Getting to the Bottom of the Value of 50 50-Gram Gold Bar
Flip through any gold dealer catalogue and you will see then and there that neat little rectangle: 50 gram gold bar. It is not pocket change, but it is not as heavy as a kilo. It is a sweet spot to most investors. What would be reasonable to pay? Which tricks play into the purchase? We can take a taxi ride into the land of spot prices, peculiarities of middle-sized bars, and add a glimpse at why first-year commemoratives still have their share of fans (and customers) at the expense of wonderful shiny new coins.
The Spot Price: pulse of every gold bar
Let us cut to the chase. Spot price is equivalent to the amount that you would pay today in the wider market when purchasing one troy ounce of the raw form of gold. It is more or less like a worldwide auction, 24 hours a day. Have you ever watched those moving green-and-red charts on CNBC? That is the spot price of gold jittering with each transaction, each remark and each political gaffe.
A bar of gold weighs 50 grams and is equivalent to about 1.607 troy ounces (50/31.1035). Multiply the spot price as a rule of thumb to price the hallmark amount of gold by increasing it by by factor of 1.607 to calculate the basic value of gold inside. Fast, but dirty? In case spot is fixed at 1500 pounds per ounce, the crude value of the bar amounts to about 2410.50 pounds.
Naturally, no one is going to give you a 50g bar at the spot. That is only the hook. The result is another bill that is wound up higher due to those sneaky, but very real, mark-ups.
The Real Cost: Premium, VAT and the Danger of Paying too Much
No one runs a mint free. The premium includes every inconvenience with the production of the perfect bars, packaging, shipping, and a piece of profit. You should pay 3-6% over spot at the most reliable UK dealers in 50g bars. The thinner the bar, the higher the premium. Not only does it nearly cost as much to produce a 1g bar as a 50g one, but it is also less likely that small buyers, who are not likely to squeeze price breaks on bulk, will haggle.
Then there is VAT. The investment-grade gold bars (over 995 fineness) are VAT-free in the UK. Good news! Silver? Unlucky that way, but we will make do with gold here.
Stray too far away, however, and you can end up with bars on sale. Beware. When the deal is too good to be true, it is a fool’s gold, that is, counterfeit, substandard bars, or unmentioned commissions can sting real bad. Use reliable sellers; seek certification and serial numbers.
Fat vs. Skinny: The merits and demerits of the 50g Gold Bar
Hedge fund managers may be experienced and fond of 1-kilo ba, rs and new customers seduced by cheap 1g cards. A 50g gold bar is the Goldilocks answer, the perfect size, not too large or too small, to most of us.
Pros
Compared to big kilogram bars, they are affordable. No car has to be sold, and no house needs to be remortgaged.
The size is Lower Total Premium Per Gram compared to 1g or 5g bars. You are getting more gold for the dollars.
Storage Simplicity. Severe value can be packed away in a small safe by 15 or 20 at a time.
Cons
Liquidity Risk. It is hectic to sell the entire 50g even in a situation where you need less money. It is impossible to cut it in half.
Divisibility. It is not as flexible as it can sell ten 5g bars.
Less Collectable Items. Bars are bars – a line of clean rectangles with not much story in them.
Battle of coins: the precious and historical coins against the budget coins of today
Let us mix the pot. Why should even the buyer who has a romantic bent towards the old coin lust after the same after a new one is just fresh off the press and only worth just above the melt value? Here’s why.
Historical Coins: The Siren Song of Rarity and Romance
Gold Sovereigns, or the old Britannias, or the St. Gaudens every once in a while–this is not a lump of metal. They tell fables. Possibly your 1914 Sovereign was carried home in the pocket of a WWI officer. Perhaps it was ignited at betting tables in jazz-soaked 1930s.
Collectors accord a premium over gold weight, lured by small issues, by heritage and the mystic of the past. This generates numismatic premiums. Some of them are even mind-boggling. You get, with the right Victorian rarity, not merely gold: you are getting a time machine.
However beware when it comes to old coins it is a lot more difficult when you are a new guy to be able to make a proper evaluation of what is history versus what is a mere fancy tale or word play fake. And as opposed to bars, there is nothing less abstract than documentation: provenance is important.
Bright New Cheap Coins: Fungible, Shiny, and Easy
It seems that romance is overrated. There are a few investors who simply seek straightforward value and a whole lot of it. You can get modern coins (i.e. modern gold Britannias or Maple Leafs) at a lower premium, are easily identifiable and will trade quickly.
The use of legal tender coin is occasionally tax-favoured, unlike the bars. The Britannia coins issued even in recent years in the UK are considered tax-free as far as Capital Gains Tax is concerned. Add a sufficient number of them together, and you are hiding profits from HMRC.
However, there is no need to have extreme price fluctuations. The spot price makes modern coins live and die. Their design can vary, and they have done so, but never quite enough to gather too much collector enthusiasm, just yet.
There are more than a number of reasons why gold bars at the 50g mark are appealing. You have a reasonable ratio: low-cost to store and handle, and some nibbling on the smell of creamy old-fashioned gold. For more sentimental people, historical coins may sparkle with glamour and temptation, but they will be associated with danger and research.
