If you’re looking to invest in physical gold to diversify your portfolio and hedge against economic uncertainties, we recommend investing in gold bullion.

Many people think of gold bullion as those large gold bars seen in movies like The Italian Job or Goldfinger. Indeed, most western countries’ gold reserves are in the form of these massive bars.

For investment purposes, however, gold bullion comes in many forms, including gold bars, rounds, and coins. Bullion simply means a bulk amount of gold (or other precious metals) measured in weight. A large gold bar stashed away in Fort Knox is a gold bullion, but so is an American Gold Eagle coin you can get from a neighborhood coin shop. Their individual worth comes from the amount of gold they contain.

Gold bars, rounds, and coins

Gold bars are mostly privately minted, and come in many shapes and sizes – from the 400-ounce gold bars used in professional bullion trading, to one-gram bars produced for the gift market.

Gold bullion rounds are produced by private mints. While they’re designed to look like coins, they do not carry any face value or collector’s value. Their single purpose is wealth storage, and their worth comes only from their melt value plus a small premium above the spot price of gold.

Gold bullion coins are struck by government mints around the world, and carry a nominal or face value. They may be used as legal tender, but their true worth comes from their gold content plus a certain premium.

Gold bullion coins’ legal tender status makes them easy to transport across international borders, and may actually come in handy in times of severe financial crisis.

Liquidating gold bullion

Gold bullion coins are easiest to liquidate because their gold content and purity are guaranteed by their origin country’s government. Investors around the world trust government-minted gold coins, particularly those struck by popular mints like the U.S. Mint and the Royal Canadian Mint.

Gold bars, especially large ones, may need to be assayed on liquidation, which would entail more costs. They are also generally more difficult to unload because of their high gold content. Not a lot of buyers can afford or are willing to pay the high cost of a large gold bar, unless they need the gold for industrial or commercial use.

One factor that can have a significant effect in liquidating gold bars and rounds is their hallmark, which identifies the private mint that struck the product. Certain private mints have gained an excellent reputation in the market, making their products easy to buy and sell. These mints include Johnson Matthey, Ohio Precious Metals, Credit Suisse, Sunshine Mint, and PAMP Suisse.

Gold bullion pricing

While large gold bars are typically more difficult to unload, they can also give you the biggest savings at purchase. Premium over the spot price diminishes as the bullion size increases, resulting in a lower price per ounce of gold.

Privately minted one-kilo gold bars would have the lowest premium per ounce. They’re followed by privately minted gold rounds, particularly the biggest-available size of one troy ounce.

Gold bullion coins carry the highest premium per ounce, as the government’s guarantee on their gold content adds value to the product. Additionally, gold bullion coin dealers have to pay large fees to the government, which also factors into the price.