Here’s Why You Should be Buying Fractional Gold
At a Glance:
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- Fractional gold refers to gold coins or bars that weigh less than 1 troy ounce.
- Buying fractional gold is a good way to invest in gold on a budget.
- Many popular gold coins and bars are available in fractional weights.
Fractional Gold: A Cheap Way to Invest
Gold prices are reaching new heights. For some investors, spending $2,000 on a single gold coin just isn’t possible. We don’t blame anyone who feels this way! High gold prices make it harder for new investors to start preparing for their futures using one of mankind’s most beloved assets.
The good news is that gold doesn’t have to be expensive. You read that right – you can invest in the world’s oldest safe haven asset for just a couple hundred dollars. How? Using fractional gold!
Fractional gold refers to gold coins, bars, or other bullion products that weigh less than 1 troy ounce. Fractional gold bars and coins usually come with higher premiums, but they also allow investors to buy gold while saving thousands of dollars.
What is Fractional Gold?
Like the name suggests, fractional gold products weigh a fraction of 1 oz gold items. 1 oz gold coins and bars are the most popular way to invest in gold. The spot price of gold is quoted in troy ounces, which is the standard measurement unit for precious metals. Because of this, most investors try to stack gold using gold products weighing 1 troy oz.
Most popular 1 oz gold coins are also available in fractional weights. Coins like the American Gold Eagle and British Gold Britannia are sold in weights as low as 1/10 ounce. Fractional gold bars are even more obtainable for investors on a low budget. We even sell 1 gram gold bars, which are available for as little as $92!
Fractional gold is a relatively new invention. Until the 1970s, most gold investors traded in massive, expensive gold bars. Once Nixon took the United States off of the gold standard in the 1970s, gold took off as an investment for average people. Since the average investor can’t afford a 1 kilo gold bar,
Fractional gold is one of the best ways to invest in gold for cheap. If you have $100 in your wallet, you can afford to invest in gold.
Most Popular Fractional Gold Coins
Since fractional gold is such a popular way to invest in gold, many of the world’s best gold coins are available in fractional weights. Investors can buy American Gold Eagles, Canadian Gold Maples, British Gold Britannias, and many other gold coins in fractional weights.
One coin, the Austrian Gold Philharmonic, is even available as a 1/25 oz gold coin!
Finding beautiful fractional gold coins has never been easier. If you’re looking for a cheap way to buy gold, take a look at some of the most popular government-minted gold coins on the market. Chances are that your favorite gold coin is available in a weight below 1 oz.
Do Fractional Gold Bars Exist?
Fractional gold bars are another good option for investors who want to buy gold without spending thousands of dollars. Because gold bars are usually sold at a lower premium than gold coins, investors can save money by investing in small gold bars.
Like gold coins, gold bar manufacturers have started producing smaller versions of their most recognizable gold bars. We love fractional versions of the Argor-Heraeus and Royal Mint Britannia Gold Bars, both of which are available in weights as small as 1 gram.
Another solid option is the PAMP Fortuna Gold Bar. This bar is available in nearly every weight – including 1 gram. More importantly, this gold bar from PAMP Suisse is one of the most beautiful gold bars on the market. Fractional gold bars are usually even cheaper to buy than fractional gold coins because of their low premiums over spot price.
Why Buy Fractional Gold?
The main reason investors buy fractional gold is the low cost of entry. Full 1 oz gold bars can cost upwards of $2,000 – especially when gold prices are high. Fractional gold allows investors to start building a collection of gold bars and coins at a fraction of the cost they’d pay for larger products.
There are two hidden benefits to buying fractional gold, though. Since most fractional gold coins and bars are smaller versions of popular products, they’re extremely beautiful. Second, fractional gold products increase the liquidity and divisibility of your portfolio. We always recommend buying a variety of different weights, because diversifying makes it easier for you to control how much (or little) of your portfolio you can liquidate at one time.
Lower Entry Costs
Why should you invest in fractional gold? Savings. Fractional gold coins and bars are smaller than 1 oz products, so they sell for considerably less. We refer to this as the cost of entry – how much money it takes for investors to start trading gold. Some investors believe that gold is always expensive to buy, but this is a common misconception. In reality, fractional gold coins and bars make it possible to buy gold for as little as $100.
As we’ll discuss later in this guide, fractional gold is also sold at a higher premium over spot price than larger bars and coins. A good rule of thumb: the smaller the product, the higher the premium. However, the entry cost of investing in fractional gold is lower than buying large gold products – even when we factor premium prices into the equation.
Low entry costs are important because they help investors get started. If you buy a fractional gold coin and the value of the gold it contains goes up, you’re always able to sell the piece and buy something larger.
Beautiful Designs
In addition to a lower entry cost, fractional gold products offer beautiful designs. Many fractional gold coins and bars are just smaller versions of existing popular coins. If you’re a fan of the American Gold Eagle but not a fan of its price tag, 1/10 oz Gold Eagles are a great option. This is true for other popular gold coins and bars, too.
