Investing in Gold Bars: The Why What & How To Guide
The idea of investing in gold bars is an idea that has been around for centuries. It’s a popular form of investment because the price of gold tends to be relatively stable, and it works as a hedge against inflation or other economic downturns.
It can also act as a valuable asset during uncertain times, allowing investors to diversify their portfolios and provide them with a safe haven for their money in the event of economic turmoil.
However, before taking the plunge, it’s important to be aware of some key factors that will influence your decision.
In this blog post, we will discuss the basics of investing in gold bars. So, let’s dive in!
Table of Contents
Advantages of Investing in Gold Bars
One of the biggest advantages of investing in gold is that it provides diversification, which can help reduce overall risk.
By spreading your investments across different asset classes, you can better manage volatility and protect against losses during market downturns.
Store of Value
Gold has been used as a store of value since ancient times, making it one of the most reliable investments available today. As long as demand remains high, gold will continue to retain its value over time.
There are several tax benefits associated with investing in gold bars, including lower capital gains taxes when the investment is held for more than one year.
Additionally, gold investments can be exempt from sales tax or VAT if they meet certain criteria set forth by local governments.
Gold bars have high liquidity due to their wide acceptance around the world.
This means that they can be easily bought or sold without any delay or hassle, providing investors with flexibility when needed.
Unlike stocks and bonds, gold does not depend on economic conditions or company performance for its value, making it a relatively low-risk investment option for those who want to minimize their exposure to market fluctuations and volatility.
Drawbacks of Investing in Gold Bars
Although the price of gold tends to remain stable over time, it is still subject to short-term price swings due to sudden changes in supply and demand as well as political events around the world that could impact prices significantly.
Storing physical gold requires additional costs such as safe deposit box fees or insurance premiums which may add up over time if you are holding onto large amounts of bullion for an extended period of time.
Depending on where you buy your gold bars from, there may be selling fees associated with selling them back into the market.
Lack Of Yield
Unlike stocks, bonds, or other securities, physical gold does not provide any yield, which means there is no income generated from holding onto bullion.
If inflation rises too quickly, then gold may not be able to keep up with rising prices.
This means that your investment could potentially lose value over time if prices rise faster than expected.
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What You Need to Know Before Buying Gold Bars
Understand The Different Types Of Gold Bars
There are several different types of gold bars available on the market.
Depending on your budget and investment strategy, you may want to consider buying kilo bars, which weigh 32.15 troy ounces or 1000 grams; 100 oz bars; 1 oz coins; and fractional coins (which come in 1/2, 1/4, and 1/10 sizes).
Research The Price Of Gold
Before buying gold bars, it’s important to research the current spot price of gold so you can ensure that you’re getting a good deal.
Spot prices change daily depending on supply and demand forces in the markets, as well as other factors like geopolitical events and currency fluctuations.
Buy From A Reputable Supplier
When investing in gold bars, it’s important to purchase from a reputable supplier who has experience dealing with precious metals investments.
It’s best to do research ahead of time and read reviews from previous customers before making any purchases.
Be Aware Of Storage Fees And Insurance Costs
One of the most important things to consider when buying gold bars is storage fees and insurance costs associated with keeping them safe over time.
Depending on where you store your gold—whether it be at home or at a secure facility—these costs can vary greatly and should be taken into account when determining whether or not an investment makes sense for you financially.
Understand The Tax Implications
Investing in gold is generally considered a long-term investment since there are tax implications associated with selling any bullion products within a certain amount of time after purchase (usually one year).
As such, it’s important to have an understanding of how the IRS taxes investments like gold so that you can make informed decisions about how much money you stand to gain (or lose) from holding onto an asset over a period of time.
Determine If You Want To Take Delivery Or Store Your Bars Offsite
Once you decide to buy a certain amount of physical metal, you need to decide if you want to take delivery or store your bars offsite with a third-party custodian service like Brinks or Loomis International.
These custodians offer secure storage solutions for investors across the globe at competitive prices.
Taking delivery means that you own your precious metals outright but also requires more effort (and expense) on your part when it comes time to sell them back into the market later down the line.
This allows storing them offsite however typically involves higher ongoing storage fees but means that they are easily accessible if needed quickly.
Consider An Exchange-Traded Fund (ETF)
Exchange-traded funds (ETFs) are another option available for investors looking to add exposure to precious metals like gold without having taken possession of actual physical metals themselves.
ETFs track the price movements of an underlying basket of securities, allowing investors access to liquidity while still capturing potential upside potential from changes in prices.
ETFs also tend to have lower fees than traditional physical bullion investments, making them attractive for those looking for more cost-efficient ways to invest in precious metals.
Consider Alternative Investments
While investing directly in physical metals may be appealing for some, others may prefer alternative investments such as stocks, bonds, mutual funds, certificates, etc.
These alternatives provide more flexibility than traditional bullion investments, allowing investors greater control over their portfolios depending on their individual goals.
For example, stocks allow investors access to liquidity while also providing potential capital appreciation through dividends, whereas certificates give investors ownership rights without having actually owned any underlying asset itself.
Look Into Other Precious Metals
When investing in precious metals, many people only think about purchasing gold because it has been around for centuries as a form of currency.
However, there are many other options out there including silver, platinum, palladium, and even copper – each offering different advantages depending on individual investor needs.
Be Prepared For Market Volatility
Just like any other type of investment, physical precious metal holdings can become volatile depending on market conditions.
