How To Buy Gold Bars

Gold Bars

Buying gold is easier than you think, provided you do the research thoroughly. You will need an account, to begin with, and a clear concept of the benefits and regulations related to this asset.

Most people own physical gold in the form of pieces of jewelry, coins, etc. However, bars are also catching up as a popular choice. With progressing time, buying gold bars is now a few clicks away, as many online e-commerce stores give the option.

Why choose gold bars, though? 

Compared to coins and jewelry pieces, bars cost less, but you must consider several essential factors first. Understanding these features will help the buyers choose the right asset. Read on to find out all about buying gold bars.

Is Gold a Good Choice?

Many choose to get gold wishing to strike it rich. However, in reality, the gold price has increased by 36% in the past five years. This is a gradual but slow rise compared to other assets like stocks. Yet, one cannot deny the rush towards the market of gold. What is the hype?

Gold is considered a safer choice when inflation is high, and there is always a risk of extreme market dips. The dip in the price of gold is relatively low, while the rise is steady and consistent. 

fine gold

Important Criteria while buying gold bars

Buying gold bars is not entirely risk-free, especially for the novice. You should take several important factors into account to make a wise choice. Each of the factors is analyzed here to give a better insight into this.

Purity

The purer the gold, the higher its value. So, ensuring the authenticity of its purity certificate is the first important factor. This further depends on several criteria—the source of the gold bar, weight, karat, and mark of purity.

How do you find out if the gold bar is of the highest grade? For this, understanding the purity measurement of gold is essential. The unit to measure its purity is called karat. The most popular and purest form of gold is 24K, 22K, and 18K in the order of purity. 24K means that all 24 parts of the gold are pure with negligible impurities.

High-quality gold, worthy of being an asset, is usually 99.5% pure and is 24K. Any less than this is for consumption purposes. Therefore, you should only get quality gold bars that have the name of the manufacturer, weight, and purity stamped on its face.

Tolerance level

The manufacturer of the gold bar can provide all the information about the weight and the purity tolerance level of the bar. The tolerance level can vary from one gold bar to another. 

Some have a +/- tolerance level. Others may have NIL negative weight tolerance or NIL negative purity tolerance. This way, customers have the assurance that they get the best value for their money.

Refinery

Knowing the refinery from where the gold bars are coming from is helpful in the future. Usually, gold bars that are refined at reputed refineries have the highest level of purity.

Again, you can get this information from the seller or the manufacturers of the gold bar. If you are purchasing through a bank, they can also provide the necessary information.

Fineness

This is the measure of the purity of valuable metals by parts per thousand instead of karat. It is also an expression to judge the unique metal content in jewelry. It represents the purity in parts per thousand, giving an idea about the value of the ornament.

This means when the gold is refined to a quality level of 999.9 parts per thousand, what you get are high-quality gold bars. This is a standard level of quality that you should opt for.

Denomination

By getting lower denomination gold bars, you can maintain liquidity when required. The denomination of gold bars starts from 5g and goes up to 1kg. This means several gold bars of a lower denomination are a better asset than fewer ones of a higher value.

However, the price of gold bars with the higher denomination is relatively low as it commands a lesser premium. This choice is entirely up to the buyer and their circumstances.

Return Policy

In case the gold bars are bought online, it is prudent to check the return policy thoroughly. Most significant gold store chains have online counterparts which have exchange and return options too.

However, the terms and conditions related to gold return or exchange are much stricter than other regular goods. So, you should make the call with deliberation. 

The basic step towards initiating return is to keep the packaging intact as it can affect the purity of the gold bar.

gold

Factors to Consider Before buying gold bars

Getting a gold bar is just the goal of the long asset diversification process. 

Here are a few essential things that you should consider, though before jumping head on to reap the maximum benefits:

  • Storage- Secure storage is vital for the gold assets. Most consumers prefer a custodian and safe storage. However, note that it will add to the cost of the gold as well.
  • Insurance- If the gold is stored at home, it should be insured against theft and natural disaster. This, in turn, often adds to the homeowner’s or rents insurance. In case it is stored anywhere else, the consumer must check their insurance policies thoroughly.
  • Source- The source’s reputation from where the gold bar is manufactured affects the growth of the value in the future. Hence, choosing a well-known and respected producer is essential.
  • Purpose- If the intention is purely asset diversification, the purity of the gold will accordingly vary. This means your target gold items should have purity ranging between 91%-99%.

gold

Summing Up

Frankly speaking, the process of attaining gold bars is relatively simple. It is the quality and related concepts one must research and learn to make a wise decision. 

Gold can be volatile too, but when compared to other forms of assets, it is still safer and gives a much higher ROI at the same time.

One can rightly say that when you understand the intricacies of this type of asset, gold bars, along with other forms of diversification, will ensure security.