Buying Gold Bullion & Bars

How to buy gold bullion bars for investmentGold bullion bars and gold bars are popular as an investment in gold and as a hedge against global currencies, and have been so for many decades.

While many investors or people wanting to protect their wealth against inflation may choose gold coins, or even shares in gold companies, or gold certificates, the gold bullion bar provides a different level of investment.

Gold coins are predominantly bought by people with less money to invest or protect with gold, whereas gold bars can cost a significant amount of money – a 1 Kilo gold bar, at the time of writing this, would for example cost you a cool £25,000.

If you have a lot of money to invest, then a series of gold bullion bars of different weights and sizes could be the perfect answer.

Gold itself is treasured as a highly precious commodity and has been for several thousand years, and was used as a status symbol from the earliest civilizations.

The Aztecs, Egyptians, and Mayans amongst others developed using gold into a fine art form, and used it to display the wealth of the richest, and of their societies taken as a whole.

Gold may have been regarded as a precious metal but it was not always produced to the same standards across the world, or indeed across the centuries.

It is a soft metal in its purest form, which means for some uses people tend to add other metals to make it harder, most commonly copper is added, but of course it could be added to the bullion form also to deceive a buyer.

Before regulations were brought in to make all gold bars to the same standard people could not always be sure of what exactly they were buying, and of course if one gold bar that you bought contained a higher percentage of copper than another gold bar at the same price, then you are effectively paying over the odds because of the lower amount of pure gold in your bar.

Indeed up to the first two decades of the 20th century the best way of making sure people were buying high quality gold was to acquire gold coins such as the British sovereign, or also the American Eagle, since both Britain and America were known to produce only high quality high purity coins.

However that was a very cumbersome way of obtaining large quantities of the finest gold.

Coins were of a consistently high standard as national mints had to mint coins to strict quality control standards, and specifications, but national banks as well as some commercial banks did start to store their reserves of the metal in bar form rather than in coins, but yet again the size, standard, and purity of the bullion could and did vary markedly.

Some banks were able to develop a better reputation for the quality of the gold that they issued, bought things with, or used to make coins from.

For example the Bank of England, the U S Federal Bank, and Credit Suisse all had fine reputations internationally.

Due to gold strikes in the 19th century gold was often obtained from Australia, Canada, South Africa as well as the U S A. Such gold rushes also led to increased concerns about keeping gold supplies safe from robberies in general, and armed hold ups in particular.

The American government even decided to store its national gold reserves in Fort Knox, which it claimed nobody would be able to break into.
It was to be the British government that inadvertently came up with the means to ensure that gold bullion bars and gold bars would virtually all made to the same exacting standards.

They had not intended to do so, but then Chancellor of the Exchequer Winston S Churchill had decided that Great Britain should go back onto the gold standard. The British Parliament passed an act that laid down exact guidelines as to the purity and quality of all bullion bars, bars, and coins that were to be released by the banks.

As an aside the British attempt to return the pound sterling to the gold standard was ruined by the economic fall out of the Great Depression, and the Second World War killed off any chances of it being revived at all. Yet the British legislation is still the bench mark standard by which the great bulk of gold producers aim to achieve when selling their gold.

Buyers of gold bullion bars and gold bars are generally keen to buy from suppliers were they know that the quality of the metal they are buying is assured. To do this they will often approach trusted dealers and indeed sellers such as national banks, and merchant banks including Credit Suisse.

Now these sellers frequently sell bullion bars and bars in different sizes to suit the needs as well as the budgets of potential buyers, with bullion being available from a few grams to several kilos in size.

If you do decide to buy gold bullion as an investment then you should look out for the best known names as mentioned above, and of course always buy from a reputable dealer.

There are many out there across the world and you even have the options today to either take delivery of your gold bullion bar and store it yourself, or to pay a small price for a secure storage facility to store it for you.

Depending on your level of investment and your own security arrangements this may be a very good idea, otherwise you would certainly need to arrange suitable insurance (since it will not be covered on your normal household insurance) in case the unthinkable happens and it is stolen.

There is a ready market for gold bars with dealers who sell gold bars also looking to buy them, there is a small difference in the price they will pay to buy from you, and the price they will sell to you at (called the bid/offer spread), it is usually only a couple of percent since the value of gold is a fixed price, which changes on a daily basis.

In other words it’s not like having say an antique painting where the price is determined by what someone is prepared to pay, it is a fixed price based on the quantity of gold, and you be offered more or less the same price wherever you sell it.