How to invest in gold bullion bars: a practical guide

Written by
Fact checked by
Adam N.
Apr 2024

Investors around the world regard gold as an attractive investment. This metal has kept people fascinated for thousands of years and its allure as a safe haven asset has not dimmed over time. People have flocked to this commodity during times of economic crisis, wars and natural disasters throughout history.

Modern-day investors regard gold as an excellent choice in the course of building a diversified portfolio and often place a portion of their wealth in gold bullion. As a result, the physical gold industry is thriving as demand for bars and coins has quadrupled since the early 2000s.

If you are someone who likes the touch and shine of gold as well as the security it offers, you may want to invest in physical gold bars instead of buying intangible financial assets such as gold ETFs, gold futures, gold mining stocks or gold options. Commonly referred to as gold bullion, gold bars are made of  investment-grade gold. They are the most direct and most standardized way of owning physical gold and carry fewer risks than gold jewelry or gold coins. Gold bars come in a variety of sizes, ranging from a 1-gram bar to a 400-ounce bar. Gold bullion coins, such as the South African Krugerrand or the American Gold Eagle, are also popular options but they carry a higher premium. Here are a few key aspects that all investors should consider if they want to buy gold bars.

What to watch when buying gold bullion bars?

Buy pure gold only

Gold bars that meet investment standards must contain at least 99.5% (995) pure gold. Make sure the bar features the name of the manufacturer as well as the bar’s weight and purity.

Understand the pricing of physical gold

Don’t fall into the trap of oversimplifying gold bar purchases. When it comes to gold prices, make sure you understand the difference between spot and retail prices.

The spot price is what you pay for immediate delivery and this is the cost at which the precious metal is quoted on international commodity markets. Be familiar with gold's spot price when shopping around on the market, check one of the scores of websites that feature the daily spot price of gold.

On the other hand, retail prices include the markup or premium that sellers charge and most often this is the price that retail investors will have to pay for their gold bars. Be aware that on top of the retail price, you will incur additional costs when purchasing a gold bar, which we will discuss below.

Find a reputable dealer

The gold market is rife with scams and dodgy operators. Make sure you do your research in advance and check the background of the entity you intend to do business with. A reputable gold seller should disclose all fees required to complete a transaction in advance. You can purchase gold bullion through government mints, private mints, precious metals dealers and even jewelry stores. Buying gold from abroad may involve a whole set of additional costs and administrative burden related to clearing the gold through customs. 

Keep an eye on fees

As discussed above, most gold dealers charge more than gold’s spot price. The premium typically includes distribution charges and the dealer’s profit. Different sellers may offer the same items at different prices, so shop around before making a decision. 

Consider the size of your investment

As mentioned above, gold bars come in a variety of sizes. If your objective is to invest a larger amount of money into physical gold, buying larger bars may seem the sensible solution. However, keep in mind that selling large products may be more difficult in some instances and you may end up selling at a price lower than the spot price of gold when you sell your gold back to a dealer.

If you commit a larger amount of money to buying bullion bars, you may want to purchase gold bars in various weights.

Safe storage and insurance

True to its name, gold is indeed a precious metal, therefore there is a risk that it may be stolen. Storing your gold bars in a safe location is a must but it comes at a price. Storing your gold at home or in the office is risky; you are better off with a depository or a safe deposit box at a bank. It pays to shop around for the best deal since rates vary.

Many investors in physical gold take out insurance to be on the safe side. If you decide to follow suit, make sure the policy covers the exact type of bullion bar you have.

📈 Are you worried about inflation and its potential impact on your investments? Our Inflation page is here to help! Learn how inflation can impact your investments and discover practical ways to protect them with our beginner's guide to inflation.

Bottom line

Even though there’s something comforting about being able to touch what you own, investing in bullion bars comes with a set of risks and extra costs.

If you decide that owning gold bars is not your thing but would still like to gain exposure to this precious metal, read our article on the best ways to invest in gold.

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Edith Balázs
Author of this article
I bring 20+ years of experience as a correspondent having worked for Bloomberg, Dow Jones and The Wall Street Journal covering macroeconomics, stock, currency and fixed-income markets. I hold a Master's degree in American Studies and Journalism.
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