Gold prices recently reached over $1,600 an ounce. Because of that and the fact it’s a strong safe-haven investment, you need to know how to invest in gold bars.
Buying gold is a popular option for investors to guard against market downturns.
Traditionally, when equities markets go down, safe havens, like gold, tend to go up.
Basically, while gold isn’t used as a currency, gold can be easily turned into cash and it highly liquid. That’s what makes gold so popular.
You can buy different types of gold. There are mining stocks — companies who specialize in mining gold around the world — or physical gold — gold you can actually hold in your hand.
Buying mining stock is just like buying any other stock. However, just like the market, mining stocks can be speculative and many factors go into how that stock goes up or down.
Now, we’re going to show you how to invest in gold bars.
How to Invest in Gold Bars
1. Here’s Why Investing in Gold Bars is Good
When you set out to purchase gold, you can choose between bars, coins and even jewelry.
If you’re torn between coins and bars, here are some things to keep in mind:
- Bars are less expensive than coins. One of the main reasons for this is because coins usually have pretty intricate designs on the. Bars, on the other hand, are simply stamped. You will wind up paying for those designs.
- Bars are easier to store. Consider that 500 ounces of gold bars are far smaller than 500 ounces of gold coins. If you are paying to keep your gold stored, that is something to keep in mind.
Remember, bars are still portable, private, liquid and aren’t going anywhere anytime soon.
Knowing why gold bars are a good investment helps understand how to invest in gold bars.
2. Where to Buy Gold Bars
There are many different outlets where one can purchase physical gold — outside of gold jewelry.
However, just like buying anything online, you need to make sure the buyer is reputable. Do your due diligence and check out their credentials before you drop hundreds or even thousands of dollars with someone.
3. You Can Pick the Size
That’s right, you aren’t relegated to just buy a big bar of gold.
Most websites allow you to choose from a 1-gram wafer up to a 400-ounce gold bar. There are some advantages to choosing a smaller weight:
- Smaller divides easier. If you buy 400 ounces in wafers, it’s easier to divide and sell. If you have a 400-ounce bar, you have to sell the entire bar.
- Smaller sizes are easier to sell. Finding someone who can afford a 400-ounce gold bar is pretty difficult. It’s much easier to find another person to buy one-gram wafers.
- You don’t need an assay. An assay is basically a test to determine the quality of your gold. Large bars typically require an assay which costs more. Getting one can also slow down your ability to sell because it takes longer to get. Smaller weights of gold don’t usually require an assay.
If you know the different sizes of gold and their advantages, it helps to understand how to invest in gold bars.
4. Know Your Refiner
A good way to tell if the gold bar you’ve purchased is reputable is to look at the stamping. The stamping tells you who refined the bar, the weight, the purity and the registration number.
If there’s no stamping, it could mean the bar was refined by an unknown entity or that it is of low quality.
Pay attention to the refiner. You want to buy a gold bar from a reputable source. Having that will ensure your bar is high quality, and it should make reselling the bar much easier.
Here are some of the more highly regarded refiners around the world (and this is not a full list):
- Johnson Matthey.
- PAMP Suisse.
- Sovereign mints such as the Royal Canadian Mint and Perth Mint.
If your refiner is any of these, your gold is likely legit.
Knowing how to spot a refiner is another step in understanding how to invest in gold bars.
5. Storing Gold Bars
After you buy your gold bars, you have to put it somewhere.
From 1933 to 1974, U.S. citizens could not physically own gold without a license. Those restrictions were lifted on Jan. 1, 1975. That means you can own and store your gold bars wherever you want.
But, if you don’t want to keep your gold at home in a safe or under your pillow, there are options. The most prominent is using a precious metals depository. Many depositories can provide segregated or communal storage.
When you buy gold bars from a retail site, many of them offer you depository options. You want to make sure your depository offers insurance to cover you in the event something happens to your investment.
Also understand that these depositories will charge you a fee — monthly, quarterly or yearly — to store your gold. So, make sure you factor that into the cost of your investment in gold bars.
Now you know why gold bars are a good investment, where to buy them — and the different size options, what makes your gold bars reputable and how to store your bars after you buy them.
These are all important factors in understanding how to invest in gold bars.