The ultra-rich who own $1 million gold bars probably aren’t focused on profits amid soaring gold prices, experts say

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.