How to Buy Gold Bars
When the stock market continues its volatility, investors often consider adding gold to their portfolios as a safe haven investment and a hedge against inflation. For some investors, the idea of holding physical gold — as opposed to gold companies’ stocks or gold exchange-traded funds (ETFs) — is appealing in part because it gives them more control over their investment.
First-time investors in physical gold may opt for gold bars as they’re easy to buy, highly liquid compared to other physical precious metals and available in many different sizes and valuations.
If you’re considering adding physical gold to your retirement portfolio and decide you want to buy gold bars, you need to first educate yourself about the types you can buy, where to buy and how to buy.
What are gold bars?
Gold bars — also referred to as gold ingots when they’re large — are one of the most common forms of investable gold, along with gold rounds and coins. You can purchase them from precious metals dealers, many of whom conveniently operate online, as well as from other types of retailers.
What is gold bullion?
Gold bullion is high-purity gold that has been melted into bars, ingots, rounds or coins. It’s important to know the spot price — the price at which gold can be bought or sold on the marketplace at any given time — when you set out to buy gold.
Keep in mind that precious metals dealers routinely mark up the gold they sell, particularly for certain gold bullion coins, which means you’d be paying more than the face value of the metal. The lower premium for bullion products is one reason why they are attractive for gold investors.
Gold bars vs. gold rounds vs. gold coins
Gold rounds and gold coins are often referred to interchangeably, but there is an important difference between the two. Rounds are more similar to gold bars in spite of their shape: While gold coins are distinguished by distinctive patterns, rarity and condition, gold rounds and bars derive their value from their weight.
The high premium on some coins, especially collectibles, can make them challenging to sell for what they are worth, especially on short notice. Keep this in mind if you plan to buy rare, uncirculated or collectible coins.
Advantages of buying gold bars
Are gold bars a good investment? For gold investors, buying gold bars can offer some advantages you might not get from paper assets such as stocks, mutual funds, ETFs or bonds.
Inflation hedge
When inflation is high, investors use gold as a hedge against rising costs of goods and services, since the value of gold generally rises in tandem with that of other commodities. Gold acts as a store of value even when the strength of the U.S. dollar comes under pressure.
Cushion from market volatility
Gold is considered a safe-haven asset, meaning that it retains its values even when the values of other assets fall. Gold generally moves inversely to stocks, with prices typically rising when the market plunges.
Enhances diversification
Investment advisors recommend a diversified portfolio to grow wealth and mitigate risk. Gold, as well as other precious metals like silver, platinum and palladium, can contribute to diversification because they behave differently than other assets, especially during periods of economic uncertainty and geopolitical unrest.
Disadvantages of buying gold bars
Investing in gold bars is appealing to some investors, but this asset also has drawbacks.
No income generation
When you buy stocks and bonds, you get the opportunity to earn income via dividends or maturity yields, respectively. Although gold is traditionally held because it is a store of value, without its ability to produce yield, you won’t earn income that can be reinvested to further grow your nest egg through compounding.
Value may decrease
As with stocks or any other asset class, this key caveat remains true: Past performance is no guarantee of future returns. Gold can drop in value like any other investment, which is something you need to take into account if you expect to need to sell your gold at any point.
Pricing can be volatile
Many financial advisors consider gold to be an unsuitable short-term investment because its price can be volatile. That's why you should make sure that you have at least three to five years before you will need to liquidate your gold. This is especially true if you choose to invest in gold coins and gold bars, since there is less of a market for rare gold coins and therefore, less liquidity in that sector of the precious metals market.
What to consider when buying gold bars
Any gold investment should be conducted in the context of your broader financial circumstances. Buying physical gold is a bit different from purchasing paper assets because you need to make sure you’re purchasing from a legitimate seller.
The weight, manufacturer and purity of each bar should be stamped on the front of it. You can expect genuine gold bars to have registered serial numbers you can use to verify their authenticity. Both government mints as well as private mints operate refineries that produce gold bars. Seek out products made by reputable manufacturers like the U.S. Mint, Credit Suisse and Sunshine Mint.
If you plan to invest in gold coins, keep in mind that extremely rare ones might be more difficult to sell for full market value. You may want to stick to better-known and more widely circulated coins like the American Eagle produced by the U.S. Mint, the Canadian Maple Leaf produced by the Royal Canadian Mint and the Australian Kangaroo produced by the Perth Mint.
Price
You can find the current trading value of gold by looking it up on an exchange like COMEX. Make sure you know the “spot price” or face value of the gold to ensure you’re getting the best deal, and be aware that vendors often mark up the price of the gold they sell, particularly if you choose to buy rare or uncirculated gold coins.
