Investing in 1-ounce gold bars? Here are the dos and don'ts to know

When it comes to investing, gold has a wide appeal, especially in the current economic climate. For starters, the asset can act as a hedge against inflation and a store of value, as its limited supply and enduring value provide a potential safeguard against the erosion of purchasing power. And, gold's status as a non-correlated asset can offer valuable diversification benefits, so it's hardly surprising that so many investors are adding the metal to their portfolios right now.

And while investors have a wide range of gold assets to choose from — including gold individual retirement accounts (IRAs), gold stocks and even gold exchange-traded funds (ETFs) — 1-ounce gold bars are a particularly attractive option right now. After all, these compact units of pure gold offer a balance of affordability and liquidity that larger bars or smaller coins may lack. Their standardized weight and purity also make them readily tradable, while their relatively modest size allows investors to build positions gradually. 

But while 1-ounce gold bars can provide a solid foundation for a diversified portfolio, there are important factors to be aware of before buying in. 

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The dos and don'ts of investing in 1-ounce gold bars

Here are the important dos and don'ts to know before adding 1-ounce gold bars to your investment mix:

Do research reputable dealers

Before making any purchase, be sure to thoroughly investigate potential sellers. Look for established dealers with positive reviews, proper accreditation and a history of ethical business practices. This due diligence can help you avoid scams and ensure you're getting authentic gold bars.

Explore the many benefits of investing in gold here.

Don't rush into a purchase

As with any type of investment, you should avoid making impulsive decisions based on fear or market hype. Take your time to research and make informed choices instead to ensure that 1-ounce gold bars (and not another type of gold asset) would be the best addition to your portfolio.

Do verify the purity and authenticity

When purchasing this type of gold, it's important to buy gold bars that come with proper assay certificates and are stamped with recognized hallmarks. It can help to focus on bars produced by well-known refineries to minimize the risk of counterfeits.

Don't overpay for premiums

While it's normal to pay a premium over the spot price of gold, be wary of excessively high markups on the gold bars you're considering. It can help to compare prices from multiple dealers to ensure you're getting a fair deal.

Do consider storage options carefully

If you invest in physical gold, you'll need to decide which gold storage option makes the most sense for you, whether that's at home in a secure safe, in a bank safety deposit box or with a third-party storage service. Each option has its pros and cons in terms of accessibility, security and cost, so be sure to weigh all the factors first.

Don't forget about insurance

If you're storing gold at home, make sure your homeowner's or renter's insurance policy covers precious metals. If not, consider additional coverage to ensure that you're fully covered in case of theft or other types of losses.

Do diversify your gold investments

Diversifying your portfolio is just the first step in ensuring that your portfolio is built to withstand future financial issues. While 1-ounce bars can be an excellent choice for the right investor, you may want to consider mixing them with other forms of gold investments to spread risk and increase liquidity.

Don't neglect proper handling

Gold is soft and can be easily scratched or damaged, which can lower the value of your gold bars. So, be sure to handle your 1-ounce gold bars carefully and consider keeping them in protective cases to maintain their condition and value.

Do inspect the gold bars before buying

You have lots of options to consider when it comes to gold dealers, including online gold dealers — which typically offer some of the lowest prices and largest selections available. But whenever possible, you should inspect the gold bars in person before purchasing to ensure that there are no red flags or issues that arise. And, if you're buying your gold bars online, ensure the dealer has a solid return policy.

Don't fall for deals that seem too good to be true

While it makes sense to try and get a deal on your gold bars, you should be extremely cautious of any offers that are significantly below market price. Unfortunately, the gold market does have issues with counterfeit products, and a deal that seems too good to be true can be a sign of a scam or a counterfeit product.

The bottom line

In today's economic landscape, investing in 1-ounce gold bars can be an excellent way to add stability and potential growth to your portfolio. The compact size and standardized nature of these bars make them particularly attractive, whether you're just dipping your toes into precious metals or are a seasoned buyer aiming to expand your holdings. But before you buy, keep the dos and don'ts in mind and ensure that any gold you buy will complement — and not dominate — your investing strategy.