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Gold, the age-old embodiment of wealth and security, remains a popular hedge investment in periods of economic turmoil. So, should you purchase gold bullion, and which forms of gold offer the best protection against financial ups and downs? Learn more about the best type of gold to buy.
Why Invest in Physical Gold?
For thousands of years, pure gold has been a prized precious metal that has retained its value through every economic upheaval. Gold’s stable value, universal recognition, and physical appeal have made it the most popular investment metal throughout history.
Purchasing physical gold offers many benefits, including:
- Enduring value. Gold is as popular today as it was in ancient Egypt. When you buy gold, you know your bullion bars or coins will always retain their intrinsic value.
- Proof against inflation. The dollar and other currencies may lose their worth, but gold provides unmatched stability. Gold is a resilient investment, less subject to market trends than real estate, technology, art, and many other assets.
- High reliability. Gold is a universally acknowledged commodity, so whenever you choose to resell your physical gold, you’re sure to find an interested buyer.
- Security. Owning physical gold protects you against unforeseen crises like stock market crashes, political unrest, war, and more. You can access and recoup your physical gold even if you lose every other asset.
Popular Gold Coins and Bars for Investment
Both bullion bars and bullion or legal tender gold coins are high-value options you may consider as a gold investment. These are some of the most popular gold bars and coins on the market.
Gold coins are an attractive choice for first-time or small investors. Coins offer the advantages of convenient size, easy storage, and high liquidity. The most widely known gold coins include:
- American Gold Eagle 1 oz. First minted in 1986, the American Gold Eagle is now the most popular gold coin in the U.S. This legal tender coin contains precisely 1 oz of gold, which makes up 91.67% of its composition. American Gold Eagles also contain a small mixture of silver (3%) and copper (5.33%).
- Gold Britannia 1 oz. The Britannia 1 oz coin is a UK legal tender gold coin of 999.9 fineness. Manufactured by the Royal Mint, this coin depicts Lady Britannia on one side and an image of British royalty (Queen Elizabeth II or King Charles III, depending on the year of mint) on the other.
- Canadian Maple Leaf. Another popular legal tender coin, the Canadian Maple Leaf weighs exactly one troy oz (31.1 grams). Starting from 1983, all Maple Leaf coins are 999.9 pure gold.
Gold bars bear an imprint of the manufacturer’s name and the bar’s weight and purity (usually 999.9). Bullion bars come in several standard weights, including:
- 1 oz gold bars. One troy oz, or 31.1 grams, is probably the most popular weight for gold bars.
- 10 oz gold bars. Another widely traded weight, a 10 oz gold bar, is a good option if you want a more substantial gold investment at a lower premium.
- 1 gram gold bars. Small one-gram gold bars are easy to store, offer high liquidity, and are a good option for beginner gold investors.
- 1 kg gold bars. Gold bars of 1 kg (32.15oz) are some of the largest bullion bars available to private investors.
Understanding the Different Types of Physical Gold
As a gold investor, you’ll typically face a choice between three main types of physical gold: bars, coins, and rounds.
- Gold bars are rectangular blocks of pure gold that are cast or minted. Gold minting involves a more intricate manufacturing process than casting, resulting in a more aesthetically pleasing, higher-premium bar.
- Gold rounds are similar to bars but come in a coin-like shape and attractive designs that make them popular with investors. Rounds carry a slightly higher premium than gold bars but a lower premium than legal tender gold coins.
- Gold coins. Legal tender coins come from government-run mints and can be worth much more than their metal content, especially if they’re comparatively rare commemorative coins. Not every legal tender gold coin consists of pure gold, so pay attention to the coin’s metal content before you buy to ensure you are getting what you expect.
Gold Coins vs. Gold Bars: Pros and Cons of Each
If you have a set amount to invest in gold, which is the best type of gold to buy: bars or coins? Bars and coins offer several distinct advantages. Specifically, gold bullion bars:
- Are available in many sizes, so you’ll find a suitable gold bar option for any budget
- Are easily exchangeable, provided you purchase your bars from a recognized manufacturer
- Carry lower premiums than coins, especially in larger sizes
- Work great as a long-term investment thanks to their flat shape and convenient storage
On the other hand, buying gold bars in very large sizes could be inconvenient to sell whenever you decide to liquidate your investment. For instance, if you purchase a 1 kg gold bar and want to turn part of your gold into cash, you’d need to sell the large bar and purchase several smaller bars first.
