I met this morning with a nice gentleman that was selling a loose 100 gram gold bar. He had saved up for quite a while to purchase the gold bar and was liquidating it for some short term cash needs. This was his first purchase of gold bullion, so he had some questions as to if he made the right decision or not. As we talked through some of the key aspects of buying and selling gold bars or gold bullion, we came to the conclusion that he could have made a better decision. In this short piece, we’ll share with you some of the key takeaways from our discussion in hopes that you’ll make the best decision when buying or selling gold bars.
An important point to keep in mind is that most individuals are more comfortable purchasing gold bars that are recognizable as opposed to those that are not. This means that you should only consider gold bars that someone else will want to purchase in the future. There are plenty of recognizable gold bars on the market today. Some of the premium brands include Pamp Suisse, Credit Suisse, Perth Mint, Royal Canadian Mint and Valcambi, just to name a few. Other name brand gold bars include APMEX, OPM, Elemetal, Sunshine Minting, Republic, etc. Premium brand gold bars will typically sell at an additional premium, but the market may be a bit broader and more liquid for these bars when the time comes to sell them.
As alluded to above, the most liquid gold bars are those that are most recognizable. While some gold buyers plan on purchasing gold bars with the intent of keeping them forever, a majority of individuals at some point in time will sell their gold bars. The best way to ensure that you have as broad of a market as possible when the time comes to sell your gold bars is to purchase recognizable gold bars, such as those listed above. Other factors that you should consider, and that affect the liquidity of gold bars, are the size and the condition, which we’ll discuss in further detail below.
They say that “size matters,” and that’s also the case with gold bullion, but it may not be quite what you think. Gold bars come in various sizes, including 1 gram, 5 gram, 10 gram, 20 gram, 1 oz, 50 gram, 100 gram, 5 oz, 10 oz and a kilo. With all of these options, how do you determine which one is best? It turns out that smaller and larger sizes are in less demand than standard sizes, such as one ounce, and can be slightly more difficult to liquidate. Typically the most popular gold bars are the one ounce variety, which is also the case with gold coins. Interestingly enough, some of the large online coin dealers will sell the fractional or off-size gold bars at a slightly higher premium than one ounce gold bars. That’s not to say that you should avoid fractional or off-size gold bars, but you should make sure that you’re paying a reasonable premium based on your ability to sell these items in the future.
As is the case with gold coins, condition matters with respect to gold bars. Ideally, we recommend that you purchase a gold bar that has been sealed and carded. These are gold bars that are sealed in tamper-proof plastic packaging. They typically include an assay number on the packaging that matches the assay number stamped on the bar, but that’s not always the case. That’s not to say that you should avoid gold bars that are outside of a sealed package. In fact, we purchase them all the time, as did this morning. However, you should pay a slightly smaller premium for these bars.
In summary, we highlighted several factors that should be taken into consideration before you buy gold bars. It’s important to purchase gold bars that are recognizable, which means sticking with premium or name brand gold bars. This will give you the best opportunity to maximize your payout when the time comes to sell your gold bars. Other factors that affect the liquidity of gold bars are the size and condition. When possible, stick with standard size gold bars, such as one ounce. Fractional and larger gold bars are perfectly fine, but you should pay a rate that is commensurate with the liquidity of these items. Lastly, the condition of your gold bars matter. If you have the option of buying a carded and assayed gold bar at the same price as a loose gold bar, always go with the former. Again, don’t completely discount gold bars that are out of the packaging; just make sure that you’re receiving a slight discount for these items.