When someone says gold bars, we imagine them as shown in the movies – something smuggled by pirates or in heist movies. In real life, few of us may have seen 1 gram to 10-gram gold bars. In fact, in many cultures people gift gold bars to mark a festival or some special occasion. However, when someone says gold bars, we do not associate them with the small wafers, but as large shiny bricks that are neatly stacked and glimmer like the sun rays.
A brief history of gold bars
When currency was still backed by gold, there was a standard weight to gold and that has continued till today with uniform size, shape and form with subtle differences that reveal to a trained eye the when and where of the gold bars’ casting. For instance, US-cast bars are trapezoidal in shape. The first curious descriptions of gold bars occurred in Annals, Book XVI, by author Tacitur in ancient Roe, circa 65 A.D. In the book a Carthaginian man named Casellius Bassus described to the greedy Emperor Nero Claudius Caesar “immense stores of gold, not wrought into the form of coin, but in rude and shapeless ingots, such as were in use in the early ages of the world.” Elsewhere, there are accounts of Romans using gold bullion as currency in Mesopotamia since 7th millennium C.E.
The Bank of England first created gold reserves and minted gold into currency in the 18th century. English colonies in the US used Colonial Gold till the country’s independence after which it began to produce its own coins under the Coinage Act of 1792.
Manufacturing Gold bars
Making gold bars is a three-step arduous process –
- Mining of gold – miners use hydraulic water jets, explosives, and other tools to separate gold from other underground deposits. Then, through a multi-step process to reduces the rock into sand-like granules, gold is isolated from the sediment. These granules are then mixed with a chemical solution and heated in a smelter to separate the gold from the other elements and sink it to the bottom.
- Refining the gold – after smelter, the gold is treated with chemical, pressure and high temperatures in a furnace to refine it. once the gold is sufficiently refined it is tested for purity.
- Pressing of gold – in its pure form, the gold is allowed to cool slightly and then reheated to cast it into bars in ingot-shaped molds.
Nuances of a gold bar
Gold bars are not 100% pure and generally contain copper, platinum, iron, or silver to preserve its shape and make it easier to store. If it contains iron, it will have a greenish hue and with copper the bars will look redder. Both silver and platinum give gold a whitish shade.
Gold bars have simple designs and thus carry a lower premium than jewellery or coins. They are also less vulnerable to counterfeiting than coins. As per international standards, gold bars from reputed mints have markings on the side containing information of production, finesse, purity, and melt (that is, the molten gold from which the bar is made). On obverse side, the gold refiner’s seal will be stamped along with a registered serial number, purity, and weight. Some gold bullion makers also add a hologram as additional security measure.
Better to buy gold bars
Even if you buy just 10 gram gold bar, it is still a better option than coins. Firstly, it has the lowest premium over spot price. This implies you will get more gold for the same amount with gold bars.
For new investors, gold bars are safe haven investment that will help them hedge their portfolio against fluctuations among other investment class like shares or even currency. With gold bars, you can safely buy gold online as it comes with enough security markings that certify its purity. Also, genuine sellers sell bars that are sealed and carry certificate of authenticity. Finally, gold bars are easy to store in large quantities in their larger sizes and the smaller size ones are easy to sell anywhere in the world.
In a volatile market gold is a tangible wealth conservation and growth instrument and every serious investor must have some form of gold in their portfolio.