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Most people imagine large brick-like bars when they think of gold. In fact the gold bullion bars used on bank heist film weigh 12.5kg and are worth nearly £1/2million!
Luckily for the average investor bullion bars are available in many sizes to suit even the most modest pocket. Bar weights come in both imperial and metric denominations. The common weights you’ll see are 1g, 2.5g, 5g, 10g, 20g, 1oz, 50g, 100g, 5oz, 250g, 10oz, 500g, 1kg, and 12.5kg.
There are thousands of different producers of bars and many of the top refiners are members of the London Bullion Market Association (LBMA) which provides accreditation and guarantee of quality. Some of the best known manufacturers are Credit Suisse, Johnson Matthey, Pamp Suisse and Umicore. Each may produce bars of equal gold content and weight, but with varying dimensions and shape. All will be regarded as 24 karat which is virtually pure goldand is often quoted as 99.99% pure. Some bar refiners will offer certification and serial numbers on some of the smallest bars, while others only provide documentation for bars of 250g or larger.
The main advantage of investing into gold bars is that you will more often than not receive the most actual gold for your money as their value solely consists of their gold content. However a popular misconception is that bars can be bought exactly at the gold spot price. This is never true unless you are a large central bank dealing in tonnes of gold! In practise, the spot gold price is the benchmark from which all types of investment gold are priced. Gold bars will generally trade at a narrower premium to coins and this premium falls as the size of the bar increases. Obviously when selling back a 1oz gold bar, you will no doubt receive a lower price from a dealer than its equivalent sized coin.
While a gold bar is the most efficient purchase for someone looking to melt down the gold for jewellery, it can present some obstacles for other investors. The very fact that it’s 24 karat gold means that unless the bars are kept in a specialist depository, it can scratch and tarnish. This can affect the price you’ll receive when selling the bar.
Ease in selling your bars can be affected by two other factors. Firstly make sure that you buy a well known manufacturer, as there are many obscure producers whose bars may be more difficult to sell. Secondly, while purchasing larger bars may save a couple of percent off the buy price, you cannot break this bar up if you only want to cash-in some of your investment. You may find a 1kg bar may be more difficult to sell than a 1oz bar as there are fewer buyers. Finally, unless bought as part of a pension, the profit made on the bullion bars is taxable. If you’re keen to own gold bullion as part of your pension, then bullion bars are the only type of gold that qualifies. Gold coins of any type are not currently permitted into UK pensions. The advantages of Pension gold are that you receive up to 40% discount off the price of bars through tax relief, the bars are in 1oz denominations offering full flexibility and are stored in a licensed gold depository – maintaining the integrity of the bars.
Gold Bullion Bars
Bullion Bars are more practical if you are planning on buying a large amount of gold and wish to save your money this way for a long time before cashing it in as whole for a lump sum. When storing a lot of gold, gold bars are generally the easier and more practical option. This is why you will often see that central bank reserves of gold are kept in blocks of 400 Troy ounce gold bullion bars.
Gold bars don’t have to restricted to huge amounts of cash either, as they are available in a range of sizes. While the trading of gold bullion bars won’t necessarily be as fluid as coins, you may prefer bars so you can trade it in at a later date as a nest egg.
You can choose to store your gold bars either at home or in a bank, but it is vital to ensure it is secure and protected. Any damage to the surface of the gold can lower its value, and with higher purity gold – tarnishing is more likely. If you are choosing to store your gold at home, it is also important to ensure you inform your home insurance company and have somewhere safe and secure where it can be stored such as a safe.
Buy Gold Bars
Physical gold is a popular form of insurance for those anticipating the event of complete financial or societal breakdown – as gold is likely to retain its value and still be easily traded as a form of currency. Saving for the future is important and by choosing to buy gold bars, you can ensure you protect the value of your money and hedge against inflation.