Gold bars tend to be cheaper per unit than gold coins, which make them the mainstay of the gold bullion industry. Apart from individual investors, governments also use gold in the form of bullion bars to store and trade, because of their ease of storage. Which leaves the burning question – Where Can I Buy Gold Bars?
Before you Buy
Gold bars are available in a range of sizes and formats, so it is important that you decide which gold bar suit your needs best, before you make any purchases.
As with other gold products, the bigger the bar, the smaller the premium will usually be. Gold exchanges, central banks and Exchange Traded Funds (ETF’s) usually trade in large 400 ounce bars, or gold ingots’, but because of their indivisibility, they are not considered suitable for the smaller individual investor.
Other disadvantages of buying large gold bars include a smaller pool of potential buyers owing to their high cost, the fact that they are counterfeited more often because of the scale of returns that can be made, and that they are more likely to require an assay at your cost before resale.
Although gold bars as small as 1 gram or even 0.35g, also known as ‘wafers’ because they are so thin, are available, the premium applicable will be proportionally larger, so they are also not considered a wise investment for the novice investor.
One ounce gold bars are generally considered the best buy for the individual investor, since their premium is relatively low and there is usually a ready market for them in case you need the funds. Bear in mind, though, that physical gold should be held as long as possible and only liquidated as a last resort.
Purity and Weight
Gold bullion is valued on purity and weight. In addition, the quality of a gold bar is also important, which relates to the reputation of the refiner identified by the hallmark and stamping on the bar.
In most countries, including EU countries, gold bars will be recognized as investment gold only if they have a purity of 99.5% or more, that is, 995 parts per thousand (24 karat).
Typically, gold bullion bars and ingots will be refined to a higher purity of 99.9% or even up to 99.99% (the ‘four nines’), but purity in excess of this is technically difficult to achieve.
Be aware that gold bars stamped with fineness or purity of less than 99.5% will not be considered investment gold in many parts of the world. As well as being considered worthless for investment purposes, such bars will be likely to attract taxes upon importing or selling them.
Gold bullion bars are available in a wide range of weights these days, in both Troy Ounces and metric units – grams and kilograms. The smallest size is usually one gram, although in some parts of the world, 0.3g bars – called wafers – can be purchased. Bars then range through popular weights including 5g, 10g, 20g, 50g, 100g, 500g, 1kg in metric sizes and ¼oz, ½oz, 1oz, 5oz, 10oz, 20oz in Troy Ounces, not to mention the well-known nominal 400oz gold ‘brick’.
Bear in mind that 1 Troy Ounce is equal to 1.097 standard ‘avoirdupois’ ounces, or 31.1g (an avoirdupois ounce is 28.35g).
Chinese gold bullion bars are produced in multiples of weight termed the ‘Tael’, which is legislated at 50g in mainland China, but varies in other parts of the East, being approximately 37.8g or 1.2oz in Hong Kong. Tael bars are stamped with the weight either in grams for Hong Kong, or in Taels for mainland China. They are produced at above 99.5% purity, usually to the ‘four nines’ standard.
Tola bars and Tezabi bars are cast bars found in south Asia – India and Pakistan – and mostly do not bear any markings, so are not popular with western investors.
For those who can afford them, 1kg (32.15oz) ‘kilobars’ are very popular with traders and large investors, owing to their convenient size and low premium. However, for a smaller investor, the lack of divisibility of a bar of that size and its cost should make it less attractive.
For the novice, the popular 1oz or 100g bars would be the most appropriate to consider, unless you have a more limited budget for investing, in which case a ½oz bar could be considered.
Owing to the high degree of purity required of investment gold, the weight of the gold bar should match its stamped weight. Owing to the non-standard size of cast bars, it is not possible to ensure that stamped weight is all gold and not alloy or, worse still, gold plating, so be sure to purchase gold bars from a reputable dealer.
Assurance of Quality
When buying gold bars, choosing one with a recognized hallmark and proper stamping will reduce the chances of your being scammed. The stamped markings need to include the refiner’s name and/or logo, the weight of the bar, its purity (above 99.5%) and preferably a serial or registration number.
Should any of this information be missing, a potential buyer of your gold bar may demand an assay, which will be at your cost and will reduce your return. Products from private mints that do not provide all the information necessary to determine the quality of a gold bar should therefore be avoided by the novice investor.
So if you are purchasing a small gold bar, you should insist on buying one with a well-recognized brand, or hallmark, and preferably a minted bar that is sealed in a plastic capsule. Some of the most reputable refiners, accredited by the London Bullion Market Association (LBMA) and Comex include: Umicore SA, Argor-Heraeus SA, PAMP Suisse, Velcambi SA, Johnson Matthey Ltd, Metalor Technologies USA Corp., Umicore Brasil Ltda, Rand Refinery Ltd, Istanbul Gold Refinery, Mitsubishi Materials Corp, and sovereign mints such as the Royal Canadian Mint and The Perth Mint.
Before looking at buying a gold bar you should familiarize yourself with the hallmarks of some of the accredited refiners that you would be comfortable with.
Now you’re ready to go looking for your gold bar, but where should you buy from.
Where to Buy
As is the case with gold coins, there are a number of sources for buying gold bars, including online dealers, online auction sites, gold shows, or from a local ‘brick and mortar’ gold dealer, a TV promo, or a cold caller. The pitfalls are generally the same, and the bottom line is again; only buy gold bars from a reputable seller.
Gold Shows, TV Promotions and Cold Callers
Avoid buying from cold callers or in response to TV promotions like the plague, as these are the least transparent sellers.
Likewise, buying at a gold show or expo is likely to lead to you paying more than necessary unless you really know your facts.
Online Auction Sites
Online auctions have their own pitfalls, and you may end up bidding more than the worth of the item and then also having to foot the bill for shipping and insurance. If you are considering buying from one of these sites, firstly stick to “Buy It Now” or “Make Offer” listings, and then be sure to check the seller’s reviews and the delivery terms.
Remember to look for a weight and purity of gold bar that suits your investment goals, and to only buy bars produced by recognized refiners.
Local Bullion Dealer
Local ‘brick and mortar’ gold bullion shops come in many shapes and sizes, and have varying degrees of pro’s and con’s. A small local dealer may be friendly and helpful, with low overheads, but will they have the knowledge and experience to advise you correctly. More importantly, do they have the facilities to safely handle larger orders of bullion?
A local branch of a larger enterprise might have a wider selection of products, payment and delivery options, and greater access to better deals on the products you are looking for. However, when dealing with a larger, reputable dealer, it may be wise to investigate whether they have a website through which you can make online purchases.
There are a number of ways of identifying reputable online gold bar dealers. These include good Trustpilot or Better Business Bureau ratings (which need to be checked for validity), inclusion of broadly educational rather than strictly sales-focused content, ability to supply larger volume and to ship promptly within 24 to 48 hours of your payment clearing – in other words they have stock in reserve, they accept a variety of forms of payment, and a buyback policy.
These features will generally indicate that the dealer is established and will still be around for the long term. The buyback policy often means you might get better resale value if you sell back to them, instead of selling through another dealer.
Low overheads generally translate into better prices and, in addition to these advantages, online buying allows you to buy at any time of the week day or night, with the price fixed in when you make your purchase. You can make your purchase from wherever you find yourself when the price is right for you, whether from a laptop, tablet, or smart-phone, as long as you have access to the internet.
Just be sure that you have done a proper comparison of the associated costs, commission, bank charges, shipping and insurance fees, before pressing the “buy” button!