Buying gold bars
Buying gold bars from the most known manufacturers
Apart from standard gold bullion bars that record only the official stamps of the refiner, many accredited refiners also manufacture customized gold bars. The most known bars are Credit Suisse gold bars, PAMP Suisse gold bars, Johnson Matthey gold bars and Perth Mint Gold bars.
For example, customized gold bullion bars are produced for bullion-dealing banks around the world, the bars recording the name or logo of the bank – with the certification mark or name of the refiner usually also recorded on the bar or in an accompanying certificate. In recent years, the growth in the number of banks and other entities issuing customized bullion gold bars has been such that, in many countries, investors now have access to both standard and customized gold bars that are manufactured by accredited refiners.
Buying gold bars from bullion dealers
Dealers that provide bars for national markets can be classified under two broad categories: international dealers (those that order large quantities of gold bars from refiners so that they can supply dealers, fabricators and other trade entities around the world) and national dealers (those that service their national market by buying gold bars from local refiners and dealers, international dealers or local exchanges that deal in bars).
Selecting a Dealer
It is important to select a reputable dealer before buy gold bars – ideally, one with which you can establish a long-term dealing relationship. The reason for this is that most dealers prefer to buy back gold bullion bars that they have previously sold to the investor. As the dealer will be familiar with the brand, it will normally offer a better buy-back price. Brands with which it is not familiar, or which it considers may be difficult to sell, may have to be bought back at the gold/silver scrap price.
Although no gold-related association can guarantee the reliability of any dealer, some associations publish a list of active bullion dealers.
Which brand should you prefer when buying gold bars?
As most dealers focus on a single brand or a small number of brands, an investor’s choice is limited to what is available from the selected dealer. However, to ensure that you have tradable bars that might have to be sold back to another dealer, it would be prudent to use a dealer that offers you gold bars that are manufactured by an accredited refiner, and well known in your country.
I recommend you to buy gold bars made by Credit Suisse, PAMP Suisse, Johnson Matthey and Perth Mint.
What Size of Gold Bullion Bar?
Most dealers offer a range of gold bullion bar weights to accommodate the requirements of large and small investors. While some investors choose the largest bars available from the selected dealer, others may choose smaller bars so they can accumulate a gold investment over time or retain a capacity to sell their investment in small amounts in the future.
When buying gold bars it can be borne in mind that larger gold bars usually have lower percentage premiums above the prevailing value of their fine precious metal content – and usually a smaller “spread” (difference between the buying and selling gold price per gram or troy ounce).
Gold Bars Prices
When buying gold bars from a dealer, it is important to be aware of its pricing policy. Investors should calculate the following for the bar weight that they intend to buy:
• The barʼs premium above the value of its fine precious metal content. The reason for this is that it gives some indication of the maximum premium reduction that could occur in the event of a market situation, where buy backs exceed sales and the dealer may be obliged to buy back gold bars at the scrap price of gold.
• The spread between the gold barʼs purchase and sell-back price. The reason for this is that it gives some indication of the current premium reduction if you were to sell the bar back to the dealer.
When gold bullion bars are sold by a dealer, the premium normally includes the following costs: refining, gold bar manufacture, delivery of the bar to the dealer and dealer overheads.
The premium may also be affected by the extent to which the bar is available on the market, and whether the gold price is relatively stable or volatile.
For example, when the gold price is volatile, the bar’s premium above the value of its precious metal content can be higher and the spread can be wider. The reason for this is that dealers are exposed to greater risk during these times and are obliged to increase their spreads.