Gold is currently at record highs. If you are looking to invest, should you buy gold coins or bars? This article covers both options and various considerations to help you make the best decision.
Recent surveys show that 77% of Americans believe the country’s economic conditions are less than excellent or good. This widespread concern about the economy often leads people to seek out safe investment options like gold.
Learn about the differences between buying a gold coin and a gold bar. We’ll look at what each option offers and weigh its pros and cons.
Understanding gold coins and bars
First, let’s look at why people invest in gold in the first place:
Safe-haven investment
You don’t have to look much further for a good reason to invest in both gold coins and bars than in today’s economic climate. With consumer prices up 18.7% in the last four years and personal income growth lagging at just 0.2%, gold can be counted on as a smart investment to protect against eroding purchasing power.
Many investors see gold as a defense or “insurance policy” to preserve wealth amid potential recessions, high inflation, and the devaluation of the US dollar. Combine those economic factors with gold reaching record prices in recent years, and you have a solid investment addition to your portfolio.
While gold has always been a valuable investment, its future looks particularly bright. In fact, we recently discussed on our podcast how gold prices are potentially on their way to over $3,000 an ounce. To learn more about this prediction and the factors driving it, check out our podcast episode:
Independent asset
What’s very interesting about gold and other precious metals is that they are independent assets. What we mean by this is your investment is not impacted by:
Third-party performance: You’ll see investors discuss gold’s “no counterparty risk” which means you don’t have to rely on a company’s performance or another third-party to impact your investment.
Digital issues: Your gold bullion investment doesn’t need internet access, software applications or mobile devices to work. So when there’s an issue that affects others like the big Crowdstrike outage this year, it doesn’t impact your gold.
Cyber risks: It seems like every month there’s some new large cyber attack. We all know these happen almost daily. Your physical gold does not have these risks.
What are gold coins?
The government mints gold bullion coins, which have a face value and are legal tender. They’re available in various designs and might have collectible or historical value.
Examples include American Gold Eagle, the Canadian Maple Leaf, and the South African Krugerrand. Each coin’s value relates to its gold content and potentially by its rarity and demand among collectors.
What are gold bars?
Gold bullion bars get produced by private mints and refineries. They don’t have a face value or artistic designs. Investors buy them for weight and purity.
Pros and cons of gold coins
Before buying gold coins, here are the pros and cons to consider:
Advantages
Potential numismatic value: Some gold coins have numismatic value, which is the combination of coin rarity, condition, demand, and historical significance. This is why coins are so valuable to collectors and investors.
Easier to trade and sell: Gold coins are highly liquid, making them easier to trade and sell. Their widespread recognition and government backing give investors confidence that they can quickly convert them into cash or other assets. This liquidity is a big reason why many investors prefer coins.
Legal tender status: Since government entities often mint gold coins, they have a face value and are considered legal tender, like $20 Liberty Gold Coins.
Disadvantages
Slightly higher premiums: Gold coins have higher premiums than bars. This is because of manufacturing costs, artistic designs, and minting process. These premiums can add up, especially if you plan to purchase a significant amount.
Storage considerations: If you’re a coin collector, storing your coins can be a bit challenging. They must be kept in a safe, secure place to preserve their condition and prevent theft or damage. This might require special cases or safes which add to your overall costs.
Pros and cons of gold bars
Gold bars have different benefits and challenges than coins:
Advantages
Lower premiums and manufacturing costs: Gold bars usually have lower premiums than coins. They don’t require intricate designs or minting processes which makes them a more cost-effective option.
Direct gold content and weight: If you buy bars, their value is tied directly to the gold content and weight so it’s easy to understand how much they are worth.
Disadvantages
Less flexibility in selling smaller portions: One downside to gold bars is that they aren’t as flexible as coins if you need to sell in smaller portions. If you need to liquidate only a part of your investment, you might find it harder with larger bars.
Requires secure storage: Like coins, you must store gold bars in a secure location. But, because of their size, you might need to pay for third-party storage.
Choosing a gold bullion dealer
Besides choosing between gold bars vs coins, you’ll also want to work with a reputable dealer. Here’s some things to look at to help you choose a reputable company and not run the risk of getting scammed:
Years in business: Look for a company that has been around for decades so that you know they are legit and not a fly-by-night operation.
Customer reviews: Gold dealers should have positive customer reviews and strong ratings from organizations like the Better Business Bureau.
Transparent pricing: Whichever company you choose should be transparent about premium pricing above the spot price.
Resources: A good company provides education and resources to help you make the best gold investment decision. This includes advising you on various precious metal options, storage, and insurance. If you are looking at a Gold IRA, the company should have strong relationships with custodians and guide you on qualified bars or gold coins.
Gold coins or bars? You can’t lose either way
You can’t really go wrong with either option. The best choice depends on which one best meets your needs, and both forms offer a tangible asset that diversifies and strengthens your investment portfolio.
This point is summed up well by a user on r/Gold who says, “I went the coin route. Others like bars. Some like gold from different mints or different sizes. There can be a little economical difference depending on the route you go, but not that much. There is no one perfect way to do it. Mostly personal preference.”
If you’re still unsure which option might best suit your needs, Swiss America is here to help. With a range of products and expert guidance, we’ll help you find the right fit for your investment strategy.
Gold coins or bars FAQs
Are 1 oz gold coins a good investment?
Yes, most 1 oz gold coins are a great investment. They are highly liquid, so you can easily buy or sell them as needed. Their size makes them convenient for large and small transactions.
Why would someone buy gold bars?
Gold bars are a cost-effective way to invest in larger quantities of gold. They also have lower premiums than coins so your investment goes a bit further.
Is it better to buy gold coins or gold bars?
Buying gold bars is a better option for large investments since they have lower premiums. Gold coins can be easier to sell, plus they have potential collectible value.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
