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Gold is an excellent addition to any investment portfolio. It’s a good vehicle for wealth protection during economic uncertainty and inflation. Investors looking to buy gold have opportunities to choose between gold bars and coins.
Deciding which one to choose will depend on your investment goals and personal situation. This gold coins vs. bars article will cover all the essential talking points to help you make the right choice between these bullion products.
What are Gold Coins?
Gold coins are pure gold whittled down to coin format. Most gold coins come from government-approved mints. The size of the coins varies from grams to kilos. Gold coins are very popular when it comes to the ownership of precious metals worldwide.
Why Buy Gold Coins?
Some of the advantages of buying gold coins include the following:
More Variety to Choose From
When buying gold coins, you have significant flexibility in choosing your coin variety. You can select coins of a particular design, size, origin, grade, rarity, and finish. Depending on your budget, you can elect to go with gold bullion coins, collectibles, or proof coins.
Use as Legal Tender
Governments mint gold sovereign coins guaranteeing purity, weight, and gold content. A legislative body and an advisory committee decide the designs, maintaining the coin’s consistency and design integrity. You may use such coins as legal tender.
General Liquidity
Due to the wide range of prices and sizes for gold coins, you have more flexibility in managing your gold holdings. You can elect to buy or sell small or large amounts per time, and you can spread your investment activity over longer periods to take advantage of gold coins and gold price fluctuations.
Extra Numismatic Appeal
Apart from the metal values, some gold coins are also valuable due to their history. Rare coins from a specific era may command extra value as many collectors regard them as art. So, a 12-ounce coin from the 1800s will likely generate more market returns than a similar-sized coin from the 2000s.
Souvenir Characteristics
Gold coins make excellent gifts. Most of them come stamped with a date. Therefore, some owners use them as gifts to commemorate important events like anniversaries, weddings, birthdays, and more. It’s easier to give gold coins a unique design that will hold sentimental meaning to both the recipient and the giver.
What are Gold Bars?
Gold bars are typically much larger and often purer than gold coins. They come in a wide range of sizes, starting from an ounce to a kilo. You can buy gold bars from government-approved and private mints.
Why Buy Gold Bars?
Some of the buying gold bars include the following:
Quick Diversification
Gold bars are preferable if you want fast, high-volume diversification with gold. Due to their size and simplicity, you can use them to increase your gold holdings quickly. Buying 100kg of gold is faster with gold bars than gold coins. The mints will process and ship your order a lot faster.
Lower Production Costs
Due to lower production costs, gold bars often attract cheaper premiums. The premium is the extra amount you’ll have to pay in addition to the price per ounce. The additional fee covers the cost of production, shipping, and the mints’ profit margins.
Gold bars don’t have any of the intricate designs of gold coins. Therefore, they don’t attract a lot of labor and machining costs.
Easier Valuation
You can see at a glance how much your gold portfolio is worth. With gold bars, the price basis is the weight and nothing more. You don’t have to pay more for intangibles such as rarity, grade, etc.
The ease of valuation is a popular tie-breaker in many debates around gold coins vs. bars.
Storage Flexibility
Gold bars are compact, portable, and durable. You can choose a wide range of storage options. You can elect to store your gold bars in a storage unit or a wooden cupboard without any protection. You can stack them or store them side by side without worrying about damage.
Multiple Mint Options
The United State Mint doesn’t make gold bars, but buying gold bars is easy. There are so many government and private minting institutions from which to choose.
High-quality bars come with assurances such as a recognizable hallmark from the bar’s manufacturer. The stamp on the bars will also include data such as the registration number, weight, purity, and refiner.
Ease of Transactions
As mentioned above, gold bars are just plain gold. They don’t have any historical significance or ties to a specific country or culture. Therefore, it’s easy for people worldwide to evaluate them. A gold bar in the UAE is just as valuable in the US or Europe.
When you need to liquidate some of your holdings, you can easily find private or commercial buyers at home or abroad.
Which is the Right Choice?
There is no right choice when it comes to gold coins vs. bars as an investment option. The right choice will vary from one bullion investor to another. The best way to make the right choice is to look at the characteristics that matter most to you. Here are a few factors to consider:
Size of Premiums
If you’re looking to add gold to your portfolio without paying a lot of money in premiums, gold bars are the right choice. Gold coins command higher premiums because they cost a lot more to produce, store and ship.
A set of 10kg gold bars will cost less to produce than 100 pieces of 100g gold coins. Gold bars win if you want to keep premiums to the barest minimum.
General Flexibility
Gold bars aren’t very flexible when it’s time to sell. You can elect to sell a fraction of your holding with gold coins. Coins allow you to sell smaller fractions as they often come in grams while bars come in kilograms.
With gold bars, you must sell the entire bar to realize any gains.
Thus, if you want to hold gold for the long term, gold bars win. Gold coins win if you want to retain the flexibility of taking advantage of price fluctuations by occasionally cashing in on some of your holdings.
A middle-ground alternative is to keep a part of your portfolio as gold coins and others as gold bars.
Tax Concerns
Since gold coins are legal tender, you won’t need to pay taxes for holding them. On the other hand, you may need to pay capital gains tax for holding gold bars anytime you elect to sell them.
The hit on your profits can be significant for high-net-worth portfolios.
Gold coins win if you want to keep your capital gains tax down.
Numismatic Value
Gold coins accumulate sentimental value as they age. Holding them gives you two sources of potential value rise. If you buy coins with cultural and historical value, you can accumulate significant gains if gold prices also continue to soar.
If you’re a collector, gold coins give you a chance to hedge against inflation while adding to your collection.
Price Valuation
As seen above, it’s easy to determine the worth of gold bars accurately. There’s no speculation on the value.
For example, if you have a 12kg portfolio, you can find the current value by calculating the total number of ounces (423 in this case) with the dollar price per ounce.
With gold coins, valuation is more complicated. You need to include intangibles such as the mint state and intangibles in your calculations.
So, if you don’t intend to speak to gold coin valuation experts each time you add to your portfolio or want to sell, gold bars are the best choice.
Storage Management
Your gold portfolio is only as safe as your choice of storage and how you choose to manage the units of precious metals. Coins are harder to store and keep track of.
If you have 100 coins, you have to spend time counting them during routine checks and should maintain an inventory. An equivalent of ten 1kg gold bars only takes a glance.
Similarly, don’t forget that gold bars are easier to store and move around discreetly. A gold bar can blend into the environment wrapped in a paper bag or a piece of clothing.
Coins are noisy and require special storage if you are transporting a large collection.
Let’s Help You Decide
On the surface, gold bars are a good choice for investors looking to build a large portfolio, while gold coins are better for people looking to increase their gold holdings slowly.
However, your situation may call for a different solution. For some investors, choosing a Gold IRA instead of buying physical gold bars and coins is the better choice.
Contact us for more guidance on investing in gold coins vs. bars. At the Oxford Gold Group, our knowledgeable team has helped many people in your position make the right choice to build their gold portfolio.
Call us today at 833-600-GOLD to book an appointment.
