Gold Coins Vs Bars: Which Is The Better Investment?

Gold has long been a popular investment option for those looking to diversify their portfolios and protect their wealth. Physical gold, in particular, is an attractive option for those who want to keep things simple and tangible. But when it comes to investing in physical gold, is it better to opt for bars or coins?

There are pros and cons to both, and the best choice depends on your personal preferences, investment goals, and budget. Gold bars, for instance, tend to have lower premiums than coins due to their larger unit size and lower manufacturing costs. They also come in a wider range of sizes, making them suitable for various budgets and investment strategies. On the other hand, gold coins are often issued by government mints, carry legal tender value, and have historical and cultural significance, making them more collectible and potentially increasing their resale value.

So, which is the better investment? The answer is that there is no one-size-fits-all solution. By considering factors such as investment goals, budget, storage options, and personal preferences, investors can make an informed decision that aligns with their unique circumstances and financial objectives.

Gold coins are more liquid and easier to store

Gold coins are a more liquid investment than gold bars. Liquidity refers to how easily an asset can be sold at a widely recognised fair price on the open market. Gold coins are more liquid because they are smaller and easier to sell in small amounts. They are also more easily stored and traded, making them a more flexible investment.

Gold coins are more liquid because they can be sold quickly and in increments. Coins are smaller and easier to sell in small amounts, making them more liquid than gold bars, which cannot be sold in parts. Gold bars are a better option for long-term investors who want to preserve their wealth, whereas gold coins are better for those who want to buy and sell for short-term profit.

Gold coins are also more liquid because they are universally recognised and can be resold easily. They are also more flexible, as investors can split their investment into smaller parts. Gold bars, on the other hand, must be sold all at once.

Gold coins are easier to store than gold bars. Gold bars are bulky and often require a pricey safety deposit box or bank vault. Gold coins, on the other hand, can be stored discreetly in a fireproof safe at home.

Gold coins are also easier to store because they come in various sizes, making them suitable for any budget. For example, 20g or 1oz bars are ideal for those looking to buy physical gold regularly, while 1kg gold bars are the largest option available.

Gold coins are also a good option for first-time investors. They offer a great starting point for investing in physical gold and can be easily transported.

Overall, gold coins are a more liquid and flexible investment than gold bars. They are easier to store and trade, making them a good option for investors who want to buy and sell for short-term profit.

Gold bars are purer and have a higher gold content

Gold bars are typically made of 24-carat gold, which is 99.99% pure gold. They are also available in 22-carat gold (916.7) purity. The higher the purity of gold, the lower the chances of other alloys being included. This means that gold bars are a purer form of gold investment than gold coins.

Gold bars are also larger in size than gold coins, ranging from 1kg to 1g, and are therefore a more suitable option for investors looking for a purer gold investment. The larger size of gold bars also leads to lower manufacturing costs, which means that gold bars are generally sold closer to gold's current spot price. This makes gold bars a more cost-effective way to invest in gold, especially for investors with large budgets.

The larger size of gold bars also means that they are less prone to wear and tear than gold coins, which can be an important consideration for investors looking to maintain the condition of their gold investments.

Additionally, gold bars are a more discreet form of gold investment than gold coins, as they can be stored in a variety of locations, such as a safety deposit box or bank vault, without attracting attention.

Overall, gold bars offer a purer and more flexible gold investment option, providing investors with a range of sizes and purities to choose from, as well as the potential for lower costs and better storage options.

Gold coins have higher premiums due to intricate designs

Gold coins are often more expensive than gold bars due to their intricate and detailed designs, which require a high level of craftsmanship to produce. This additional artistry and design work contributes to the higher premiums that gold coins command over the spot price of gold.

The intricate designs found on gold coins are carefully crafted and can feature historical figures, events, or other culturally significant elements. These designs not only make the coins aesthetically appealing but also add to their collectibility and potential historical value. The higher premiums on gold coins are, therefore, a reflection of the additional craftsmanship, design, and potential collectibility that they offer compared to gold bars.

