The most common question that gold investors ask is whether they should buy coins or bars. The important thing that any potential needs to understand about gold is that the melt value remains the same irrespective of the form of gold being bought or sold. Simply put, an ounce of gold is an ounce of gold across the board. To make a good decision from the outset you need to understand what the advantages of either coins or bars are:
Gold and silver bullion coins are usually minted by government mints. These coins are legal tender this means that in addition to their intrinsic value, there is a value assigned to them by the government. This legal tender value is always going to be lower than the intrinsic value of these gold coins which depends on the fluctuating market price for gold. Gold coins always have the potential to appreciate especially when the demand for these coins outstrips the supply. This is often true for numismatic or collector’s gold coins. These have more value when there is a strong demand for a specific coin.
Coins are often more expensive to buy than gold bars. There is a higher premium value attached to gold and silver bullion coins because of the added cost of having government branding. Basically, gold bullion starts off as a blank gold piece with a purity of 99.99%. It is sent to a mint like the Perth Mint or the United States Mint or Royal Canadian Mint or any other government mint. The premium on gold bullion coins is high because of the intricate and unique designs that are imprinted on the surface but one has to account for the fact that government mints also add their own surcharge for stamping coins.
Let’s look at gold bars…
Gold and silver bullion bars aren’t commissioned by governments. The price of gold bars is less than that of coins which means there is a greater difference in profits that can be generated when they are resold to gold dealers. Investors who are looking to maximize the value of what they invest in will find bars to be more efficient.
Investors often worry about the bulky nature of gold bars. They are concerned a lot with the trading in small increments. This is where most people defer to coins rather than bars. Moreover, when there is some sort of imminent financial crisis it is easier to sell coins. They are smaller, portable and you could simply slip them in your wallet. Investors who insist on buying gold bullion bars do so to ensure that the profits will be higher when they decide to sell because less money was paid for the bullion. Keep in mind that smaller bars cost more than larger bars. This is because the production costs of smaller bars are higher than that of bigger gold bullion bars.
The bottom line is that whether you decide to trade in gold coins or gold bars, you will need to consult with gold dealers to get the best possible returns on your investment. The intrinsic value of precious metals like gold or silver doesn’t particularly change with form. To have a truly diverse portfolio and ensure some financial security, it is a good idea to invest in both forms.
