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MoneyWatch: Managing Your Money
By Jake Safane
Edited By Angelica Leicht
/ CBS News
Although the pace of inflation has started to slow down, prices continue to rise, and interest rates remain high. Meanwhile, there's continued economic uncertainty caused by issues such as geopolitical strife and upcoming elections. Against this backdrop, gold prices have reached record highs recently.
However, not all gold investments are the same. Not only do people have different motivations for investing in gold, such as portfolio diversification or trying to hedge against inflation, but investors also choose different ways to invest in gold. Some prefer gold stocks or gold ETFs for liquidity purposes, for instance, while others prefer to buy physical gold for more control.
Yet the choices for investing in gold don't end there. If you decide to buy gold bullion, such as physical gold bars, there are different sizes and weights to consider, and that can affect areas like liquidity and price — so it's important to understand which options may make the most sense for your portfolio.
Ready to invest in gold? Compare your best options here.
The best gold bar sizes and weights to invest in, according to experts
If you're trying to decide the best weight and size of gold bullion to invest in, here are some scenarios to consider.
The case for gold bars smaller than one ounce
Some investors prefer small gold bars, particularly those weighing less than one ounce. Note that in the gold investing world, an ounce typically means a troy ounce, which at just over 31 grams is slightly more than a standard ounce that's a little over 28 grams.
"The industry makes it somewhat confusing because typically smaller bars are weighed in grams and larger bars are weighed in troy ounces," says Brandon Aversano, CEO and founder of Alloy.
Smaller gold bars can come in a variety of sizes, such as 1-gram, 5-gram and 10-gram, he adds.
You can also find 50-gram bars, for instance, though that might tip more into medium-sized bars, depending on your perspective.
In general, smaller gold bars, like those weighing less than an ounce, can make sense for those looking for an easier way to invest in gold.
"Small gold bars are easily transportable and highly liquid, which makes them great for buying and selling quickly. They also require less storage and are more readily available for purchase," says Aversano.
However, this portability can come at a cost.
"It's worth noting that bars smaller than one ounce often come with higher premiums, necessitating a balance between enhanced liquidity and flexibility with the higher cost," says Andy Schectman, CEO at Miles Franklin.
Plus, smaller gold bars, because of their popularity, are more susceptible to counterfeiting, says Aversano.
Learn more about the benefits of gold investing here.
The case for 1-ounce gold bars
If you want a slightly larger gold bar, though still one that's relatively small in the grand scheme of things, then you might opt for a 1-ounce gold bar.
"One-ounce gold bars boast very strong retail demand and liquidity, making them highly tradable assets. Their affordability also enables gradual accumulation, appealing to a much larger and more diverse investor base," says Schectman.
These gold bars can also sit in a sweet spot in terms of pricing. While you do need to afford the overall price of an ounce of gold — the spot price is nearly $2,500 — you might pay lower premiums in comparison to smaller gold bars and gold coins that might just weigh a few grams. Premiums might still be higher than they are for larger gold bars, but that could be worth it.
"While investing in gold bars larger than one ounce may offer marginal savings, these savings are arguably not commensurate with the reduced demand and flexibility inherent in 10-ounce and kilo gold bars," adds Schectman.
The case for gold bars larger than one ounce
As you move past 1-ounce gold bars, there can be a wide range of larger gold bars — some of which can still be easily transportable, while others are physically difficult to handle.
"Investors consider various sizes and weights of gold bars depending on their storage and investment capacity. Due to their large holdings, central banks tend to favor larger bars such as the Good Delivery bars, typically weighing 400 troy ounces," says Bas Kooijman, CEO and assets manager at DHF Capital S.A.
"Other large investors and institutions also use smaller bars such as the one-kilogram bars. For individual investors seeking a balance between affordability and ease of storage, 100-gram bars are popular," adds Kooijman.
Note, however, that these are still much larger than one ounce and thus cost several thousand if not tens of thousands of dollars to buy.
"Large gold bars are a solid long-term investment and are often purchased as a hedge against challenging macroeconomic conditions or geopolitical instability," says Aversano. "While there is a higher cost to purchase overall, the premium on the cost is smaller because of the total amount of gold being purchased."
Still, there are some possible drawbacks to consider.
"Due to the high value of each bar, larger gold bars are often held in depositories which carry a monthly fee. They are also more challenging to liquidate quickly," he adds.
The bottom line
There are pros and cons to different gold bar sizes and weights. If you want more liquidity and lower overall cost, you might prefer a smaller gold bar. If you want to pay a lower per-ounce price and can afford more of an upfront investment, you might prefer larger gold bars. However, larger gold bars, such as those weighing several ounces or more, might prompt the usage of a depository, which can add fees but perhaps improve security.
