5 things to know before buying 1-ounce gold bars this summer

Over the last few months, a mix of high inflation, economic uncertainties, geopolitical tensions and other factors have led to an uptick in interest in gold investing. After all, gold can act as a safe haven asset and can help hedge against inflation's eroding effects on investor portfolios, so buying in right now, amid today's unusual economic and political landscape, can be a smart move.

But it's not just inflation and economic uncertainties that are driving the renewed interest in gold. The price of gold has also been climbing recently. Last month, the spot price of gold hit a new record high of over $2,400 per ounce, which prompted even more interest from investors, many of whom are now trying to capitalize on the potential for future price movement.

But while gold investing could be a good move this summer, there are many different ways to approach it. For example, you can open a gold IRA, invest in gold mining stocks or ETFs that track gold prices or even buy fractional gold. One of the most popular and straightforward choices, though, is 1-ounce gold bars. If you want to invest in this type of gold this summer, though, there are some important things you should understand first.

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5 things to know before buying 1-ounce gold bars this summer

Here are a few important factors to consider if you're planning to buy 1-ounce gold bars over the next few months: 

There's a premium over the spot price

Nearly all gold bars, including 1-ounce gold bars, have additional premiums incorporated into their price. This accounts for the manufacturing costs involved in producing them, as well as distribution fees and profits for the mints and dealers selling them. So, you'll want to take those premiums into account as part of your investment decision. 

It's also worth noting that the premium you pay can vary quite a bit between different 1-ounce gold products and the dealers you purchase from. Generally, the more popular and mass-produced a 1-ounce bar is, the lower the premium tends to be. But premiums also fluctuate based on supply and demand in the market at any given time, so be sure to do your homework on the different premiums if you decide to take this route. 

As part of that process, you may want to check live pricing from multiple reputable gold bullion dealers — and that's true whether you're buying 1-ounce gold online or from a local coin shop. 

Learn more about the options you have for investing in gold this summer.

Fake gold products can be an issue

Unfortunately, the gold market has issues with counterfeit bars and coins in circulation, and that's become an even more prevalent issue as prices rise and profit motivations increase. In turn, it's crucial to only purchase from trusted bullion dealers and mints to mitigate this risk of receiving fake gold products that look real but aren't.

Before buying, be sure to research the product specifics and authenticate your gold bars by double-checking weights, dimensions, detailing, packaging security features and more against the official specifications. If anything seems suspect, proceed with extreme caution and verification from an independent third party. Ultimately, buying from only highly reputable dealers is your best defense.

There may be resale challenges with generic bars

Popular 1-ounce gold bars are highly liquid, which is a major benefit of this type of investing. However, if you purchase generic gold bars, it's important to understand that they can sometimes be tougher to sell later, especially if you overpaid for premiums initially compared to prevailing rates. In turn, you may struggle to fully recoup premiums when selling generic bars.

The resale challenges tend to be highest with lesser-known private mint bars from smaller companies with lower production numbers and fewer potential buyers. So it can be wise to avoid niche, unmarketable bars and stick to more liquid, widely recognized bars if you're planning to eventually sell and capitalize on the uptick in gold prices.

Buying in bulk can be a smart strategy

If you're making a larger investment in 1-ounce gold bars and can afford to put more money into your purchase, you may want to look into buying in bulk. Many dealers will offer lower premium pricing when buying in bulk versus just a couple of bars at a time, so purchasing larger quantities upfront could mean saving a significant amount of money in premium costs.

For example, premiums on a larger quantity of gold bars may be about 3% to 4% over the spot price compared to 5% to 8% on one or two bars. That may not seem significant, but when you're considering that the spot price of gold is over $2,300 per ounce right now, dropping the premium costs by a couple of percentage points could mean that the savings add up quickly.

You may need to plan for storage and insurance costs

Unlike paper investments, holding physical gold requires having a secure storage solution that protects your investment and is ideally insured in case of any theft or damage. Improper storage risks losing your entire gold investment, so this is a crucial consideration. 

If storing at home, conceal the safe well, never discuss your gold holdings and consider supplemental insurance beyond typical homeowner's policies that have low coverage caps for cash and precious metals. Bank safe deposit boxes provide more security than homes, but may still have limitations around access during banking hours and insurance coverage caps. 

Private bullion depositories tend to offer the highest security and full insurance coverage. However, there are fees for this type of storage, and it can add significantly to the cost of owning gold bars. So if you want to use private storage, be sure to shop around, as both the rates and security protocols can vary.

The bottom line

Overall, investing in 1-ounce gold bars can be a straightforward way to add some golden diversification and inflation protection to your portfolio during uncertain economic times. However, make sure to do your homework on reputable dealers, understand the premiums for different gold products, and explore delivery, storage, and insurance factors so you can make a smart purchase in this summer's high-demand gold market.