Popular Gold Bars for Investors

Gold Bars vs Gold Coins

The debate between gold coins versus bars will likely continue for eternity. Part of the answer simply comes down to preference. The answer also distills down to security, funding, holding period, and efficiency.

Preference

Enjoyment and independence drive much of the desire to hold physical gold or silver. With these motivators satisfied by holding physical precious metals then the form doesn’t really matter, personal preference simply drives the last mile of the pursuit. For example, do you enjoy looking at coins or does the simplicity of a bar – the satisfaction of a chunk of gold – please you more?

The numerous mints around the world all generate many different individual coins. A collector/investor will find a huge selection to choose from and enjoy. In all, there may be a thousand different coin options, in varied fractions of an ounce, to choose from. Conversely, bars offer less selection but are seen as more purposeful and less “playful”.

Which will you choose?

Gold Bar Security and Purity Concerns

If one were to try and defraud a precious metals investor, your energy and time would be better spent manipulating a piece that was lacking detail and large. A criminal organization would generate large illicit gains by selling a tungsten-filled kilogram gold bar than a U.S. gold buffalo coin. It would be easier as well – drilling into a bar requires few specialty tools whereas hollowing out a thin coins with intricate carvings seems nearly impossible to do without destroying the coin or its engravings.

For this reason alone, most investors favor coins due to their built-in security. However, security concerns don’t need to remove bars from consideration entirely. Instead, the concerns are justified but can be alleviated through simple testing options. For example, investors can use a combination of methods to ensure that a bar is pure gold. These include, weighing, conductivity analysis, testing magnetism, and ultrasound testing.

Funding

Funding simply refers to whether or not the investor has the capital to purchase a gold bar. With that being said, investors who consider purchasing a 1 oz gold coin are equally able to purchase a 1 oz gold bar. However, the larger 10oz, kilogram, and 100oz bars require substantial funds and are a limiting factor for many smaller investors.

Holding Period

Holding period may be less of a concern in today’s world than in the past but it’s still a consideration.  For an investor focused on holding physical precious metals for a decade or longer the format doesn’t matter quite so much.  Unlike a long-term holder, an investor who may sell their gold or silver in a few months or one year may want a popular coin instead.  By definition popular products are more desirable and easier to sell.

However, if purity can be assured, gold is gold regardless of format.  Fortunately, recent innovations have made assuring purity much easier, especially at the 1oz bar size.  For example, Pamp refinery introduced their Veriscan product.  Many refineries began sealing their 1oz gold bars in plastic with an assay certification card, Pamp included.  However, Pamp included a scannable QR code for individual bar verification.  These added layers of security make selling a 1oz gold bar a safer endeavor.

Gold Bars are Efficient

Finally, and applicable to large institutions only, the logistics of owning hundreds of individual coins is impractical. For investors seeking to build a position of, let’s say, $100m in gold, they’ll likely opt for a small palate of 100oz bars rather than 40,000 individual coins or small 1oz bars. As an added benefit to these large investors, 100oz bars are rated as good for delivery against CME gold futures. CME gold futures provide additional options in the event they choose to sell in the future.