As you’re surely aware by now, I favor coin bullion for investment, given its versatility and ease of acquisition. However, I do believe that gold bullion bars also have their place in the investor’s physical metal “portfolio,” and of course I have a fondness for big chunks o’ gold. Who doesn’t?
But there are certain things that you have to keep in mind when buying bar bullion for your stash, so let’s take a look at those issues.
So Here’s the Deal
In my mind, bullion bars are primarily the tool of the large scale investor, the individual with plenty of money to spend who wants to wield a hefty financial weapon. That’s because bars tend to come in fairly substantial sizes.
While small bars do exist, as I’ve mentioned repeatedly in other articles on this site, they’re mostly novelties created for the small investor — little tiny pieces of gold foil, mostly. That’s not to say that they’re not worth anything, because after all, gold is gold.
But for my money, coin bullion is a better deal at fractional weights, and much easier to acquire.
Unlike most (though not all) coin bullion, gold bars almost invariably consist of gold with a purity at least of 99.5%, and ideally 99.9%. There’s no need for the hardening metals added to the alloy in gold bullion coins, since damage is much less of a concern with bars.
Gold bars are for the serious investor only, so all that matters is the content, not the package. I’ll discuss that a bit more later.
Said bars come in sizes ranging from a troy ounce to about a troy pound; in the metric format, bars weighing from 100-1000 grams are common. Anything bigger is considered an ingot, a format so large that it’s of more use to financial institutions and governments than individual investors.
Needless to say, with such bullion bars, you’re talking some serious money. Even the smallest ones will cost around $1,400. At the moment, a one kilogram Pamp Suiss bullion bar will tip the scales at no less than $44,000, and likely a good bit more, depending on the premium demanded.
If you were wondering, ingots do qualify as bar bullion, and may weigh as much as 400 troy ounces (the infamous “London good delivery” ingots). Now, that would be one heck of an investment! Are you game?
Why Bother With Bars?
There are many good reasons to consider investing in gold bars. As I mentioned above, they do make for excellent financial weapons, and when you buy in bulk, you have the pleasure of making quite a bit of money all at once when the value goes up.
Furthermore, the more gold you buy at once, the cheaper the premium tends to be. Most bullion bars have a lower premium than coin bullion anyway, given the way they’re manufactured.
And then there’s the lack of collectability. Now, ideally, coin bullion has no collectible value… but in the real world, collectors just treat them as big coins, and pay extra for proofs and perfect specimens.
The result is higher prices than you ought to be paying, given the intent of the issuers. You don’t see that with bar bullion, because after all, they’re just plain, rectangular pieces of metal. There’s no real collector appeal, which is all to the good for the investor.
Good Night, Sweetheart
Well, that’s about it as far as space goes for this exciting episode, so I’ll finish this up next week. Tune in then for more adventures in buying gold bullion bars!
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