If you want to invest in the gold market, you’ll need to decide how you’re going to go about doing it. Or more specifically, what type of gold you’re going to buy. The main types of gold that people buy for investment are gold coins and gold bars – and each has its respective pros and cons.
Read on if you’re entering into the age old ‘gold coins vs. gold bars’ debate. We’ve got a roundup of the positives and negatives and the things you need to consider before you purchase either.
What’s the difference between gold bars and gold coins?
A gold bar is, put simply, a lump of metal. Well, it is perhaps slightly more refined than that - it’s usually minted into a neat cuboid shape, with the weight and purity of the equivalent gold content inscribed onto the surface. This is desirable for those investors who want the gold for its inherent value rather than because its minted in a certain way or takes a certain form.
A gold coin however has a certain premium value associated with the fact that it is in many cases also legal tender, as well as the historical and traditional value of coinage that many people hold in very high esteem. Indeed many gold coins that are still traded today were once circulating currency.
Gold coins vs. gold bars – when do coins win?
Gold coins win for those investors who appreciate the historical value of these coins. If you want your gold to be something more than simply a financial investment, perhaps even start a gold coin collection, then coins are for you.
Of course, there is additional economic value to the historic value of gold coins that many coin collectors, or specialised investors will pay a healthy premium for. Gold coins are minted in continuing annual series, meaning that they often increase in value over time, as collectors wishing to ‘complete’ their collection will pay increasingly more money for older variants. The British gold Sovereign coin and gold Britannia coin are examples of this – with new, annual versions of the coin being minted each year.
The value of gold coins is more difficult to quantify against the live gold spot price. The coins’ values will rise (and fall) with the price of gold. But there is a further value to be found in their increased levels of rarity if you’re selling to coin collectors or investors seeking to complete a series or find a specific year that carries importance to them. Of course, this value is likely to increase with time as the coins from older years become harder to find. This additional, Numismatic value is difficult to quantify and is likely to vary over time as collectors’ tastes and targets change.
Gold coins vs. gold bars – when do bars win?
When comparing gold bars vs. gold coins, however, gold bars do have certain benefits of their own. You can usually tell the value of a particular quantity of gold bar very easily – because the equivalent weight and purity will be inscribed onto the metal itself and the value of that metal is governed by the live gold spot price.
For those investors who want strictly to invest in the value of the gold rather than for its cultural and historical tradition, this is a good way of doing so. You’ll be able to closely track the contemporary value of your gold, as it rises and falls, and be able to demand a reasonably specific price for the product upon sale.
Gold bars usually comprise 99.99 per cent pure gold. Since the main value of the product is its gold content, there isn’t really much use for any other kind of metal being alloyed in there, so you can usually guarantee that a gold bar will be 24-carat gold. They come in sizes from as little as 1 gram to as large as 1 kilogram, meaning that you can invest as much or as little as you like at any one time, and at whatever speed suits you.
How do they compare in other ways?
Gold Coins vs. Gold Bars.
Gold Coins
Gold Bars
Size
Gold coins vary in size depending on which you buy. Smaller coins like the Sovereign are good for those looking for a discreet investment.
Gold bars are available in a wide range of sizes, from 1 gram to 1 kilogram.
Gold bars are a good way of storing large amounts of wealth in a small space. 1kg quantities of gold often stores wealth of over £40,000 at any one time.
Reliable Investment?
All gold is considered a reliable investment. It may be more difficult to gauge the best value for a gold coin, since its collector’s value is less easily gauged by the live spot price.
Gold is considered a reliable investment in all cases. Gold bars are particularly so, since their value can be accurately determined by the live spot price.
Cost
Gold coins will command slightly higher premiums over the spot price than gold bars, due to the extra minting costs, and the commemorative nature of their value.
Gold bars should be priced very closely to the gold spot price, with just a small additional margin from the mint and merchant.
Historic/Traditional Value?
Gold coins come with a high traditional value. Historic gold Sovereigns have been known to command premiums of 35 per cent over and above their contemporary gold value.
Gold bars hold little historic or traditional value and are traded exclusively for their gold content.
Tax Advantages
Gold coins are VAT free if they qualify as investment gold under HMRC regulations and EU Commission rules.
Gold bars are VAT free if they qualify as investment gold under HMRC regulations.
Where can I buy gold coins or gold bars?
If you want to get the best return on investment from your gold products, you’ll want to buy from a merchant who charges the most competitive gold premiums on their products.
In this regard, The Gold Bullion Company has you covered. Since the prices of our gold bullion products are automatically updated in line with the live gold price on our website, you can always be sure that our prices are going to be amongst the best around.
Browse our selection of gold bars and gold coins to start your gold investment plan.
