- The price of gold keeps hitting new highs and delivering unusually strong gains in 2024.
- Profits are nice, but the cost of storing and protecting physical gold can offset some returns.
- Experts say that's okay, since wealthy bullion investors are more concerned with avoiding losses.
In the 2003 remake of the classic heist film "The Italian Job," a crew of thieves set about retrofitting their Mini Cooper hatchbacks to survive the rigors of a police pursuit while hauling nearly a ton of gold in the boot.
The target of the heist was a $35 million stash of bullion bars, which by one estimate works out to about 274 bars, or 65 in each of three vehicles at the average spot price for that year.
Two decades later, the price of gold has skyrocketed to a recent all-time high of $2,500, meaning that each one of the gold bars depicted in the film would be worth $1 million.
In other words, the crew's haul would be worth more than a quarter billion dollars today if they went after the same 274 bars, or if they only wanted the $35 million, they would only need one car carrying a mere half ton of gold.
For the high-net-worth individual interested in living out the silver screen fantasy of holding a 400-ounce gold brick in their hands, there are several companies that will help make that happen.
Stephen Flood, director and co-founder of GoldCore, a precious metals services company headquartered in Ireland, told Business Insider his company has provided the experience to several clients who want to take delivery of their bullion investment.
"There, you're in the realm of armored cars — even for a single bar," he said. "It's not the sort of thing you'd want to put in the post."
Most of the time these large-format bars never leave the storage vaults where they're kept under meticulous security, he said. Instead, whenever a bar is sold, it is moved between various shelves and locations within the vaults that correspond to its new owner.
The expenses associated with storing and protecting physical gold can add up quickly, which in normal times can offset its increase in value.
But for the ultra-wealthy, that's not the biggest concern.
Jonathan Da Silva, a trader with Kitco Metals, told BI that ultra-rich bullion buyers have "excess" monetary wealth that they're seeking to convert into something more durable and less risky.
"The gold bullion market of course offers much tighter spreads than other alternative asset markets like sports memorabilia or high end jewelry, art, or automobiles for example," he said.
There's basically no guesswork when it comes to pure gold.
Plus, keeping one's gold pile in the same (often Swiss) vault as other investors, institutions, and central banks also makes the investment more liquid in an emergency, since the physical item can change hands in a matter of minutes — no need to hunt around for a trustworthy buyer and schedule an armored car.
Flood also said the run-up in price has also made kilogram bars a more attractive format, since those now run about $80,000 each.
Long-term holders of gold typically don't intend to sell, and in the unlikely event they have to, "when are you going to need to liquidate $1 million?" he said.
Setting aside this year's unusual 22% gain, gold tends not to be all that remarkable of an investment vehicle. And if returns are the goal, there are plenty of financial derivatives for investors to get exposure to gold's market performance without the trouble of owning the physical metal itself.
If you think of financial markets as a giant casino, says Genesis Gold Group Jacob Diaz, owning the actual metal is akin to taking some of your chips off the table.
"You put them in your pocket and you know that no matter what, I'm not going to lose this," he said.
Diaz said this tends to amount to roughly 5%-20% of a person's net-worth represented in precious metals, depending on their circumstances. Flood's estimate was around 10%.
That's part of what makes gold more popular among those who already have a great deal of wealth to preserve, like Gen X and Boomers, than it does among younger generations still trying to grow their wealth in the first place.
After all, financial risk and reward go hand in hand, and there are few ways to have significant upside potential without also having exposure to the downside.
And gold bullion investors — especially those in a position to buy 400 ounces at once — are more concerned with long-term risk.