Gold Bars: 4 Factors to Consider When Buying
Ralph Waldo Emerson once famously said, “The desire of gold is not for the gold. It is for the means of freedom and benefit.” I met with a nice gentleman one morning who was selling a loose 100 gram gold bar. He had saved up for quite a while to purchase it and was liquidating it due to sudden cash needs. This was his first purchase of gold bullion, so he had questions as to whether he made the right decision or not. As we talked through some of the key aspects of buying and selling gold bars, aka gold bullion, we concluded he could have made a better decision.
Continue reading to find out what this gentleman could have done differently as we share some key takeaways from our discussion.
Hopefully, it’ll help you make the best decision when the time comes to either buy or sell precious metal bullion and bars.
Recognizable Gold Bars
An important point to keep in mind is that most individuals are more comfortable purchasing 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.
- Pamp Suisse
- Credit Suisse
- Perth Mint
- Royal Canadian Mint
- Valcambi (just to name a few)
Other name brand, yet lesser known gold bars than those listed above include:
- Sunshine Minting
Premium brand gold bars will typically sell at an additional premium, and the market may be a bit broader and more liquid when the time comes to sell them.
Liquidity of Gold Bars
As we alluded to earlier, the most liquid gold bars are those that are most recognizable.
While some gold buyers plan to purchase bars with the intent of keeping them forever, a majority of individuals will, at some point, decide to sell. The best way to ensure that you have as broad of a market as possible and to receive the greatest potential return is to purchase recognizable bars, such as those listed above.
While purity isn’t typically an issue with gold bars, some gold bars produced in other countries may not be .999 fine. Unless you’re a jeweler or are buying scrap gold, we strongly recommend that you steer clear of gold bars that are less than 24 karat. If you have any questions as to if there is going to be a liquid market when the time comes to sell your gold bars, we recommend that you stick with LBMA-approved gold refiners.
Aside from name recognition, other factors to consider that may affect the liquidity of your bars, are the size and their overall condition, which we’ll discuss next.
Size of Gold Bars
Ever hear of the saying, “size matters?”
If so, you can apply that same philosophy to gold bullion, but it may not be quite what you would think. Bullion bars traded in the retail market 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 kilogram, which is 32.15 ounces..
With all these options, how do you determine which is best? Keep in mind, bigger may not always be better when it comes to gold bars.
It turns out that smaller and larger sizes are in less demand than the standard one ounce size and can be slightly more difficult to liquidate; especially the larger size bars. Typically, the most popular bars, as well as gold coins, are of the one ounce variety. Interestingly enough, some of the large online coin dealers will sell some of the less requested sizes of 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 and hopefully for a profit.
Condition of Gold Bars
As is the case with gold coins, condition matters with respect to gold bars. Ideally, we recommend you purchase a gold bar that is sealed and has an assay card. Sealed bars mean they are enclosed in tamper-proof plastic packaging. Assay cards or certificates will include the serial number of the piece, which is further proof of its authenticity and integrity, and they should include the specific type of metal and include the mint of where the piece originated. When packaged, the assay number on the assay card should also match the assay number stamped on the bar. Of course, rare bars don’t include packaging, but 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, including that morning we met with the gentleman who sold us the 100 gram gold bar. However, you should pay a slightly smaller premium for these bars without the sealed packaging or assay card.
Where to Buy Gold Bars
Buying gold in the form of bars or bullion can be a great way to invest in gold, serve as a hedge against inflation and allow you to maintain your purchasing power.
Gold bars differ from gold coins in that they’re privately produced versus government-issued, which makes them more affordable. While privately produced, bars aren’t available for direct purchase by the public from the producer or manufacturer. Rather, individuals who are interested in gold bars need to work with a retailer or authorized dealer.
Gold recently made headlines once again due to a new all-time high as demand increases for those seeking a hedge against financial uncertainty. While it’s frequently touted as a solid investment option, there are a limited number of places from which to purchase that are available to the public. The most popular options typically include coin dealers (local and online), auction sites, pawn shops, and jewelry stores.
Online Coin Dealers
Online coin dealers are a good option for individuals that don’t have a coin shop nearby. Some online coin dealers are well-established and have a good track record, while others are fly-by-night companies, have a history of substantial delays or fail to fill orders. It’s important that you thoroughly research an online coin dealer before placing an order for your gold bars; otherwise, you may be out a substantial amount of money. Also, be sure to confirm if they have live product or if they are experiencing inventory delays.
Local Coin Dealers
A local coin dealer is oftentimes the best choice, especially if you’re located in the vicinity of a reputable coin dealer with solid reviews. Most coin dealers realize that investors have the option to purchase gold bars online and should be willing to provide competitive pricing.
However, it’s important to keep in mind that online coin dealers do substantially more business than local coin dealers, so the price at which you can purchase a gold bar from your local coin dealer may be slightly higher than from an online dealer.
The benefit of buying from a local coin dealer is that you take immediate possession of the gold bar at the time of the transaction. Additionally, local coin dealers usually offer a safe, secure, and comfortable environment to allow for privacy and anonymity.
We occasionally meet with customers who purchase gold bars from auction sites only to find the item that they purchased is counterfeit. Unless you suspect this is the case early enough, you may not have the option to return the bar for a refund, as most auction sites have limited return policies. If you’re purchasing from an auction site, be sure that you purchase only from recognized dealers or from a site that thoroughly vets the products and offers a generous return policy.
Pawn Shops & Jewelry Stores
Many pawn shops and jewelry stores sell gold bars as well, but not all of them are experts on the bars. In other words, unless they’re familiar with how to test and authenticate gold bars, they may unknowingly sell items that are replicas. Most coin dealers use an electronic precious metals verifier to confirm the authenticity of gold bars. However, that may not be the case with all pawn shops and jewelry stores.
If you’re considering purchasing from a pawn shop or jewelry store, have a list of questions ready to ask. If they don’t answer all your questions to your satisfaction, continue looking until you find one that does.
We highlighted several factors to take into consideration before you buy gold bars as well as the importance of purchasing gold bars that are recognizable, which means sticking with premium or name brand gold bars. This will also 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 bullion and bars are the size and condition. When possible, stick with standard size bars, such as one ounce. Fractional and larger 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 bar at the same price as a loose bar, always go with the former. Again, don’t completely discount bars that are out of the packaging; just make sure you’re receiving a slight discount for these items. Of course, if you’re going to melt the bar down to use as jewelry, as some of our clients do, then the packaging should be of limited concern to you.
Atlanta Gold & Coin Buyers is metro-Atlanta’s leading coin and bullion dealer. Call us today if you are looking to purchase or sell your gold bars or coins.
At Atlanta Gold & Coin Buyers we offer competitive pricing and convenient appointments. You can view what we pay on our webpage and also our current inventory. Give us a call or email today if we can help you with your precious metal needs.
Happy Treasure Hunting!