Investing in Gold? Choose Between Bars and Coins, or Collect Both

Gold bullion: it’s a surefire way to hedge against inflation, provide a safe haven for your investments, and diversify your financial portfolio. Gold and other precious metals, like silver and platinum, can be used to protect your assets in turbulent economic times and are savvy ways to feel confident about your evolving financial well-being. 

Nevertheless, first-time investors are often unsure of where to start. The fundamental confusion or even hesitation among buyers can begin with the basic division of gold coins (or rounds) and gold bars (otherwise known as ingots or wafers, depending on your region). 

Which form of this precious metal is most suitable for you? This short article will get you started thinking about your next steps toward stock market stability.  

How Pricing Works

Mints that produce gold coins and bars (and sell to verified sellers, who in turn sell to members of the public) need to charge higher prices than the ‘spot price’ of gold in order to cover their costs. This premium is added to the bullion dealer’s percentage, which ensures these businesses can stay profitable. This is standard practice among trusted gold buyers and sellers, so be prepared.

Comparing Prices

Gold bars are formed with liquid metal and standard molds; most are simple rectangles or squares. This allows mints to produce them en masse and deploy minimal aesthetics. Of course, they come stamped to indicate some vital information, like purity, weight and the mint issuing the bar. 

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Coins, conversely, are marginally more complicated and costly to produce, considering that many carry intricate designs from established artists and often carry smaller production runs. Coins also carry face values as legal forms of currency — most bars get their value from their precious metal content alone. 

The result? You’ll typically find higher premiums when choosing coins over bars.

Comparing Uses

Considering the basic price differential outlined above, those who wish to invest in gold as an asset alone — in other words, as a part of their balanced financial portfolio — often choose to purchase bars. Bars represent a simple, safe and satisfying way to accrue a tangible asset and are the most cost-effective option between the two.

However — and this is a big ‘but’! — coins have their unique attraction to investors above and beyond bars. They carry the same intrinsic value as gold bars per troy ounce, but some coins also have what’s called a numismatic value. A coin’s numismatic value is generated through a host of factors of direct relevance to coin collectors, including, but not limited to:

  • rarity (or limited runs), 
  • age and historical significance (or even special provenance),
  • condition (what’s called ‘grading’), minting errors, and other defects, and
  • demand among collectors.

If you’re interested in exploring these premiums, or if you want a taste of the satisfaction that comes with the hobbyist and community perks of building a collection — especially one that’s historical, beautiful, impressive, and deeply rewarding — then you may find that coins are the superior way to build a store of gold bullion.

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The Bottom Line

Interested in purchasing a larger quantity of pure gold and want lower premiums? Gold bars might be right for you, especially if you value simplicity. If you’re keen to be a collector of items with historical significance and are interested in potential added numismatic values, then gold coins might be more suitable. 

But don’t feel you have to make a binary choice: some investors choose to have a mix of both bars and coins to balance their portfolio. Do your research, understand your investment goals, and consider the trade-offs before diving in.

 

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