In addition to the price of the gold, remember to check that your budget accounts for the cost of shipping physical gold to you, including the insurance.
Purity
There is an international purity standard for investment-grade gold: Investible gold bars should be 99.5% pure. (If you plan to buy gold coins as well, their gold content should be between 22 karats and 24 karats.) Make sure you are working with a reputable dealer to ensure you are buying pure gold.
Storage and insurance
Unlike owning a stock portfolio, if you own physical gold you will need to ensure that it is stored securely, either in a home safe or at a safe deposit box at a bank. You will also need to insure it against loss, theft or natural disasters. Factor into your budget the cost of securing and insuring your gold. Learn more by reading our guide on how to insure physical gold.
Investment goals
Since gold bars don’t generate income, you need to make sure that the rest of your portfolio will generate sufficient retirement income. If you do anticipate needing to liquidate your gold for income, you should have a long-term, preferably flexible timeline for selling it.
It’s also advisable to buy gold bars rather than gold coins if you anticipate selling, since gold coins can command a higher premium that may be hard to recoup.
Where to buy gold bars
You can buy gold bars from licensed online dealers in the bullion market. Although these kinds of vendors make buying very convenient, you should do your research before making even a simple purchase of gold bullion bars.
Some well-known precious metals dealers that sell gold and silver bars include:
- JM Bullion
- APMEX
- Provident Metals
- Westminster Mint
- Money Metals Exchange
In addition to online brokers such as the ones listed above, you can sometimes buy smaller gold bars — particularly those of 100 grams or less — from jewelry stores or pawn shops. Be mindful that although you might save some money by avoiding shipping costs, buying from an unvetted or unlicensed source ultimately could be riskier, since you could wind up with less-pure or lower-karat gold.
How to buy gold bars
If you’ve decided you want to buy gold bullion and have calculated the amount of gold you want to add to your investment portfolio, here is how to go about actually making your purchase.
Research companies and check reviews and ratings
It’s critical to make sure you’re working with a legitimate seller if you plan to have part of your nest egg in gold. Resources like the Better Business Bureau and the Business Consumer Alliance are a good place to start your research as they offer tools like rankings and alerts about legal actions taken against the companies.
Online platforms that compile user reviews such as TrustPilot can also give you visibility into how a company treats its customers.
Compare gold bar prices
As with almost anything you buy, it pays to shop around. Compare gold bullion bars of the same size made by the same manufacturer to be sure you can get an apples-to-apples comparison — just remember that the spot price of gold fluctuates. Cast bars of gold bullion tend to have a lower premium than minted bars.
Place order
Many online gold dealers let you make your purchases right on their websites. Some might let you make your purchase with a credit card, but you might get better pricing if you agree to a wire transfer.
Some gold retailers also offer bulk discounts for people buying large quantities of gold.
Decide how to store your gold bars
For many, the biggest inconvenience of investing in physical gold is storing it, securing it and insuring it. If you plan to store your gold in your home, invest in a high-quality safe. Alternatively, you can keep your gold in a bank safe deposit box.
Be aware that if you plan to buy via a gold IRA, IRS rules dictate that you must store it in an approved depository. You cannot keep IRA gold at home or in a bank safe-deposit box.
Summary: Should you buy gold bars?
- Buying gold bullion (most often in the form of bars) is one of the most straightforward ways to own physical gold.
- Gold bars are priced by their weight — unlike gold coins, which also derive value from their rarity or collectible status. The bars are stamped with the manufacturer, weight and purity.
- Gold is sought out as a hedge against inflation and as a store of value. It can add diversity to an investment portfolio and provide you with an alternative to paper assets like stocks and bonds.
- Gold does not generate income, and even if its value grows, you don’t gain the benefit of compounding as you would with assets like stocks or mutual funds.
- Holding physical gold means incurring expenses for storage and insurance.
- Gold prices fluctuate, and online merchants often mark up from the “spot price.”
- Before you buy gold, conduct research so you know you’re buying from a reputable dealer.
In the U.S., U.K., Europe and Australia, you are most likely to encounter gold bars that are denominated and priced in grams or in troy ounces. (Refiners in other parts of the world such as Asia and the Middle East use different denominations.)
Two of the most common large gold bars are the London Good Delivery 400 oz bar and the COMEX Good Delivery 100 oz bar. (Keep in mind that concentrating so much value in a single multiple ounce bar could make liquidating it more challenging.) Small bars, on account of being easier to acquire and trade, come in many more denominations, so you're sure to find a combination that suits your investment needs.