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5 Things to Consider When Purchasing Gold
Gold is a historically sound investment, as it provides a hedge against inflation and performs well in times of economic crisis. When an investor chooses to diversify their portfolio with gold, deciding what type of gold to purchase can be a daunting process. Keep reading to learn more about the five things to consider when purchasing gold.
1. Bar Size
When purchasing gold, consider the type of bar size. Bar size can be measured in two ways: troy ounces or the Metric System. Troy ounces are used in the United States and the United Kingdom. One troy ounce is slightly heavier than the standard ounce, weighing about 1.097 standard ounces1. The U.S. and the U.K. use troy ounces to ensure standardized and fair measurements of gold. The Metric System is used everywhere else as a common way to measure gold bar size. The units of sale for gold can be:
- 1 Gram
- 10 Grams
- 100 Grams
- 1000 Grams (1 Kilogram)
- 12,500 Grams (12.5 Kilograms)
2. Bar Purity
It is important for an investor to know how pure their gold is, or how much gold is in the bar they are purchasing. If a gold bar is not made of pure gold, it is called an alloy, or a mix of gold with other metals. Gold purity can be measured in two ways, the first of which is by karats2. Pure gold is referred to as 24-karat gold (or 24k), so every non-pure bar will contain less than 24 karats. For example, if a bar’s purity amount is 50% gold, then it will be 12k gold.
The second way to express gold bar purity is through fineness3, or parts per thousand. Pure gold has 999.9 fineness, which means that the bar is 99% or more comprised of gold. A bar that is made up of 75% gold will have a fineness of 750.
To the right is a chart that shows the breakdown of karat amount, fineness, and the percentage of gold in a bar:
3. Bar Type
A third characteristic to be aware of when considering gold as an investment is the actual bar type itself. While standard gold bars make up nearly 100% of the market, there are emerging markets for alternative types of gold, such as social gold, green gold, and digital gold. Visit Gilded’s homepage to learn more about the benefits of digital gold as a portfolio diversifier.
4. Bar Look
Choosing how you want your gold bar to look – cast or minted4 – is another consideration when it comes to purchasing gold. A cast bar is the simplest, fastest, and cheapest way to secure your gold bar. Here is an example of what a cast bar may look like:
As you can see, there is a natural finish to the bar. It is common for blemishes and/or irregularities to show up on the bar, but each cast bar is unique.
If you would rather have a more polished, shiny bar, you may want to opt for a minted bar.
Unlike cast bars, minted bars have no unintentional marks or flaws on them, and they go through uniform inspections to ensure their quality. As a result, minted bars are more expensive than cast bars.
The fifth and final thing to consider when purchasing gold is where it came from. More specifically, did it come from a refiner or not? While there are hundreds of refiners that deal with gold and other precious metals, having a reputable, world-renowned refiner ensures the quality, care, and protection of one’s gold. To learn more about the importance of refining, check out our blog post that outlines the gold refining process.
There are so many things to consider before purchasing gold like a bar’s size, purity, type, look, and refiner are all important things to consider before purchasing a gold bar. When looking to invest in gold to diversify your portfolio, be sure to consider these five factors to help determine what type of gold bar best meets your requirements.
1 Private Bullion, “Troy Ounce vs Ounce, https://privatebullion.com/blog/troy-ounce-vs-ounce/“
2 Britannica, “karat, https://www.britannica.com/technology/karat“
3 BullionByPost, “Gold purity, https://www.bullionbypost.co.uk/index/gold/gold-purity/
4 Seo, “What’s the Difference between Cast and Minted Gold Bars?, https://goldstocklive.com/market-news/what-s-the-difference-between-cast-and-minted-gold-bars/#:~:text=Gold%20cast%20bars%2C%20although%20very,you%20intend%20to%20use%20them.“