Buying Physical Gold Bars

So you’ve decided to buy bullion. Now you’re faced with a choice between bars and coins. The right choice depends on your circumstances, but bars do offer certain advantages over coins. Most importantly, gold bars are typically far cheaper than coins. You pay a higher mark-up for the designs and inscriptions featured on coins.

You can buy bars in far larger weights than you can buy coins. This will save you further money, but it doesn’t really come into play when buying an ounce or less. Bars are also more compact than coins, so they will reduce (not insignificant) storage costs. You face three main choices when you buy bars: weight, refiner, and dealer. This article will guide you towards the right choices.

Sizes of Gold Bars

Bars are readily available in sizes up to a kilogram (32.15 troy ounces). Considering that such a bar sells, at spot, for over $55,000 (December 2012), it makes sense that kilo bars are primarily bought by governments and institutions.

In the retail market, you’ll more frequently see gold being sold in 10-ounce bars. These are an efficient way to buy gold, but they come with the downside that they can be hard to sell quickly. 1-ounce bars are another weight frequently encountered.

Bars below one-ounce primarily have novelty value, since the high relative markups remove most of the investment potential. These mini-bars are also frequently inscribed with various commemorations and designs.

Gold Bar Production

The size of the bar determines how it is made. Large bars—ingots—are made by pouring molten gold into molds. Smaller bars—biscuits—are made by pressing gold into strips, then stamping out the bars. The distinction has relatively little impact when it comes to buying gold, but it is important to know the industry’s lingo.

You want to buy the largest weight of bar that your investment funds allow. Otherwise, you’re throwing away money. One exception: if you can only afford a few ounces, you may want to consider investing in gold coins like the Krugerrand, which are well-known, and are stamped with their weight and purity. The liquidity of these coins can justify the slightly higher cost.

Brands of Bars

When it comes to refiners, your best option is probably a Swiss refiner—Credit Suisse is known for the quality of its bars—but a number of refiners are good options: Metalor, Argor-Heraues, SilverTowne, PAMP, Johnson-Matthey, and Engelhard.

As for selecting a dealer, the keys are to follow the precautions outlined in [ed: link to htb safely] and to comparison shop. Also, be careful about buying bars from a brick-and-mortar coin shop, as they might pressure you to buy things you did not intend to, and they typically have high markups. Make sure that you find a suitable storage solution before purchasing gold bars. Your dealer likely will be able to help you with this.

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