When you tell someone you invest in physical gold, comments about gold bars, Fort Knox, daring bank robberies and a world of untold wealth tend to follow.
If only the last part were true!
You may be surprised to learn that investing in gold bars is very straightforward for the average investor. We’ll explain how to invest in just a moment.
However, let’s begin by explaining some of the terms experts use in the bullion industry. You’ll appreciate knowing some of these when you place your first order for gold!
We’ll start with a definition of gold bullion:
“Gold bars and ingots manufactured to 99.5% purity or higher by an accredited refinery and mint”
In other words … high quality gold made into the shape of a rectangular bar by trusted companies and governments.
Now let’s look at the main features of bullion investing.
Features and Benefits of Bullion Investing
Gold bullion is part of the “Precious Metals” asset class. Every asset class has its own particular characteristics and bullion is no different.
Lets have a look at the advantages and disadvantages …
All over the world individuals, companies and governments accept gold.
Approved by the IRS for your Gold IRA.
Can buy and sell your gold bullion with a single phone call.
A proven store of value – it will never go to zero (unlike some stocks).
Guaranteed quality and purity of gold.
Transparent pricing and a ready market to buy your gold if you need to sell.
Easy to store at home or in a secure bullion vault.
Diversify your portfolio with a different asset class.
Cherished legacy to be left for children and grandchildren.
You receive no income. There is no interest or dividend paid.
Storage fees must be paid if stored in a secure bullion vault.
How are Bullion Bars Manufactured?
Gold bullion is typically manufactured as bars or ingots.
- Larger gold bars are cast by pouring molten gold into a mold.
- Smaller gold bars are minted or stamped from a sheet of gold.
You can tell the difference between a “cast” bar and a “minted” bar by the sharpness of the details and edges. The minted bar is much sharper.
Below we have two 10 ounce bars from the Perth Mint in Australia.
The bar on the left is cast and the bar on the right is minted.
You may find cast bars are a fraction cheaper than minted bars but the difference is minimal.
The price of bullion bars is linked to the fineness and quality of gold contained within. Markings on bullion bars are to assure quality, rather than to display complex themes.
You will find fine design is more associated with gold bullion coins.
How Much do Gold Bars Weigh?
The weight of a gold bar is measured in both troy ounces and grams.
A troy ounce is equal to 1.01974 ounces or 31.01 grams.
The term “troy ounce” is a standard weight within the precious metals industry. Troy ounces are not in common use in other industries.
The term “troy” has been linked to the town of Troyes in France from as early as the 9th century.
When the weight of a bullion bar is described in ounces, it will be troy ounces that is meant even if the term “troy” is missing.
Individual investors have the option to purchase bars in a variety of weights from 1 gram to 400 troy ounces or more. Common gold ingot sizes include:
- 1, 2, 5, 10, 20, 50, 100 and 1000 grams
- 1, 5, 10 and 400 troy ounces
The standard size of gold bars held by banks and government organizations is 400 troy ounces (12.4 kilos or 438.9 ounces).
Who Mints Gold?
Now you have an idea of the different types of gold ingot we’ll explain who casts and mints the bars.
Refiners take delivery of gold from mining companies and refine it into bullion.
The refining and minting of gold is closely tracked around the world by the London Bullion Market Association (LBMA).
At the time of writing 64 LBMA certified gold refineries operate in 27 countries.
The gold industry ensures the quality and integrity of every gold bar through this level of control.
Do not buy from refiners who recycle jewelry, electronic parts or old coins. That gold refining is best left to your local scrap metal dealers!
When you invest in gold bullion, you are investing in the purest form of gold, not a melted down necklace!
The following table shows you some of the LBMA approved mints.
|Gold Mint||Country||Website||Gold IRA Approved||LBMA Approved|
|The Perth Mint||Australia||www.perthmint.com.au||Yes||Yes|
|Royal Canadian Mint||Canada||www.mint.ca||Yes||Yes|
How is Bullion Priced?
The price of 1 troy ounce of gold is known as the “gold spot price”.
You will find the gold spot price quoted on COMEX – the COMmodity EXchange run by the Chicago Mercantile Exchange (CME).
The spot price for gold rises and falls for many reasons including:
- Demand for gold – how many people, companies and governments want to buy gold? Increased demand leads to a higher spot price.
- Supply of gold – how much gold is available to meet demand? If the gold supply is falling, then that can lead to a rise in the price of gold.
- Time of year – for example demand for gold increases from China just before the Chinese New Year.
- Investment sentiment – if the financial markets are confident about economies and companies, gold tends to fall. If the economic outlook is uncertain, gold tends to rise.
The price of gold bullion, like all commodities, will fluctuate on a daily basis.
However, no matter the daily ups and downs in price, history shows gold has been an excellent store of value.
We find the most common gold investment strategy is to buy gold bullion – which diversifies your portfolio and safeguards your wealth for the long term.
This makes gold bullion an ideal investment for retirees.
Can You Buy Gold Bullion for a Gold IRA?
Gold bullion can be purchased for a Gold Individual Retirement Account (IRA).
If you buy gold bullion for your IRA, it must be stored in a secure, approved facility managed by a recognised bullion company.
Talk to your bullion dealer about the best mix of bullion bars in your Gold IRA. Owning a selection of sizes allows you to be more flexible when you need to sell.
We recommend a precious metals dealer who can assist you with a gold IRA rollover and the secure transfer of your gold to a dedicated bullion facility.
To receive a gold investment information kit just complete the form on the right-hand side of the screen and the dealer will send the information through.
How do I Invest in Gold Outside an IRA?
It is very easy to buy gold ingots outside an IRA.
You can call your precious metals dealer who will have an up-to-the-minute view of gold prices and which gold bars are currently in stock from which mints.
Once you decide on the weight of gold ingots you want to buy, place your order over the phone and the metals dealer will do the rest and arrange safe delivery.
You can always start small. Purchase a 5 gram bullion bar to learn about buying physical gold. This simple experience gives you the confidence to make further investments.
Gold bullion you buy in your own name can be stored at a secure facility, at home or anywhere you choose.
Visit our section on bullion storage options to see what’s available to you.