Meanwhile, gold coins from government mints:
- Also come in several sizes, including the standard 1 oz and 1/2, 1/4, and 1/10 oz coins (depending on the coin)
- Offer higher flexibility compared to larger gold bars
- Carry legal tender status that gives them high reputability
- Are easy to resell thanks to their global recognition
- May gain in value over time if certain designs or mint years become popular with coin collectors
The main disadvantage of gold coins is their higher premiums compared to bars. Since the design and manufacture of coins are more expensive, a 1 oz coin will almost always be more expensive than a standard 1 oz bullion bar.
Numismatic vs. Bullion Coins: Which Are the Better Investment?
You’ve probably heard stories about rare coins selling for breathtaking multimillion-dollar price points at auctions. Numismatic coins are rare collectibles that can be worth many times more than their melt value. This includes, for instance, U.S. gold coins dating from before 1933, when the government confiscated privately owned gold coins and bars to combat the Great Depression.
Bullion coins are regularly minted legal tender coins like the American Gold Eagle and Canadian Maple Leaf. A gold bullion coin is worth only slightly more than the spot price of its metal content.
While the idea of bagging an extremely rare and valuable numismatic coin can be very attractive, purchasing collectible coins is always risky. Your potential profit would depend on numismatic market trends, finding the right buyer, and pure chance. On the other hand, bullion coins are a conservative, solid investment that offers a safe inflation hedge.
Purity and Weight Considerations When Buying Physical Gold
Most investment-grade gold has a purity of 999.9, meaning your gold bar or coin contains 99.99% gold. However, some legal tender coins, like the American Gold Eagle, have a lower gold percentage, so be aware of these differences when you decide to purchase gold.
The premiums on gold bullion bear an inverse relationship to the product’s weight, meaning smaller coins and bars carry higher premiums over spot prices. Many investors consider one ounce the ideal bullion weight unit, offering high value and easy liquidity.
Tips for Buying Physical Gold: Reputable Dealers and Storage Options
Whether you choose to buy bars or coins, ensure your gold comes from an established manufacturer or a government mint. Buying from reputable gold dealers will help you avoid scams and make your life easier whenever you decide to sell your gold.
You’ll also need a secure and convenient storage option for your gold investment. You can store gold:
- At home
- In a bank’s safe deposit box
- In a private, secure vault
While home storage gives you easy 24/7 access to your gold, remember that it makes your investment more vulnerable to theft and natural disasters. Additionally, not all types of homeowners insurance include precious metal coverage, and even when they do, they will likely put a cap on your recovery value.
Using an IRA To Buy the Best Gold in the Market
Diversifying your retirement portfolio with a gold IRA can help you secure your future. Although gold IRAs typically involve higher fees than traditional IRAs, channeling some of your investments into this type of IRA can protect you against inflation and stock market crashes.
Keep in mind that any bullion belonging to a gold IRA must meet IRS purity standards, and you must store your gold in an IRS-authorized depository, not at home or even in a safe deposit box. Additionally, you’ll need an approved custodian, like a bank or a trust company, to manage your IRA.
Are you looking to include physical gold in your investment portfolio? At Oxford Gold Group, we offer top-quality pure gold bullion bars and coins with secure home delivery. Contact us today to learn more about our gold products.
What is the best size of gold bars to invest in?
Although every pure gold bar will give you an excellent return for your money, 1 oz and 10 oz gold bars are some of the most popular choices for investors. 10 oz bars are substantial yet small enough to store and transport easily, while smaller 1 oz bars are highly convenient to resell.
What type of gold holds its value best?
Pure gold bullion bars offer the highest and most stable value of all gold products. Gold legal tender coins also hold their value extremely well compared to other types of gold, like numismatic coins.
Is gold jewelry also a good investment?
Although high-quality gold jewelry will always retain some value, bullion in the form of bars or coins is the best type of gold to buy as an investment. When you purchase bullion bars and coins, you get purer gold with lower premiums than jewelry. Most importantly, bullion offers higher liquidity since reselling at a predictable value is easier.