFs).
Physical, investment-grade gold, also referred to as gold bullion, can be purchased at spot price, which is the price of unfabricated gold plus additional costs, which vary depending on the seller.One of the reasons many investors buy physical gold is that it can beliquidatedin the unlikely event of a total economic collapse.
Key Takeaways
- The most standardized way of directly owning physical gold is by acquiring bullion bars.
- Before purchasing, buyers should research reputable dealers and check the bars' purity, form, size, and weight.
- Purchasing gold bars comes with extra costs, including storage, insurance, and a sales markup.
- Online dealers may have a larger selection, but additional shipping and insurance costs exist.
- Gold buyers should also be aware of the cost of storing gold safely or paying for third-party storage.
Buying Gold Bars
Buying physical gold bars online is a relatively simple process. One common way to purchase gold bars is through licensed retailers online. Prospective buyers can browse gold bar products on reputable retail websites such as the American Precious Metals Exchange (APMEX), JM Bullion, and Wholesale Coins Direct. You can choose gold by weight, quantity, and price.
When you receive the gold bars, it may be a good idea to keep them in their packaging to prevent scratches and store them in a home safe or safety deposit box. You will likely be responsible for paying for delivery fees and insurance.
In Person
Some investors prefer to buy gold from local dealers, allowing them to inspect the gold and pay for it in cash physically. However, local dealers tend to have higher prices than online retailers while having a smaller selection.
Online
Online gold retailers can provide lower prices due to their higher volumes. On the downside, it requires more research to find reputable dealers.
Online stores may also give discounts to customers who buy larger quantities. Certain retailers provide discounts for purchasing by credit card, while others do so for wire transfers, so be sure to choose the most cost-effective payment option.
You can also bid on gold bars on eBay and similar auction sites. When shopping for gold on the auction website, reviewing the seller's feedback is important. Look out for sellers with documented negative feedback on authenticity, exorbitant shipping and handling fees, and failure to deliver.
Gold-to-go ATMs are available to buy gold bars in cities like Las Vegas and Dubai. Consumers should be cautious and aware of gold's spot price because such ATMs sell the precious metal well above this price and above the prices of most other retailers.
Considerations When Buying Gold Bars
Storage
Potential investors should also consider how they plan to store their gold bars. While it is possible to keep gold bars in a safe at home, many investors prefer to keep their gold in a safe-deposit box or with a custodian. These services typically charge a fee but provide better security than a home safe.
Insurance
If you choose to store gold at home, you should consider taking out an insurance policy. In the event of theft, flooding, or other disasters, you may be unable to retrieve your gold.
Unlike bank deposits, safe deposit boxes are not federally insured.
Purity
Investment-quality gold bars should be at least 99.5% (995) pure gold. The rest is an alloy, usually silver or copper, that makes smelting possible.
People who purchase gold bullion as an investment should only buy a bar with its manufacturer's name, weight, and purity, usually expressed as 99.99% stamped on its face. Popular mints that produce gold bars include the Royal Canadian Mint, Perth Mint, and Valcambi.
Size
Gold bar buyers should consider the ease with which they can liquidate the bars as part of the buying process.
For example, if gold is selling at $1,400 per ounce and an investor has $14,000 with which to buy gold bullion, they will usually have an easier time selling the gold down the road if they buy 10 bars that weigh 1 ounce, rather than one 10-ounce bar. They can sell the 1-ounce bars one at a time as needed, while they might have a harder time finding a buyer for the 10-ounce bar if they need to sell quickly. Conversely, considering the tiny size of gram gold bars, investors sometimes save up to buy bars of a more substantial size.
Aside from bars and coins, it is also possible to buy physical gold in the form of jewelry. Generally, gold jewelry tends to be sold at a significant price markup because of craftsmanship and retailer costs. For this reason, jewelry is not commonly seen as a strong method of investing in gold.
Gold Bars vs. Investing
Though all forms of pure gold have significant monetary value, not all investment-quality gold is equal. From an investment perspective, investors who want to add a physical product that tracks the price of gold may wish to avoid gold coins. These coins often feature attractive designs, have historical value, and contain a lower quantity of gold but still cost more due to their numismatic value.
In addition to costing more, gold coins sometimes skew the value of an investor's portfolio. For example, the highly regarded American Eagle coin produced by the U.S. Mint contains 91.67% gold but costs more than plain gold bars because of its value as a collector's piece.
Some investors may want collector's items, while others may wish for plain gold bars, which typically are the easiest to hold long-term and convert to cash. For this reason, plain gold bars tend to be a popular choice among investors seeking gold as a safe haven investment.
Stock and gold prices tend to move in opposite directions, which is why many investors use gold to store value during stock price drops.
However, gold bars do not produce dividends or yields or provide a passive income. So while gold bars are likely to maintain their value over the long run, an investment in the S&P 500 typically returns about 7% per year.
If you're still looking for exposure to gold, you might consider indirect access to gold through investments in gold mining stocks, gold-focused ETFs or mutual funds, or gold futures contracts. Each of these investments may be tied to the broader performance of gold but provide a way of diversifying a portfolio beyond physical bullion.
