To invest in physical gold, the choices open to you are gold bars and coins. Gold coins may be more attractive for a variety of reasons but their manufacturing and packaging costs are considerably more than gold bars, driving their price up. This leaves us with gold bars, the most economical choice to invest in physical gold.
For this reason, the gold bar is a popular investment tool for many – from retail investors to central banks. However, not all gold bars are the same. Once you decide to invest in gold in the physical form and narrow it down to the gold bar, you need to understand more about it before proceeding further.
Advantages of gold bars
The first and foremost reason to choose to buy gold bars over coins is that you will get more gold in them for the same price. Less expensive when compared to gold coins, bars are not manufactured for their appearance or numismatic value.
Gold coins are bought for investment purposes and as collectibles. They are usually manufactured from a collector’s perspective with intricate designs and delicate features. All these involve lots of labor, both manual and using a machine, thus raising its price. From an investor’s point of view, the intrinsic value of the gold product is more important than its appearance.
Gold bars are made with the sole intention of using them as an investing tool. Another advantage that prompts investors to buy gold bars is that they require less space for storage when compared to gold coins. As a matter of fact, this bullion product was specifically designed for ease of storage.
What size gold bar is ideal for you?
This is a question you will encounter right in the beginning. Gold bullion is made in varied weights to suit the needs of the buyer – from as low as one gram to as big as 400 ounces. The one-gram gold strips are also known as a wafer for their thickness. Bullion bars in the larger weight category are usually purchased by central banks, ETFs, and exchanges as backing for currencies and assets. The general rule of thumb is, the bigger the gold bar, the lower the premium. This is because the costs involved in the production of the bigger bars are substantially lower than those for smaller ones.
This doesn’t mean you have to opt for the biggest bar possible to invest. There are other factors to consider before making that decision. When you want to cash out part of your investment to meet other needs, bigger gold products make it difficult for many reasons – their indivisibility being one of the prime concerns. Here are some of the drawbacks when you buy gold bars in a bigger size.
When you want to liquidate a portion of your gold, smaller bars come in handy. With bigger bars, you end up selling more than what you want to cash out, leading to unnecessary losses.
Difficulty in finding buyers
The bigger the bar, the harder it is to sell. It is easier to find buyers for smaller gold products than for a 50-ounce or 100-ounce bar. Fewer investors can afford to buy a bigger bar.
Forgers and scammers favor bigger gold bars for defrauding investors, as their ill-gotten rewards would be more with the bigger bars.
Need for assay-mark
As bigger gold bars are more expensive and involve more risk, potential buyers would demand authentication from an assayer. No need to say, this means an extra expenditure, on top of the entailing inconvenience and delays.
The only advantage for the gold bars in the larger weight category is their lower premium. You need to factor in their other disadvantages before making the decision. Investors with a higher net worth who are spending substantial money in physical gold can afford to have some of their investment in bigger bars, even as they have gold bars in lower weight category for easy divisibility.
The premiums on smaller gold bars are more, but this setback is compensated by their advantages, including affordability. After all, not everyone who wants to invest in gold can afford to buy bigger bars.
Best gold bars for investing
Here is a list of the top gold bars for sale in the market, rated high for their purity, liquidity, and universal acceptance and interest. All of them are also approved by the IRS for IRA investing.
Credit Suisse Gold Bars
Credit Suisse, the leading financial services company, produces gold bullion in a wide range of sizes from one gram to one kilogram. Manufactured by PAMP (Produits Artistiques Métaux Précieux or Precious, Artistic, Metals Products), these gold bars are among the most recognized gold products in the world.
PAMP Credit Suisse gold bars carry the Credit Suisse hallmark on the reverse in addition to the stamp of their weight, purity, content, and unique serial numbers. They also come with a paper certificate. Individual gold bars are documented and sealed in a tamper-proof protective holder. They come with an Assay Certificate that assures the purity, weight, and gold content of each product.
PAMP Credit Suisse gold bars have a fineness of 0.9999, making them eligible for IRA investing. Their low premium over the spot price is another attraction for gold investors. The PAMP Fortuna series gold bars, the most popular range of PAMP, feature the image of Lady Fortuna on the obverse. The one-ounce gold bar in this series is one of the most sought after among all gold bars.
Johnson Matthey Gold Bars
Popularly known as JM bullion, Johnson Matthey gold bars are produced by the British conglomerate Johnson Matthey. They are available in a variety of weight denominations but the one-ounce and ten-ounce gold bars are the most popular among investors. Most of the JM bars are now produced in their refinery in Canada.
