Gold bullion in the form of bars is one of the cheapest ways to own physical gold.
Economy of the gold bar
Perhaps the most efficient and economical way of owning physical gold is to purchase gold bar. Because of the
relatively lower costs of manufacturing these bars as compared to gold coins, the premium over the spot price of gold tends to be much lower than coins. A general rule of thumb is that the larger the amount of gold
in one unit and the less "pretty" it is, the less premium it commands and buys you more gold for the money. This in
turn leads to lower costs of storage, shipping and insurance.
So the accepted wisdom is to buy the biggest bar of gold that you can afford. In its own way, owning a large bar
of gold can be a very rewarding psychologically. Simply holding the heavy bar in your hands is an experience in
itself and gives you tangible feedback on the enormous value and security it holds. It is common for people who
hold a gold bar in their hands for the first time to be surprised by how heavy it is.
Gold bar types
There two main classifications--cast and minted--based on how they are made. Cast bars are made by pouring molten
gold into molds and minted bars are stamped out from gold sheet or strips. Markings are then pressed or stamped on.
Both types must be made by accredited manufacturers, some of the major ones being Heraeus, Metalor, Valcambi/Credit
Suisse, Pamp SA, Degussa, Johnson Matthey, Royal Canadian Mint (RCM) and the Perth Mint.
Sizes of gold bars
There are several options in sizes, weights and sources of manufacture and some thought should be given to these
before you purchase. The most important factor to consider is weight which usually also governs size and there is
some room for confusion here because even though the official measure is troy ounces, the weight of gold bars can
be quoted in grams, tolas, taels or simply ounces depending on which country you live in or are buying your bar
from. (The tola is a tradional measure in India which is a major gold buyer and taels are a measure in Chinese
speaking countries). A good practice is to simply pick the one measure you are most comfortable with, either grams
or troy ounces, and stick to it. One fact that is important to understand however is that the troy ounce is not the
same as the commonly used avoirdupois ounce that is used as a measure in the grocery store and which is lighter
than the troy ounce.
The most popular gold bars by weight for investors and collectors in the USA, UK and Australia are:
1 gram, 2.5 gram, 5 gram & 10 gram gold bars
These are the most affordable and
most popular gold bars, also called "chip gold" because of their small size. They are easy to buy over time
and available widely from dealers online through sites like
One-ounce gold bar (31.1 grams)
This is a common weight for most collectors and it measures
roughly 1 5/8 x 7/8 x 1/8 inches. These dimensions will depend on the manufacturere and the purity of gold and this
is true for all bars. Although these smaller bars approach the size of gold coins, they are still "cheaper" gold
then coins with equal gold content because the difference in the premium can be quite significant. One reason for
this is storage space because by virtue of being round, even neatly stacked coins create "empty" storage space
where rectangular bars don't.
3.215 troy ounce gold bar (100 grams)
100-gram gold bars measure about 2 1/8 x 1 3/8 x 1/8
inches and like the 1-ounce gold bar, are perfect for those investors who are not looking to invest in hundreds of
ounces of gold and want to be able to maintain flexibility in their ability to sell a few pieces if needed. The
100-gram gold bar has become very popular as an investment and as a result, carries very little relative premium
over even kilo gold bars in spite of being a small gold bar.
Ten troy ounce gold bar (311 grams)
Measuring roughly 2 5/16 x 1 5/16 x 3/8 inches, these
are the most commonly purchased bars among those investors who buy a few hundred ounces of gold because it strikes
the right balance between premium and liquidity for them. This simply means that while it is easier to sell smaller
bars when needed, it is cheaper to store and insure the larger bars.
32.15 troy ounce gold bar or kilo gold bar
Measuring about 4
1/2 x 2 x 3/8 inches depending on manufacturer, these large bars are used as a trading medium and therefore meant
mainly to be stored in bank vaults. This makes them very liquid and reduces their premium to spot considerably.
This has made the kilobar a favorite with gold investors. A commonly purchased kilo gold bar is the PAMP kilo bar
which comes with a certificate of authencity.
400-ounce Good Delivery gold bar (12,400 grams/12.4 kg)
This is the standard gold bar that is traded internationally by bullion dealers and banks and measures roughly 7
7/8 x 3 1/8 x 1 5/8 inches. Even though it is called the 400-ounce bar, its actual weight may vary between 350 oz
and 430 oz though it must be a minimum of 99.5% pure gold.