Therefore it’s essential that investors prepare themselves beforehand by doing research into current trends as well as being aware of risks associated with investing in these commodities.
How to Buy Physical Gold Bars Safely
Whenever you wish to buy gold bars is it important to know how you buy gold bars safely.
The key is to be smart about it—do your research, know what questions to ask, and always work with reputable dealers. Let’s dive into the details.
Understand the Different Types of Gold Bars
When buying gold bars, it’s important to understand the different types available. Here are some of the most popular options:
This type of bar is made by pouring molten gold into a mold and then allowing it to cool. They have a rough texture but are cheaper than other types of gold bars.
These bars are created using precision machines that stamp out intricate designs on each bar. They come in sizes starting from 1 gram up to 400 ounces.
Wafer-style gold bars are thin pieces of metal that contain 99% pure gold. They also come in sizes ranging from 1 gram up to 400 ounces.
Do Your Research
Once you understand the different types of gold bars available, it’s time to start researching who you want to buy from.
Look for reputable dealers who have been in business for years and have positive reviews from customers.
Also, make sure that they offer good customer service and are transparent about their prices and terms before committing to any purchase.
Know What Questions To Ask
When talking with a dealer about buying physical gold bars, make sure you know what questions to ask so you can feel confident about your purchase:
- What purity rating does the bar have?
- What is the price?
- Are there any discounts or special offers available?
- Are there any taxes or fees associated with my purchase?
- How quickly will I receive my order?
Tips for Storing Your Gold Bar Investment Safely and Securely
Choose the Right Safe
Not all safes are created equal, so it’s important to find one that is specifically designed for storing valuable items like gold bars.
Make sure the safe has a good weight, strong construction materials, and an interior that will keep your gold bars from being scratched or dented.
You should also look for a security rating; this will tell you how difficult it would be to break into the safe if someone tried.
Install It Properly
Once you have acquired the right safe for your gold bar investment, make sure it is installed properly in a secure area of your home or business.
The installation process should include bolting the safe down to the floor or wall and making sure there are no weak points where someone could gain access without the correct key or combination code.
Use Multiple Locks
If at all possible, use multiple locks on your safe—a combination lock with an electronic keypad is preferable, but a mechanical lock with keys will work just as well as long as it’s high quality and hard to pick.
Using two locks ensures that even if one lock fails due to wear and tear over time (or manipulation by an intruder), your gold bars will still remain secure inside of their protective casing within the safe itself.
Store Away From High-Traffic Areas
It’s important not to leave your safe in an area where passersby can easily spot it—especially if they know what kind of valuable items may be stored inside!
Keep it tucked away in an out-of-the-way corner or closet, this way, it won’t attract unwanted attention from potential thieves who may be scouting out targets for their next heist.
Change Your Combination Code Regularly
To ensure maximum security of your gold bar investment, you’ll want to change the combination code regularly—at least once every six months is recommended.
This way intruders cannot guess what it might be based on familiarity with previous codes they may have seen while attempting a break-in attempt elsewhere in the past.
Be Wary Of Fake Safes
Fake safes are becoming increasingly common these days; these are usually safes made out of cardboard or plastic material that look very similar to real ones but don’t actually provide any protection against theft or damage from fire or water exposure due to their flimsy construction materials and lack of insulation against extreme temperatures/conditions (or anything else).
To avoid being fooled by these fake safes, make sure you only buy ones from reputable manufacturers with established track records when it comes to producing high-quality products that can withstand even the toughest tests posed by nature or criminals alike!
Don’t Store Too Much In One Place
While having one large safe can be very convenient—and cost-effective too!—it’s never wise to store too much of anything in one place (including large sums of money).
Spread out your investments among several smaller safes instead; this way they’ll be much harder for burglars (or anyone else) to locate and get away with quickly without detection!
Get Fire Insurance For Your Gold Bars
As part of protecting your precious metal investments against theft and damage from natural disasters such as fires, floods, etc., consider taking out fire insurance on all of them individually.
In this way, if something does happen, at least some portion of them can still be replaced at minimal cost compared to having no insurance coverage whatsoever!
This type of policy typically provides coverage up until a certain amount per bar so make sure yours offers enough protection based on how many bars you own/store inside each individual safe(s).
Use A Safety Deposit Box
If possible, consider using a safety deposit box at either a bank or other secure institution when storing larger amounts of gold bars at once instead of relying solely on home-based solutions like safes alone.
Doing so allows more layers of security between any potential burglars looking for easy pickings & themselves getting away unscathed with whatever they manage to steal successfully!
Educate Yourself About Security Protocols And Regulations
Last but certainly not least importantly, educate yourself about any security protocols and regulations related specifically towards safeguarding precious metals investments such as yours.
This includes knowing exactly what kinds of permission/licenses must first obtain before investing any form into buying and selling such assets legally according to local laws governing its sale/purchase within respective countries/regions around the world wide web today!
If you aren’t sure that you would be able to secure your gold bars, it is best to get professional help.
There are depositories all around the U.S. with highly experienced and technologically advanced security systems, taking care of your precious metals in extremely secured vaults.
While investing in gold bars has its share of benefits, there are also some drawbacks that should be considered before committing funds to this type of investment vehicle.
It’s important to do your research so that you understand both sides before investing so that you can make an informed decision about whether or not this particular strategy is right for your unique financial situation.
Ultimately, if used correctly, investing in physical gold can provide an excellent addition to any portfolio helping investors diversify their holdings while protecting against potential risks associated with other types of investments.
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