Since fractional gold products are minted with the same designs as their larger counterparts, expect to find beautiful, numismatically valuable designs on these items. Beautiful designs aren’t necessary for a solid gold portfolio. Some investors actually prefer simple, basic gold bars because they come with lower premiums over spot price. Other stackers believe that the collectible value of a beautiful gold coin is worth the added premium.
Regardless of which kind of investor you are, fractional gold offers the same beauty as larger gold products – at a small percentage of the cost.
High Liquidity and Divisibility
While low entry costs and beauty are big reasons to invest in fractional gold, there’s an even more important reason to consider buying fractional gold: liquidity. Liquidity refers to how quickly and easily you’ll be able to sell your investments.
When you buy large gold bars and coins, your liquidity is limited. If you decide to sell part of your portfolio, you’ll need to sell several thousands of dollars of gold at one time. Instead, smart investors put some of their cash into smaller fractional gold items. If you find yourself in a spot where you need a couple hundred dollars, having a 1/10 oz American Gold Eagle in your portfolio means you can sell some gold – without selling too much.
The liquidity of fractional gold is a function of this product category’s divisibility. Highly divisible products are easy to sell in increments rather than all at once. 1 kilo gold bars aren’t divisible – you either need to sell a full kilo of gold or keep it. 10 1/10 gold bars, however, are divisible. Sell one of them, sell five of them, or sell all of them – anything’s possible if you invest in fractional, divisible gold coins and bars.
Downsides to Buying Fractional Gold
Fractional gold isn’t the perfect investment – nothing is! Two big downsides to buying fractional gold include:
- High premiums over spot price; and
- Limited selection
Smart investors can get around these cons to buying fractional gold. After all, the low entry cost, liquidity, and beauty of a quality fractional gold coin can help to offset the inflated premiums and small selections that limit the advantages of fractional gold investing.
Higher Premiums Over Spot Price
Premiums are small (or large) fees added to the total cost of a gold product. Premium costs are determined by several factors, including cost of production and investor demand. To figure out how much of a premium you’re paying for a gold coin or bar, you’ll first need to convert the product’s weight to troy ounces. Next, multiply the product’s weight in troy ounces by the current spot price of gold. Subtract this value from the total sales price of your gold bar or coin to get the estimated premium of the item.
The smaller the product, the higher the premium. This is a general rule of thumb for investing in cheap gold. Small gold products cost more to produce consistently than larger items, so it makes sense that they would be more expensive to buy. Fractional gold coins and bars might be cheaper than large pieces, but they’re also sold at higher premiums.
To offset this inflated premium cost, investors have a couple of options.
First, buying beautiful and numismatically valuable gold products can help you stay profitable over time. Rare or beautiful gold bars hold their numismatic value, so you’re likely to recoup most of the premium you paid once you’re ready to sell.
Second, consider simple fractional gold bars. Gold bars with straightforward, no-frill designs tend to sell for lower premiums than gold coins and beautiful gold bars. If you can find Any Mint, Any Condition (AMAC) gold bars, you’ll save even more money on premiums.
Investors who are smart can get around the high premiums associated with fractional gold products. Even if you pay a higher premium for fractional gold, it’s important to remember how much money you’re saving by buying smaller products.
Limited Selection
Limited selection is another downside to buying fractional gold. While many classic gold coins and bars are available in weights below 1 oz, there are a few holdouts across the world’s leading mints.
Most popular gold coins are available in fractional weights. However, there are a few classic gold coins that are still only minted as 1 oz coins – even in 2024. The American Gold Buffalo Coin is a great example. The Gold Buffalo is one of the most popular and recognizable gold coins in the world, but the U.S. Mint does not offer fractional versions of the classic coin.
On the flip side, investors who prefer the American Gold Eagle – or hundreds of other popular gold bullion coins – can still buy fractional gold versions of their favorite products. Gold bar investors usually don’t have to worry about limited selection; most of the world’s best gold bars are minted in a variety of weights.
Investors should take a close look at the weight variations available for their preferred gold coins or bars. If you’re looking to invest in cheap fractional gold, you might need to adjust your wishlist to exclude a few 1 oz exclusives.
Here’s Why You Should be Buying Fractional Gold
Fractional gold allows investors to buy into one of humanity’s oldest assets for just a couple hundred dollars – or less.
Buying fractional gold has never been easier. For most of human history, gold products were reserved for only the wealthiest of investors. In 2024, fractional gold is one of the best ways for investors to buy gold without spending thousands of dollars.
Hero Bullion sells a wide range of fractional gold bars and coins from the world’s best private and public mints. Take a look at our catalog to find the product that’s right for your collection. Remember: buying gold is for everyone – not just the wealthy!
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About The Author
Michael Roets
Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.