Gold Bars as an Investment

2011 has witnessed a staggering increase in the price of gold. Fuelled by a growing demand from countries such as China and India the price has now reached to around the $1900 per ounce mark. Expert analysts have also suggested that this is only the beginning of the increasing gold price. China now has the world's largest demand for gold and investment within China grows year on year as more Chinese access disposable income.

One of the many ways to invest in gold is to purchase gold bars. There are advantages and disadvantages to the purchase of gold bars and these are very much dependent on your reasons for purchasing and the overall size of your investment.

Advantages of Purchasing Gold Bars

Gold Bars are available in a variety of different weights ranging from as small as 1 gram to as large as a 250 kilo gold bar currently held by Mitsubishi in Japan. Therefore as an investment they are suitable to a wide range of buyers of different financial levels. Smaller investors are able to buy smaller bars which are easily stored and easily transported.

Buying gold is also a very honest investment for less experienced investors. It is in many ways a simple investment. The stock market can be difficult for a novice to understand whereas it is easy to understand that gold has an intrinsic value. This value will change with supply and demand but this is also much easier to understand than the movements of the global stock markets.

The premiums for buying gold bars are also much lower than for buying gold coins. However, it is important to understand that there are disadvantages associated with this as well. Whilst the premiums to buy gold coins are higher they also resell at higher premiums as they are considered collectibles and therefore the pool of prospective buyers is much greater.

Disadvantages of Purchasing Gold Bars

Perhaps the key disadvantage of gold bars from an investment perspective is that they are somewhat inflexible when it comes to onwards selling of your investment. If you take advantage of the lower premiums and buy a one kilo bar this is a significant investment. In the current market whereby gold is over $1800 an ounce buying a kilo gold bar would almost reach to $60,000. Now imagine that you want to sell part of your investment in a year as the price of gold has risen. As you decided on gold bars as opposed to gold coins you will have to sell all of your gold in one hit as it is not possible to carve up the gold bar. Had you decided to buy gold coins instead you could make the decision to sell only half of your investment now to realize some profits and keep the remainder as an ongoing investment.

The potential pool of buyers for gold bars is also smaller than the pool of buyers for smaller units such as the gold coins.

Where to Buy Gold Bars

Buying gold bars has really never been easier for a person. Not only can you buy it from traditional gold bars dealers in your local area it is also now possible to buy it online or even over the counter in stores such as Harrods. Buying gold has become a much more accessible investment for ordinary people to make as well. As with all gold purchases it is always a good idea for anyone to deal with reputable gold dealers as the industry itself can be susceptible to many scams and forgeries.

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