There are various ways to invest in gold, but if you want the security and feel of holding physical precious metal, you can invest in gold bars. You can purchase investment-grade precious metal, also called bullion, at a spot price. This is the price at which unfabricated precious metal is sold plus extra costs that vary from one dealer to another.
What Is Bullion?
It refers to silver and gold with a purity level of 99.5 percent and 99.9 percent. It comes as an ingot or a bar and is often kept in central banks and government reserves. Before bullion is formed, mining companies must discover gold and mine it as an ore, which is a combination of mineralized rock and gold.
Extreme heat and chemicals will then be used to extract the gold, which is referred to as parted bullion. When bullion contains other types of metal, it is referred to as unparted bullion. You can buy bullion from online dealers, trading platforms, local suppliers, or national mints. You can check out Bullion by Post for an example of an online dealer.
Expert Tips for Buying Bullion
The process of purchasing bullion is quite simple. The following tips will help you get the best value for your money:
Find a Reliable Dealer
You need to get a dealer who will show you a variety of gold products. You should also consider selecting the product you want to purchase by price, quantity, and weight. If you are using an online retailer, you should expect a discount for purchasing larger quantities. Some retailers would offer discounts if you use your credit card, so you need to confirm the dealer’s preferred payment option.
One important aspect of finding a dealer is checking reviews from previous buyers. You will do good to avoid reaching out to sellers with negative reviews like failed delivery, exorbitant handling and shipping fees, and lack of product authenticity. Immediately you receive your preferred products, store them safely in packaging to avoid scratches or in a bank deposit box.
Buy Only Pure Gold
An investment-grade bar should have a purity level of 99.5 percent. The remaining percentage is usually copper or silver, an alloy for easy smelting. Before you purchase the product, ensure that it carries the manufacturer’s name, its purity, and weight.
Bars vs Coins
Although all pure gold products have monetary value, they are not equal. From the perspective of investment, you need to avoid coins if you want a product that will track the global gold price. Coins have attractive designs, but they are numismatic.
They also cost more to produce and can skew your portfolio’s value. They are more like collector’s pieces and not every investor is interested in coins. It is very easy to hold bars for a long time before converting them to cash. You can check out https://www.quora.com/Which-is-better-to-buy-coins-or-bars to get more information on coins vs bars.
Purchase Workable Sizes
If you have a lot of money, you may be tempted to buy more gold. However, you need to consider whether the bars will be easy to liquidate before you purchase them. Let’s say an ounce of gold costs $1000 and you have $10000 to purchase bullion. It will be easy for you to sell ten 1-ounce bars instead of a single ten-ounce bar.
You can sell one bar per time or as necessary, without facing the pressure of looking for who to buy the ten-ounce bar. On the contrary, due to the small size of a 1-gram bar, some investors prefer to save more money so they can purchase a bigger size.
Know the Current Prices
Before you purchase bullion, you should know the spot price. You can easily get the information from finance websites. Gold is quite easy to purchase, but different sellers offer different prices. This is because the sellers usually include their profit margin and additional costs like authentication certificates, payment processing, and handling and shipping fees. Comparing prices from different sellers will help you negotiate a good deal.
Stay Away from Rip-Offs
Before you purchase products, you need to check review websites like Rip-off Report and BBB (Better Business Bureau) to find out the seller’s reputation. Generally, sellers must inform buyers about the fees involved before they proceed with the transaction. Even when you are buying authentic products, the seller may charge a higher price. And you will still face the challenge of clearing them through customs, particularly when you purchase large quantities.
Benefits of Holding Physical Gold
The benefits of holding physical gold are:
- It is superior to many currencies because people have been using it to store value for more than 3000 years.
- It cannot be destroyed by water, fire, or time. Unlike credit cards, brokerage accounts, and bank accounts, your bullion is a tangible asset that identity thieves and hackers cannot access.
- When there is a political crisis, inflation, or economic uncertainty, gold becomes a very powerful tool. It won’t come down to zero.
- It offers confidentiality since no one needs to know that you own physical bars. Other investments do not offer this privacy. However, you need to report and pay taxes on them. You can visit this website to learn more about paying taxes on precious metals.
- It is highly portable and liquid, which makes it easy to sell. You can either trade it for goods or cash.
- It is very easy to store, does not occupy a lot of space. If you decide to store it in a bank vault, you only need to pay a small fee. You won’t worry about late renter fees or complex tax issues.
- It does not require any special training, skill, or equipment because the buying process is straightforward.
- If you are bothered about a crashing stock market, you can use bullion to hedge stocks.
- It offers more protection than cryptocurrency and other precious metals.
Conclusion
If you want a diversified portfolio, you can consider investing in gold bullion. It is more reliable and increases in value during crises compared to paper investments like stocks and bonds. In this article, we shared some tips that will help you when you want to purchase bullion. And if you still do not know whether to invest, we outlined some benefits of holding physical gold.