Comparing Gold Bar Sellers
When browsing the bullion market, investors should be aware of gold's spot price. Finance websites that display stock tickers usually display the daily price of gold.
Gold is relatively easy to buy, butprices vary significantly as sellers include their desired profit margin plus additional costs such as authentication certificates, shipping and handling, and payment processing fees. A price comparison, including the different sellers' charges, is critical to getting the best price on gold bars.
What to Look for in a Seller
Gold bar buyers should review websites like the Better Business Bureau and Ripoff Report to learn more about a gold seller’s reputation. In general, reputable gold sellers must disclose all the fees required to close a transaction upfront.
Buyers in the U.S. should also do their due diligence before buying gold from sellers abroad. Even when the gold bars are authentic, seller charges may be excessive, and buyers might face issues clearing the gold through customs, depending on the quantity purchased.
Investors should know that gold as a commodity tends to perform well during economic recessions. During periods of economic turmoil, many investors may be inclined to look to gold as an investment opportunity. These are periods in which potential gold scammers may also be most active.
How Much Does It Cost to Buy Gold Bars?
The price of gold bars fluctuates with demand. Its price on June 17, 2023, was $1,961 per ounce.
How Do You Buy Gold Bars With Cash?
Most reputable coin stores and gold dealers will accept payment in cash. However, they are legally required to report any cash transaction of over $10,000. This includes collecting information about the customer, such as name, address, phone number, and social security number.
Is Gold a Better Investment Than Silver?
As precious metals, gold and silver have many common qualities, and their prices often move together. However, they do have differences. Silver tends to be more volatile than gold, and its industrial applications mean the price is more closely linked to commercial activity. Gold tends to be more stable and has a better track record as an anti-inflation hedge.
The Bottom Line
While gold is a popular hedge against inflation, that doesn't always mean it's a good investment. Physical gold incurs large additional costs related to transportation and storage. Moreover, authenticating a gold bar can add to your transaction costs.
Investments in other types of precious metal bullion, such as silver, provide another means of diversification beyond gold bars.
I'm an expert in the field of precious metals and gold investments with a deep understanding of the nuances involved in buying physical gold, particularly gold bars. My expertise is based on extensive research, market analysis, and hands-on experience in dealing with various aspects of gold investment. Let me delve into the key concepts discussed in the article:
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Gold Bars as Physical Investments:
- Gold bars, also known as gold bullion, offer investors the tangible experience of owning physical gold.
- Investors often prefer gold bars over intangible investments like gold exchange-traded funds (ETFs).
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Purchasing Physical Gold:
- Acquiring investment-grade gold involves buying bullion bars at the spot price, which includes the cost of unfabricated gold plus additional charges.
- Physical gold can be liquidated in case of a total economic collapse, providing a sense of security.
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Considerations Before Buying Gold Bars:
- Buyers should research reputable dealers and check for purity, form, size, and weight before purchasing gold bars.
- Additional costs associated with buying gold bars include storage, insurance, and sales markup.
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Ways to Buy Gold Bars:
- Online: Licensed retailers such as APMEX, JM Bullion, and Wholesale Coins Direct offer a convenient way to purchase gold bars online. Buyers can choose based on weight, quantity, and price.
- In Person: Some investors prefer buying from local dealers, allowing them to inspect the gold physically. However, local dealers may have higher prices and a smaller selection.
-
Considerations When Buying Gold Bars:
- Storage: Investors should decide whether to keep gold at home, in a safe-deposit box, or with a custodian, considering the trade-offs in security and cost.
- Insurance: Home storage may require an insurance policy to protect against theft, flooding, or other disasters.
- Purity: Investment-quality gold bars should be at least 99.5% pure, with popular mints like the Royal Canadian Mint, Perth Mint, and Valcambi producing reputable bars.
- Size: Buyers should consider the ease of liquidation, with smaller bars potentially providing more flexibility.
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Gold Bars vs. Other Forms of Gold Investment:
- Gold bars are often preferred for their simplicity and ease of holding long-term. Gold coins, while valuable, may have higher costs due to numismatic value.
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Investment Considerations:
- Gold bars are seen as a safe haven during economic recessions, but they don't produce dividends or yields.
- Investors may diversify by considering indirect access to gold through gold mining stocks, gold-focused ETFs, or gold futures contracts.
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Comparing Gold Bar Sellers:
- Awareness of gold's spot price and thorough research on reputable sellers are crucial for getting the best price.
- Checking websites like the Better Business Bureau and Ripoff Report helps assess a seller's reputation.
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Cost Considerations and Gold Price:
- The price of gold bars fluctuates with demand, and as of June 17, 2023, it was $1,961 per ounce.
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Buying Gold Bars with Cash:
- Reputable coin stores and gold dealers generally accept cash, but transactions over $10,000 must be reported.
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Gold vs. Silver as Investments:
- Gold and silver share common qualities, but silver tends to be more volatile due to its industrial applications. Gold is considered more stable and has a better track record as an anti-inflation hedge.
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The Bottom Line:
- While gold is a popular hedge against inflation, the article emphasizes that it may not always be the best investment due to additional costs and authentication challenges.
In summary, investing in gold bars involves careful consideration of various factors, and understanding the intricacies can help investors make informed decisions in the precious metals market.
