Gold has fascinated investors for centuries. Stock Analyst Richard Russell was quoted as saying, ‘Gold will be around, gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories.’ It’s been a symbol of wealth and opulence since the dawn of time, with no sign of slowing down.
But, before you invest in gold, you no doubt want to know if it’s still worth it. Today, factors such as inflation, market volatility, and geopolitical uncertainty could leave you apprehensive. You may be asking if it’s still worth it in a modern digital world. For many, gold still feels like a safe, tangible anchor when traditional markets swing wildly. But as with any asset, the benefits and trade-offs deserve a closer look, so you can decide whether gold is a viable alternative investment strategy for you.
In this guide, we’ll explore what gold bars are, why investors consider them, the potential drawbacks and how to approach gold as part of a balanced portfolio. That way, you’ll be better prepared to decide whether gold fits into your strategy and when to seek expert advice.
We’ll also cover how:
- Gold has long been considered a symbol of wealth and serves as a safe-haven asset amidst inflation, market volatility and geopolitical uncertainty.
- Physical gold bars offer direct exposure to gold’s intrinsic value without the collectible premiums found in coins.
- Investing in gold requires weighing benefits and trade-offs to determine its fit within a balanced investment strategy.
- Purchasing gold can fit in with your investment strategy.
What Are Gold Bars?
Gold bars, also known as bullion, are refined blocks of pure gold with a typical purity ranging from 99.5% to 99.99%. They come in different weights, usually in the form of a bar, and the weight can range from one ounce to one kilogram. Unlike gold coins, which may carry collectible value, gold bars are designed purely for investment, offering a straightforward way to own the metal itself.
Because of their standardised purity and weight, gold bars are easier to value than jewellery or collectibles. For investors who want direct exposure to gold, they’re a clear and no-nonsense way to hold the physical asset.
The Advantages of Investing in Gold Bars
Gold bars are often described as a safe-haven asset. And for good reason. When inflation erodes the value of currency or stock markets experience turbulence, gold tends to retain or even increase in value. Yes, it fluctuates just like everything else, but generally nowhere near as much or as often. The lowest gold was ever valued was in September 1970, when one ounce was $289.41 ($2,406 when adjusted for inflation), while it was valued at $3,500 in April 2025. As a result, investors use gold as a hedge against currency depreciation, rising prices and global instability.
Another key advantage is diversification. Gold has a low correlation with traditional assets like stocks and bonds, meaning it can reduce portfolio risk during downturns. Compared with coins, bars usually carry lower premiums, making them a more cost-effective way to own physical gold.
Perhaps most importantly, gold bars are tangible assets. Unlike paper investments, they have intrinsic value you can hold in your hand, which is reassuring for those who want security outside the financial system.
The Drawbacks of Investing in Gold Bars
For all its strengths, gold isn’t a perfect investment. There’s no arguing the fact that, in the 21st century, it’s seen as quite old-fashioned, even outdated.
But more importantly, unlike equities or bonds, it generates no income. There are no dividends or interest payments. Over the long run, gold has also underperformed compared to equities. For instance, the average annual return of gold is around 4.3%, while the S&P 500 has delivered closer to 11.6%.
There are also costs to consider. Secure storage and insurance add up, and investors often pay dealer premiums when buying and selling. On top of that, some jurisdictions apply capital gains tax.
Liquidity can also be a challenge. While gold is widely recognised, reselling large bars may be slower and less efficient than liquidating ETFs or stocks. Bid-ask spreads can also eat into profits, especially if you need to sell quickly.
Alternatives to Physical Gold Bars
If the challenges of storing and trading gold bars aren’t feasible or are inconvenient, there are some alternatives:
- Gold ETFs and funds: These offer quick, low-cost exposure to gold prices with high liquidity.
- Mining stocks and funds: While riskier, they provide leveraged exposure to gold prices, often rising more quickly when the metal rallies.
- Digital or allocated gold accounts: These allow investors to hold gold in a secure facility without taking physical possession, combining ownership with convenience.
Each option has trade-offs, and the right fit depends on your goals, risk appetite and strategy.
When Gold Bars Might Be Worthwhile
Owning physical gold makes the most sense in periods of high inflation, economic uncertainty or geopolitical risk. It’s not a commonly used strategy for investors in Western countries, but is still something many do in Middle Eastern and Asian countries, including the UAE, India and China. However, for conservative investors, it can serve as a stable anchor within a broader portfolio.
Experts often recommend limiting exposure to between 5% and 10% of your total portfolio. This way, gold provides diversification benefits without weighing down long-term growth. Gold bars can also appeal to those who value tangible, intrinsic assets as a form of wealth that exists outside the traditional banking system.
How to Invest Safely in Gold Bars
If you decide to add gold bars to your portfolio, security and authenticity are essential. Always purchase from reputable dealers that provide certificates of authenticity, weight and purity stamps. Opt for widely recognised products, such as LBMA-approved bars, to ensure global resale potential.
You should also consider liquidity when choosing bar sizes. Smaller bars, though carrying slightly higher premiums, are easier to sell than larger ones. And don’t overlook storage and insurance costs, which you should factor into your expected return.
There’s Nothing Quite As Good As Gold
Gold bars can be a valuable tool for stability, diversification and wealth preservation, and play a central role in your investment strategy.
Key takeaways:
- Gold bars provide a hedge against currency devaluation and offer low correlation with traditional assets, aiding portfolio diversification.
- Despite lacking income generation and facing costs like storage and dealer premiums, gold remains a stable asset during economic uncertainty.
- Alternatives like gold ETFs, mining stocks or allocated accounts offer exposure with varying risk levels and liquidity, catering to different investor needs.
At MHG Wealth, we help clients like you evaluate where gold, whether physical or otherwise, fits into your broader financial strategy.
Thinking about investing in gold? Don’t go it alone. Explore how gold fits into your wider wealth plan with personalised advice from MHG Wealth. Contact our investment team today to start building a strategy that works for you.
FAQ’S
Is investing in gold bars a good hedge against inflation?
Gold often holds its value during inflationary periods, but short-term performance can be inconsistent. It’s best seen as a long-term hedge rather than a quick fix.
How much of my portfolio should be in gold?
Most financial experts recommend 5% – 10% allocation, depending on your risk tolerance and overall strategy.
What are the costs associated with buying gold bars?
Costs include dealer premiums, storage, insurance, and in some cases, capital gains tax when selling.
Should you invest in gold bars or funds?
Bars provide tangible ownership, while funds offer liquidity and lower costs. The right choice depends on whether you value physical security or convenience.
How do you ensure you’re buying authentic gold bars?
Always purchase from trusted, accredited dealers and look for purity and weight stamps. LBMA-approved bullion products are widely recognised and easier to resell.
