Purchasing Gold Bars Explained
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Purchasing Gold Bars Explained

5 Min.

Investors who want to own physical gold for security and tangible ownership can buy gold bars. This guide explores the process, considerations, and options for purchasing gold bars.

Basics

Investors looking to add the tangible security of gold to their portfolios often opt for buying gold bars instead of intangible investments like gold exchange-traded funds (ETFs). Gold bars, also known as gold bullion, can be acquired at the spot price of gold plus additional costs, depending on the seller. Owning physical gold is favored by many investors because it can be easily liquidated in the event of an economic crisis.

Purchasing Gold Bars

Online Buying

Buying gold bars online is a straightforward process. Licensed retailers offer a wide selection of gold bars on their websites. Trusted online retailers include the American Precious Metals Exchange (APMEX), JM Bullion, and Wholesale Coins Direct. Buyers can choose gold bars based on weight, quantity, and price.

Upon receiving the gold bars, it is advisable to keep them in their packaging to prevent damage and store them in a secure location, such as a home safe or safety deposit box. Buyers are typically responsible for delivery fees and insurance.

In-Person Purchase

Some investors prefer buying gold from local dealers for a more hands-on experience. Local dealers allow buyers to inspect the gold in person and make cash payments. However, local dealers often charge higher prices compared to online retailers and have a limited selection.

Online Retailers

Online gold retailers tend to offer lower prices due to higher sales volumes. However, finding reputable online dealers requires thorough research. Some online stores offer discounts for larger quantities and may have different pricing based on payment methods, such as credit cards or wire transfers.

Auction Sites

Another option is to bid on gold bars through online auction sites like eBay. When using auction websites, it is crucial to review the seller's feedback for authenticity, shipping costs, and reliability.

Gold-to-Go ATMs

In cities like Las Vegas and Dubai, Gold-to-Go ATMs provide the convenience of purchasing gold bars. However, buyers should be cautious, as these ATMs often sell gold at prices higher than the spot price and other retailers.

When Purchasing Gold Bars

  • Storage: Investors must decide how to store their gold bars. While some choose to keep them in a home safe, others opt for safety deposit boxes or custodial services. Custodial services offer enhanced security but come with additional fees.
  • Insurance: For those who store gold at home, purchasing insurance is advisable to protect against theft, damage, or other unforeseen events.
  • Purity: Investment-quality gold bars should be at least 99.5% pure gold, with the remaining portion usually consisting of silver or copper. Buyers should look for bars with the manufacturer's name, weight, and purity stamped on them, typically indicated as 99.99%. Notable mints producing high-quality gold bars include the Royal Canadian Mint, Perth Mint, and Valcambi.
  • Size: Consider the ease of liquidation when choosing gold bar sizes. Smaller bars, like 1-ounce bars, are easier to sell individually, while larger bars may be less liquid. Gram gold bars are another option for those looking for smaller denominations.

Gold Bars vs. Other Gold Investments

Investors interested in gold should be aware of the differences between gold bars and other forms of investment, such as gold coins. Gold coins often have historical and collector's value, which can make them more expensive despite containing less gold by weight.

Gold bars, on the other hand, are favored for their ease of long-term storage and cash conversion, making them a popular choice among investors seeking a safe haven.

Diversification Options

While gold bars offer tangible security, they do not provide dividends, yields, or passive income. Therefore, investors may consider diversifying their portfolios by exploring indirect gold investments, such as gold mining stocks, gold-focused ETFs, mutual funds, or gold futures contracts.

Pricing Structure for Gold Bars

When purchasing gold bars, it is crucial to consider the pricing structure, which may include authentication certificates, shipping and handling fees, and payment processing charges. Investors can compare different sellers based on these factors.

What to Look for in a Seller

  • Reputation: Check resources like the Better Business Bureau and Ripoff Report to assess a seller's reputation and reliability.
  • Full Disclosure: Reputable sellers should transparently disclose all fees associated with the transaction.
  • International Purchases: For buyers in the U.S. purchasing from international sellers, be cautious of excessive charges and potential customs issues.

Caution During Economic Turmoil

Gold tends to perform well as a hedge during economic recessions. However, periods of economic uncertainty may also attract gold scammers. Investors should exercise caution and due diligence when considering gold purchases during such times.

Conclusion

Purchasing gold bars can be a viable option for investors looking to add tangible security to their portfolios. Whether buying online or in person, it is important to consider factors such as storage, insurance, and the reputation of the seller. Gold bars offer ease of long-term storage and potential liquidity during economic uncertainty. However, investors should also explore other diversification options and be cautious of scams during periods of economic turmoil.

Gold
Gold Bars
American Precious Metals Exchange (APMEX)
Automated Teller Machine (ATM)
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