Precious metals investors, particularly those new to investing into physical bullion, frequently ask what the best sized gold bar is to invest in. Ant the answer is: It depends on your circumstances.
Gold Bar Sizes
Gold bars are sold in a range of sizes, from 1 gram to 1 kilogram. Bars larger than 1 Kilogram, including 100 ounce and 400 ounce gold bars are also made, however these are typically reserved only for institutional investors, banks and funds.
First, it should be mentioned that gold bars are also sold in different denominations. To better understand the market, let's look at the different units in which gold bars are sold.
Many gold bars are available in grams and kilograms, and this is the most popular size worldwide, particularly for smaller sized bars. Gram denoted gold bars are available in the following sizes:
|Gram Denominated Gold Bar Sizes|
|1 Gram||2 Gram||2.5 Gram||5 Gram||10 Gram||20 Gram||50 Gram||100 Gram||250 Gram||500 Gram||1 Kilogram|
Gram denominated smaller sized bars, up to 10 grams, are generally more popular worldwide than fractional ounce bars. However, these smaller sized bars trade at a much higher premium than larger bars. These bars are also most popular in Europe, where the metric system is used as the standard. For larger sized bars, the 100 gram and the 1 kilogram sized bars are the most common.
Bars denominated in Ounces and fractional ounces are most common in North America and worldwide. The most common sized gold bar available worldwide is the 1 Ounce gold bar. This is equal to approximately 31.105 grams of gold. Fractional ounce gold bars are rare, but available. However, the most popular sized gold bars are the 1 Ounce followed by the 10 Ounce gold bar. Most European precious metals refineries that produce gold bars in gram denominations will also release a 1 Ounce gold bar. These include Argor Heraeus and Valcambi.
It is also worth mentioning that the 1 Ounce gold bar is the smallest denomination bullion bar with a very low purchase premium.
In parts of Asia there is also demand for Tola bars - a unit which is worth approximately 11.3 grams. Most European precious metals refineries, with the exception of PAMP, do not produce gold bars denominated in Tolas. There is little demand for Tola denominated bars outside of Asia.
What Size Bar Should I Buy?
The answer to this questions is that it depends on your budget and your investment goals. However, for most investors, SwissBullion.ch recommends either 1 Ounce or 10 Ounce denominated bars, depending on the size of your investment budget.
The reason for this is simple. Smaller bars, including the 1 gram and 5 gram gold bar, carry much higher manufacturing costs proportionally to the 1 ounce and 10 ounce gold bar. This also means that they sell for a much higher premium. When looking to invest in gold bullion, it is important to consider the margin over the spot price. 1 Ounce and 10 Ounce gold bars typically sell for around 2%-4% over the spot price, depending on the manufacturer and quality of the bar. For example, Kinebars, gold bars engraved by a laser hologram, sell for a higher premium than bars without a kinebar design.
For clients looking to invest in gold bullion with a budget under $500,000 or foreign currency equivalent, the 1 ounce, 100 gram or 10 ounce bars are the best option. There is little difference in the premium between these sized bars. However, they may be sold off incrementally, allowing an investor to return a more even price, or to liquidate a partial position if required. Owning gold bars in smaller increments allows our clients greater flexibility with their investment.
For clients investing in excess of $500,000, the 1 Kilogram gold bars are a good option, as they do trade at a slightly lower premium to the 1 ounce gold bars, at approximately 1-2% over the spot gold price.
Putting Together a Portfolio
For most clients, SwissBullion.ch recommends trying to build a precious metals portfolio over time. Buy gold bars and coins weekly or monthly over the course of several months or years, and plan on holding them for the long term. A precious metals portfolio is a hedge against market recessions, stock market crashes, and other unforseen events that might occur.
Also, look to diversify your precious metals portfolio as much as possible. Buy some gold, silver, platinum and palladium. And buy both bars and coins.