The British Britannia Gold Coin and Gold Sovereigns are excellent examples of gold coins with intricate designs that contribute to their higher premiums. These coins, with their elaborate and detailed craftsmanship, attract collectors and investors alike, driving up their value.

In contrast, gold bars tend to have a more straightforward design, which helps keep their production costs lower. The larger size of gold bars also contributes to economies of scale in their production, further reducing the overall cost per ounce of gold. As a result, gold bars typically have lower premiums than gold coins, making them a more cost-effective option for investors purely focused on maximising their gold content per gram.

However, it is worth noting that the higher premiums on gold coins are not solely due to their intricate designs. Gold coins are also considered collectible items, and their numismatic value—an additional value beyond their gold content—can further increase their premiums. The rarity, condition, and historical significance of gold coins can all contribute to their higher premiums.

Gold bars are ideal for long-term investment

Lower Premiums

Gold bars tend to attract much lower premiums than gold coins due to their larger unit size, which results in lower manufacturing costs. For instance, it is more cost-effective to buy a 1kg gold bar than ten 100g gold coins. Gold bars are, therefore, a more affordable way to invest in gold, allowing investors to buy gold at the lowest price per gram.

Long-Term Value

Gold bars are ideal for investors who want to hold physical gold for a long time without intending to sell part of their investment over time. While gold bars may be more challenging to sell due to their bulk, they are a better option for those looking to preserve their wealth rather than focus on short-term profits.

Ease of Storage

Gold bars are available in various sizes, from fractions of an ounce to several hundred ounces. Smaller gold bars are more liquid and enable investors with smaller budgets to enter the precious metals market. 1oz gold bars are the most sought-after as they are easy to transport, store, and sell. Gold bars can be securely stored in a safe location, such as a safe deposit box or a bank vault, to protect them from damage or theft.

Standard for Gold Investment

Gold bars are the standard format for gold investment and are exchangeable worldwide with any bullion dealer, as long as they are manufactured by an LBMA-approved refiner. This makes them a reliable and recognised form of gold investment.

Purity and Quality

Gold bars have a minimum purity of 99.5%, with some bars made of 24-carat gold (999.9 pure gold). They are produced by sovereign mints and private refineries and must adhere to strict standards regarding shape, weight, and purity. These standards help prove authenticity and prevent counterfeiting, ensuring that gold bars are a secure and reputable investment.

Gold coins are more flexible and can be bought/sold in smaller amounts

Gold coins offer a level of flexibility that gold bars simply cannot match. This is mainly due to the fact that gold coins can be bought and sold in smaller amounts, making them ideal for investors who want to liquidate their investment in increments.

Gold coins are typically available in smaller denominations, such as 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz, making them more accessible to investors with smaller budgets. This also means that investors can buy and sell in smaller amounts, allowing for greater flexibility when it comes to buying and selling.

On the other hand, gold bars are often sold in larger sizes, such as 1 kg or 400 oz bars, which may be challenging for investors who want to sell in smaller increments. While larger gold bars can provide a lower cost per ounce due to their lower premiums, they lack the flexibility that gold coins offer.

The ability to buy and sell in smaller amounts also makes gold coins ideal for investors who want to build their portfolio over time. Regular, smaller purchases of gold coins can gradually increase an investor's holdings without requiring a large upfront investment. This is especially beneficial for first-time investors who may not have a large budget to start with.

Additionally, gold coins are often issued by government mints and are considered legal tender, adding an extra layer of security and flexibility to your investment. In contrast, gold bars are not typically considered legal tender, which can make them less appealing to some investors.

Overall, gold coins offer a level of flexibility that gold bars cannot match due to their smaller denominations and the ability to buy and sell in smaller amounts. This makes them a more attractive option for investors who want the option to liquidate their investment in increments and build their portfolio over time.

Frequently asked questions