The most prominent feature of JM bullion is that they are no longer ‘minted’ but they are ‘cast’ as gold ingots. Meaning, they are made by pouring molten gold into a mold rather than made with a ‘blank press’ from a solid sheet of gold. Being cast ingots, they are simplistic in design with an uneven finish.
JM gold bars have a fineness of 0.9999 and are eligible to invest with Precious Metals IRA funds. Due to their simple production method, the premium over spot price is very low, an attraction for investors. John Matthey bars are accredited by LBMA and COMEX and are considered a very liquid asset.
Perth Mint “Gold Minted Bars”
Produced by the Perth Mint, the only refinery in Australia to have accreditation from LBMA, the Gold Minted bars are available in eight weights ranging from 1gm to 10 ounces. The gold bars come packaged in tamper-evident card mounted blister packaging. All bullion bars feature a struck version of the LBMA registered mark of the Perth Mint on the obverse and recurrent pattern of hopping kangaroo motifs on the reverse.
The Perth Mint has been producing Gold Minted bars since 2005. The current Gold Minted bars featuring hopping kangaroo motifs are also known as Kangaroo bar. The bars are popular among investors for their high-quality finish, craftsmanship, and artistic design. The bars are rectangular in shape with tapered corners.
All Gold Minted Bars from the Perth Mint comes with a fineness of 0.9999, making them eligible to invest in a Gold IRA. The competitive premium on the Gold Minted Bar is another appeal for investors.
Valcambi Gold CombiBar
Acclaimed as the best produced multifunctional bar in the world, Valcambi Gold Combibar is intended as an investment but also appreciated for its exquisite design and outstanding craftsmanship. Valcambi Gold Combibar offers the extra attraction of customization on both sides of the bar on request, provided the legally-required marks are present and the design conforms to Swiss customs rules. Also available are customized individual certificates and packaging solutions.
The first Valcambi Gold Combibar was minted in 2011, a 50gm pure gold bar with an innovative and unique design. The 50-gm bar can be broken up into 50 separate 1-gram bars. The gold bar is available in sizes of 5gm, 20gm, 1 troy ounce, 50gm, and 100gm star form. Each gold bar comes packed in security sealed PETG wrapping and also contains a serial numbered assay certificate.
Valcambi Gold Combibars are minted with a fineness of 0.9999, qualifying them for IRA investing. A pure gold bar made for investment, the Combibar ticks all the boxes from a collector’s perspective as well. This makes its slightly higher premium not a deterrent for most investors.
Engelhard Gold Bars
Engelhard is an American metals manufacturer who has been producing mint gold bullion for more than 100 years. Engelhard gold bars were mostly produced in the 1980s and no longer in production, making them valuable for a collector as well. Due to their high quality and longevity in the bullion market, the 1-ounce Engelhard gold bars are the most popular bullion gold bar in the United States.
The vintage Engelhard bars come in a variety of designs and sizes. The original plastic assay may or may not be present but the bars come with a certificate of authenticity separate from the sealed bar. The gold bar design has the Engelhard logo of ‘E’ inside a globe, weight, purity, ‘ENGELHARD’ logo, and serial number on the obverse. The reverse displays a repeating diagonal design of the ‘Engelhard’ logo and a slightly raised border.
Engelhard Gold Bar comes with a fineness of 0.9999 and is IRS-approved to buy in a Gold IRA. Due to their rarity, the Engelhard bars may be saddled with more premium than others. Often gold bullion with slight imperfections in shape or design come with a much higher premium but the demand for the Engelhard Gold bars makes them a very liquid asset, whether in an IRA or otherwise.
Investing in gold through IRA
The Internal Revenue Service allows buying precious metals bullion with retirement funds in a Precious Metals IRA. This is a special self-directed IRA that can be set up with an IRS-approved custodian/trustee. As buying gold bullion is not permitted in a 401 k or a regular IRA, you can rollover the funds to a Precious Metals IRA to take advantage of the absence of capital gain tax in it and the investment potential of precious metals without losing out on the tax-deferred status of a retirement account.
Investing in gold can be highly rewarding, provided you do the homework. If you are new to this, the best advice would be to play safe. This includes buying gold only with recognized hallmarks and proper stamping, from a precious metal dealer of good repute. The reputation of a dealer can be verified from ratings given by rating agencies and business directories. A good buyback policy is an indication of a dealer’s integrity.
Always compare a few dealers and bullion products before making the purchase. The gold bullion market is as treacherous as it is lucrative. Understand the terminology and the diverse fees associated with it to make an informed decision. Gold bars are the most tangible and liquid of all assets that can provide a hedge against economic uncertainties.
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