If you are buying gold bullion in the form of bars, then it is advisable to buy the biggest gold bar you can afford, as the effective premium you pay per ounce will be less than if you were buying gold bars of smaller sizes.
Unlike gold coins, physical gold bullion in the form of bars is typically between 99.5 and 99.9% fine, like the 24-carat Austrian Philharmonic gold bar. Bars are stamped with the name of the refinery (such as Hereaus, Pamp, Matthey, Perth Mint, Umicore and Johnson Matthey and others).
The London Good Delivery bar is the ‘gold standard’ for bullion trading across the globe. Spot traders specify ‘Loco London’ to indicate that the location where the physical bullion bars are to be transferred from seller to buyer is London.
London Good Delivery gold bullion represents the most cost-effective and easily traded form of gold for major investors to deal in and to hold, and fetches the best gold market prices. Given the size and value of these bars they can only be stored in large secure vaults, and means they are not a practical investment option for the individual private buyer.
Fortunately, it is possible to buy gold bullion at fair market prices in much smaller amounts, starting with just 1 gram, and there are numerous types of gold bar being actively traded on the world’s bullion markets by investors big and small.
Gold fact: There are local markets for gold in many countries, which often have their own versions of the gold bullion bar, including India (the ten tola or ‘TT’) and China (the five tael ‘biscuit’), whilst in the West the most popular with smaller investors is the Swiss-manufactured ‘kilobar’ (which as its name suggests, weighs 1,000 grams).
Many refineries produce one-ounce bars aimed at the smaller investor market, but dealing costs and other factors mean that you cannot achieve the economies of scale of buying larger bars. However, buying bars of this precious metal will always cost less than buying the same weight of gold coins.
There can be tax advantages to buying bars instead of coins, since in some countries gold bars are exempted from VAT, and if of sufficient purity may be eligible for holding within tax-efficient investment vehicles. As always, it pays to take professional advice before you invest!
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