Whether you have just started investing in precious metals or are a long term investor, choosing between bullion bars and bullion coins requires some consideration. It is prudent to consider what you are looking for from your investment. There is no correct answer and the answer will vary depending on each investor's requirements and circumstances.
However, there are a number of elements to consider, including the value of your investment, the product premiums and the length of time you plan to hold your investment.
Why Invest in Gold Bullion?
The most common response to this question is that gold acts as a hedge in uncertain markets and helps to balance an investment portfolio. During periods when more traditional investments like stocks are losing value, gold tends to increase in value. This helps investors cushion the losses of a recession via the gains in gold prices.
The most affordable gold bars available to investors in terms of premium are 1 kilogram gold bars. These bars sell just slightly over the spot market gold price. However, with gold prices near $2,000/oz, a 1 kilogram gold bar costs well in excess of $50,000 USD. This isn't an affordable option for many investors. In general, gold bars sold from a 1 ounce size and larger tend to have quite low premiums. The cost of minting and packaging a gold bar is the same, regardless of whether the bar is 5 grams or 100 grams. This is why the premiums get quite a lot higher on the smaller sized bars, particularly those under 10 grams.
There is a flipside to the low premiums that larger-sized gold bars offer. If you wish to sell off a gold position incrementally, then 1 kilogram gold bars may not be the best option, as you will need to liquidate your position at $50,000 USD at a time. Smaller sized gold bars can be sold incrementally, and offer an investor better control over the overall sale price. It is for this reason, the balance between premium and resale value, that 1 ounce gold bars tend to be the most popular size.
The Benefits of Investing in Gold Bars
Bars or ingots are normally rectangular in shape. They contain gold that is a minimum of .999 pure gold and are available in various sizes ranging from 1 gram to 1 kilogram. Gold bars, like coins, are private, portable, and liquid. However, their virtues are sometimes overlooked in favour of gold coins.
Gold bars are perfect for diversifying your gold holdings in large quantities. Due to their size and simplicity, investing in gold bars is one of the quickest methods to diversify your precious metals portfolio. The majority of gold bars are available from either government or commercial mints, including Australia's globally known Perth Mint, Valcambi, and the Royal Canadian Mint.
Some government mints, such as the United States Mint, do not make gold bars. One major difference between gold bars and gold coins is that gold bars are not backed by the governments where they are manufactured, and they do not have a legal tender value. However, most gold bars contain additional guarantees such as a well-known hallmark from the bar's producer and a stamp indicating the bar's purity, weight, refiner, and registration number.
Due to the lower minting costs of bars vs coins, gold bars also tend to sell at a lower premium to gold coins.
Perks of Investing in Gold Coins
Gold coins are one of the most popular precious metal investments. Since circa 550 BC, when King Croesus of Lydia ordered the first gold coin to be minted, civilizations around the globe have been enchanted by the appeal of gold coinage, a fascination that continues to this day.
Certain gold coins are manufactured by sovereign governments, which guarantee each piece's gold content, weight, and purity. A legislative body and an advisory council review and approve designs, maintaining uniformity and design integrity.
Gold coins worldwide are known for their beautiful designs, quality and versatility. They may be purchased and sold in small or larger quantities which allows an investor to take advantage of fluctuating gold prices.
Buying Gold Bars vs Gold Coins
Should you buy gold coins or bars? There are a number of advantages that both have. These include being solid investments during economic and political turmoil and VAT-exempt status. They are easy to value and to trade, as there is a fairly liquid market for both.
There is one unique benefit to gold coins over bars: their collectable appeal may boost their selling price in addition to their inherent gold worth. Additionally, there may be added local benefits to certain coins over bars. For example, in the United Kingdom any profits earned on Gold Britannia coins are exempt from Capital Gains Tax. Benefits such as these should always be considered when putting together a portfolio.
At BuySilverCoins.eu, we encourage our clients to invest in bullion goods that give the most profit for their money, ensuring that you get the maximum value of gold and silver for your money. Many investors purchase both gold coins and bars. This is a perfectly reasonable choice, and often times it is the premium and size of the bars or coins you are purchasing that matter more than whether they are bars or coins. BuySilver.coins.eu features a wide range of bullion bars and coins including in gold and silver, for its clients worldwide. Please click here to open an account.