You have probably heard about how great gold is as an investment vehicle, and a means to protect your wealth. It is stable and not affected by economic changes like traditional investment options.
This is why it is the go-to investment option for many people. But have you ever been curious about the different forms of gold?
There are physical and digital gold units. The digital gold units are a topic beyond the scope of this article.
On the other hand, physical gold is probably the most common form of gold and comes in different forms. We know of the certified bullion coins, the most common form of physical gold. However, there is another, albeit overshadowed, form: the gold bar.
This now begs the question: which should you buy? Both are great ways to acquire gold. Buying one is good, but buying both is great. Read on to find out why we have this stance.
Gold coins are small and convenient forms of gold. The first minted gold coin was around 500 BC by order of King Croesus of Lydia. They were mostly used as legal tenders. It still retains this feature today, which is why they have extra premium placed on them.
A great thing about gold coins is that most of them have a historical value, which has added to their allure. This allure remains strong to this very day, making gold coins a great form of gold to invest in.
Most gold coins are now minted for investment purposes. Each one is unique and has its date of issue embossed on the front and the purity and weight on the back.
Advantages Of Buying Gold Coins
1. It Offers Variety
When you buy gold coins, you can choose from different sizes. You can also make your choice based on finish, design, grade, rarity, and origin. This amount of variety also means that there is a wider price range.
You can easily choose from the varieties available based on your wants, goals, and budget.
2. Gold Coins Are Highly Liquid
Gold coins are highly liquid because they can be easily traded for cash. They are recognized globally, and because they come in small units, you can easily sell them when necessary.
Because they come in smaller units, you can also spread out your activity to take advantage of the surges in gold price.
3. Guaranteed Quality
When you buy gold coins, you are sure of the quality, weight, and gold content because the government mainly mints them.
The designs of each minted coin us approved by a legislative body, ensuring design integrity. The implication is that these coins can be used as legal tenders.
4. They Are Collectible Items And Tend To Appreciate
Gold coins have numismatic potential, meaning their value does not depend on the price placed on the metal. They can also appreciate based on demand, historic value, and rarity.
Even the IRS considers gold coins collectible. The implication is if you can obtain a rare or highly sought after gold coin, you might be able to sell it for a higher price after a while.
5. They Make Great Gifts
Gold coins make great gifts. You can use them to mark important events and dates, which can be stamped on the gold. To pass a message and add sentimental value to the coin, you can get a gold coin with a design that has meaning for you and the receiver.
Disadvantages Of Buying Gold Coins
1. Less Efficient
Gold coins are the less efficient option, especially when you want to hold a large amount. They are small, which means you have to buy more. Their size also makes them more difficult to store and easier to lose.
2. A Higher Premium
Gold coins have a higher premium, especially when compared to the same unit of gold bars. The implication is that you are getting less Gold than you paid for. This is not very great, especially when you look at it from an investor’s point of view.
However, you can decrease the premium on the coin by buying a large amount. You must note that the premium also depends on the kind of coin you buy; a collectible coin has a higher premium than a bullion coin.
Gold bars, also known as Gold ingots, are refined gold made by governments and private mints to meet the standard manufacturing and labeling conditions.
They are usually slabs of rectangles made from gold with .999 purity. They are made in different sizes, usually between 1 ounce to 1 kilogram. The larger gold bars are made with molds, while the smaller ones are stamped from sheets.
Each gold bar comes with a certificate that shows the Gold Standards and the weight and purity of the bar. Gold bars are probably the most cost-effective form of gold. They are portable and highly liquid.
Advantages Of Buying Gold Bars
1. You Get To Pay Less For More
Gold bars are one of the most affordable options for people who want to purchase tangible gold. You will be paying the minimum price for each ounce. And if you buy in large quantities, you will be making savings that you can invest in other options.
2. They Come In Different Sizes
Gold bars come in sizes that range from 1 0z to 1 kilo, offering you a wide range of options. You can choose which size to buy based on your budget.
3. Easy To Store
Gold bars are compact and portable, so they are easy to store. You can stack or store them side by side, and you do not need any added layer of protection. They are not as small as coins, making them easier to store.
Also, gold bars are designed to take up less space. So 1 ounce of gold bars would take up less space than the same amount of gold coins.
4. Lower Premiums
This is another advantage that gold bars have over coins. A gold bar of the same weight and content as a coin would have a lower premium than the coin.
This difference is due to production costs. It costs a bit more to produce coins because they usually have intricate details that cannot be overlooked.
Also, while the value of gold bars is primarily based on their weight, the price of coins depends on other factors like rarity and design.
5. A Quick Way To Diversify And Strengthen Your Portfolio
Gold bars are easy to purchase and are a fast way to strengthen your precious metal portfolio and your entire investment portfolio.
It does not have to go through many protocols. All you need to do is make your payment and wait for your orders to be shipped. It is the quickest and probably simplest route to gold ownership.
Disadvantages Of Buying Gold Bars
1. High Premium
Although the premium on gold bars isn’t as much as those on gold coins, they still have a high premium and will keep increasing.
Ideally, the weight and purity of the bar should be the only factor affecting the price, but several factors like supply and demand and the value of the dollar also affect the price of the gold bar.
Gold bars are inflexible, and this is especially true for large gold bars. They are difficult to melt or reshape, increasing the cost of processing. Investing in gold bars might also incur handling charges when they are resold.
Learn more about gold coins and gold bullion bars from this guy below:
Should I Purchase Gold Coins Or Bars?
Before we give our verdict, we should state that gold, in whatever form, remains a great investment vehicle and a hedge against the typical volatility of other investment vehicles.
There isn’t a right answer to the question of which gold form to buy. It depends on what you want and your situation at the time of purchase.
If you are new to the market, gold coins are a great way to test the waters. They come in small sizes so you can buy as little or as much as you want.
Gold coins are also great if you do not have a truckload of money to buy gold. You can slowly accumulate your coin stash. Coins are also great for people who might want to use their gold as legal tender in the future.
On the other hand, gold bars are great for people with a large amount to invest in gold. They are cost-effective because they offer a low premium. The implication is you can buy gold at the lowest possible price per ounce.
If you can, ensure you have coins and bars in your portfolio. They are both great ways to strengthen your portfolio and offer different advantages that might come in handy at different times.
Gold output has been decreasing over time. There has never been a better time to buy gold than now.
We can’t tell you which form of gold to buy because they all have advantages. However, take a look at your situation and your budget, and the choice might be easier for you.
If you can afford it, buy the two forms, so all forts are covered.
Remember, buying one form is good, but buying both is great!
Martin Thomas, the owner of Sutter Gold Mining, is a true gold investment aficionado. With decades of experience and a wealth of knowledge, he is the go-to source for anyone navigating the vast world of precious metals. Martin has dedicated decades of his life to understanding the intricacies of the precious metals market and the best strategies for maximizing returns. His expertise in this field is unmatched, and his commitment to helping others make informed investment decisions is unwavering. With him as your guide, you’ll gain a deeper understanding of the gold market and learn how to make smart investment choices that will benefit you for years. With his guidance and wisdom, you will never have to worry about taking the wrong investment step again.