When learning about gold, you’ve likely heard the advice that it’s best to buy a gold bar rather than coins or jewellery.
Gold bars are one of the most common ways to buy gold; they are what large banks and institutions buy when they want to stock up on the precious metal. They are usually what you’ll see in the movies, in bank vaults and in stories. But are gold bars the best way to invest in gold? And how much is a gold bar worth in 2020? Read on to find out! 👇
What is a gold bar, exactly?
A gold bar is simply refined metallic gold. It’s gold that has been collected and transported which is then smelted and compounded into a large gold bar. Smaller gold bars are created in moulds and divided according to weight. The most common type of gold bar is 400 pounds – around 12.5 kilos – and is worth above £500,000!
These gold bars meet the required standard for processing, labelling and keeping records, which are set by the London Bullion Market Association (LBMA) association.
What’s in a gold bar?
According to the standards set by LBMA, a gold bar must contain 99.5% pure gold. It must weight between 350 to 430 troy ounces, which is between 11 to 13 kilos. These large bars of gold are between 210 to 290 millimetres long, a width of 55 to 85 mm and a height of 25-45 mm.
The journey a gold bar takes is an interesting one: gold is first mined in countries such as South Africa, Russia and India. These gold mines are deep in the mountain and are mined by private gold mining companies. Once mined, the gold is put into a truck, plane or a boat and then transported to a refinery, such as Nadir Rafineri in Turkey (that’s ours!). This refinery then sells the gold to dealers (like Minted!) and then we sell the gold to investors who want to add gold to their portfolio.
Depending on the manufacturer, the gold bar will also have the specific serial number, fineness and hallmark inscribed onto the gold ingot. The bar producer will make different types of gold bullion depending on what it sells.
How much is a gold bar worth in 2020?
Gold bars and gold ingots do not have a fixed price – their price varies with time and will depend on the content of the gold, its size and its spot price. At the time of writing, one gold bar of 10 grams is worth around £470 in September 2020. How can you understand what a gold bar is worth? Here are a few ways:
The spot price of gold
The spot price of gold is the value of gold in fiat currency, such as dollar or pound value. The spot price is usually set against a troy ounce of pure gold. The price will change from one minute to another and will vary throughout the working day.
The spot price of gold does fluctuate over time, but in the long term, it rises with inflation. There have been instances, such as with the Coronavirus pandemic, where spot prices have kept on increasing for a long period of time. In fact, in the year 2020, the spot price of one gold bar increased above $2,000 per ounce for the first time in history! 🎉
The gold premium is the little extra you pay to get your gold prepared and smelted. Someone needs to pay the miners, the delivery drivers and all the businesses involved – this is where the premium comes in. It’s a fee that is charged on top of the melted value of the gold bar.
The premium will change depending on the dealer, and may vary depending on the type of gold you are buying (it may be less if you’re buying gold coins) and how much you are buying (larger quantities means lower premiums). Some dealers charge percentages while others charge fixed costs. As an example, here are some of the fees gold dealers charge.
Gold Dealer A
Gold Dealer B
Gold Dealer C
Gold Dealer D
The weight and purity
The value of gold will vary depending on whether you are buying a gold coin or bar, and how much does a gold bar weigh – it could be anything between 1 gram and 1 kg. As you can imagine, a 1-kilo bar of gold is a lot more valuable than 10 grams of gold. The details of the weight and purity are inscribed onto the gold ingot; you’ll want to make sure you are buying .999 pure gold – this means you are buying the highest quality of gold which means you’ll be able to sell it whenever you want.
You also want to take into account any taxes you’ll be paying on your gold. Gold bars and coins are VAT exempt, but you will need to pay capital gains tax on gold bar sales (although not on coins). It’s important to understand the implications of tax; luckily we put together a handy guide that breaks it all down for you:
How much should I buy?
It is true that the more gold you buy, the lower the fees you’ll be paying. However, as you can imagine, most people cannot pay thousands of pounds to buy 1 kilo of gold. One kilo of gold is also not very practical: it’s harder to sell, and it’s harder to liquidate. You can’t sell the gold bar in portions, only the entire bar.
For this reason, it’s best to buy 10 bars of 100 grams, or even smaller bars, such as 10 grams. You’ll still get a discount on your premium and will be able to sell your gold off in individual pieces whenever necessary.
At Minted, we offer gold bars of 10 grams. Once you buy enough gold to own 10 grams, you can get it delivered and you’ll only have to pay shipping costs. This is different to many other gold dealers that buy kilos of gold and then require you to pay “fabrication” costs in order to smelt the bar into smaller pieces. With Minted, what you buy is what you own. And once you want to sell it, we’ll buy it back from you at better rates than the high street!
The price of a gold bar varies depending on its value, weight and who you are buying it from. You can easily find out the spot price of gold on a website such as Gold Price. You can learn more about premiums by checking our prices or the table listed above. And once you are ready to buy your gold, head over to Minted to open an account!