Great to hear that you have decided to invest in gold. Now the next big question: gold bars or gold coins for your investment?
In this post we will discover the difference between the two at a beginner level in order for you to make the decision yourself. Although gold investing is suppose to be simple there is a lot of pitfalls and scam artists out there.
This post will help you to not make any mistakes or fall for any scams that can cost you thousands of dollars.
Let’s decode the question of gold bars or gold coins for investment
As I said above we are going to try and make this as simple as possible. Often times you see people discussing bars vs coins question and it gets way too detailed.
We are going to keep this at a very high level, everything you need to know to safely start investing in gold.
First lets discuss bars, then coins and then have a look at what’s best for you.
Invest in gold bars
Gold bars are the bigger, often rectangular shaped, pieces of bricks that are issued by private mints. Gold bars can also often be referred to as gold bullion.
These are the things that you might have seen on the TV, although those big 1 kg bricks are not usually what the private investor gets (because they are very expensive).
Gold bars vary in size but usually comes in 1 ounce to 10 ounces and are very easy to stack on top of each other.
Gold bars is in my opinion the easiest way to invest in gold.
What’s the pros of investing in gold bars?
Personally, investing in gold bars is inline with how I invest in gold. The reason why is very simple, you get the most gold metal for your money.
When you invest in coins there is a few other factors that determine the cost of your gold. If a gold coin is rare the price per ounce can be a lot more expensive than the current gold price.
By investing in gold bars you do not have any of these extra layers of cost. What you are paying for is the price of the metal plus a dealers fee. This way you will get the most amount of gold possible for your money.
As we were talking about you can buy rare coins that’s called numismatic coins. This is not anything that I recommend you to do if you don’t know exactly what you’re doing. The possibility of getting scammed is very high.
Buying gold bars is very simple and all you need to know is what the price of gold is today and see how close to that you can come with a bar. The closer to that cost the smaller profit the dealer will take. If someone is selling their gold under the spot price you should jump on it directly.
It’s also very easy to sell you gold bullion. Because people know exactly what they’re buying. It’s just gold, melted into a rectangular bar. Nothing else to think about.
There are a few things that you should look out for when choosing a gold bar that you want to invest in.
- Like we were talking about, try to get it as close to the gold spot price as possible.
- Make sure that the gold is 24 karat and 99.99% purity (pure gold, not mixed with any other cheaper metals).
- The size of the bar doesn’t matter that much, go with what works best for you. The bigger the bar is the cheaper it will be per ounce. Same as by buying a big pack of toilet paper the price per toilet roll will be cheaper. But remember that it might be harder to sell a 100 ounce bar compared to a 1 ounce bar (more people can afford a 1 ounce bar than a 100 ounce bar).
- Try to get the bar from an accredited refinery where there is a package that proofs that your gold is authentic. Accredited refineries are things like credit suisse, PAMP, volcambi, Perth Mint, Royal Canadian Mint, just to name a few. But if you get your gold from a good dealer you are all good. Have a look at where I buy my gold for some insight.
What’s the cons of investing in gold bars?
Although I generally don’t really see any major problems with investing in gold bars there are 2 things that comes to my mind.
- You might have to get your bar certified to prove it’s authenticity and purity if you want to sell it. If you just buy pure gold in a bar you do not have much proof that it’s actual gold. Then you might have to get a third party company to certify your gold which costs a small amount.
Make sure you get a gold bar from a reputable refinery and try and not break the package it comes in. Everything to be able to show that it is in fact real gold.
- It’s not as simple to use in barter. In case of an emergency where you can’t get money out of the ATM for any reason you might need to use your gold in order to provide food and other necessities for you and your family. This happened in Cyprus a few years ago and there is a lot of things that can fail and make this nightmare a reality.
Because gold bars are usually bigger and more valuable it’s very hard to walk in with a 5 ounce bar and try to purchase some food. Then you’re better off having your gold in smaller quantities.
Invest in gold coins
When you say gold coins there can be two different things to you would be talking about. There is numismatic coins which are the one’s that we briefly touched upon before in the article. These are the coins that are rare and that are said to have a collectible value.
There is a really big chance to get scammed if you buy these collectible coins if you don’t know more than the person you’re buying the coin from. If this is what you are interested in make sure to read my take on numismatic coins first to not fall into any scams.
The other coins are generally split into two different coins. The first one’s are government issued coins that are considered to be legal tender. There is a face value on the coin meaning that you should be able to pay with it.
For example the American Gold Eagle have a face value of $50 (it says $50 on the coin). But to use it as legal tender would be pretty stupid because the same ounce of gold have around $1300 in gold value. Why use it for $50 instead?
The other coins are called gold rounds. This is basically the same but it’s issued by a private mint instead of a government mint which means it’s not legal tender. But because you hopefully get the coin for the gold value this shouldn’t matter too much to you.
A tips is to buy you gold coins like you would buy gold bars. Look at the spot price and then try to get your gold for a price close to the spot price for gold.
Maybe you want to get them just because they are better looking than gold bars in your view. But don’t get dragged into the collectible value of coins and you will be fine.
There is one major thing that you should think about if you consider investing in gold coins. It’s the fact that most of these coins do not contain just gold like gold bars do.
The reason why is because these coins are suppose to be circulated. Gold is a very soft metal and the coins would break easily if it contained only gold. This is why they melt down some other materials with the gold to make the coin more durable.
For example the American gold eagle only contain 91.67% gold and the rest is other, less valuable, metals.
So what’s best for you then? Gold bars or gold coins?
Personally, investing in gold has always been about the metal itself for me. I want to get as much of the shiny valuable metal as possible for my money. This is most easily done by investing in gold bars.
Stay away from numismatic collector coins if you do not know exactly what you’re doing.
If you want to purchase gold coins try to think in the same way as you would if you would invest in gold bars. Have a look at the spot price of gold to see how much one ounce trades for today. Then look at the price for the gold coin and try to get as close to the spot price as possible.
Buy them because you think they are good looking and not for any other reason. Be aware that most gold coins do not contain 99.99% pure gold like gold bars does.
Please leave a comment below if you have any questions. I would love to hear from you and will do my best to try and help you make the right investment choice.
Hopefully we have answered the question of what’s best, gold bars or gold coins for investment?
Find out where I get my gold by clicking the green button below.