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Should I Buy Gold Coins or Gold Bars

30.03.22

The rising inflation rates and increasing geopolitical tension means many savvy investors are buying physical investment grade gold for the first time to protect their wealth. Understandably, even experienced investors new to the gold market, have many questions needing answering, before they invest in gold for the first time. The first question we are generally asked is if an investor should buy gold coins or bars.  

Both gold coins and bars have their own unique characteristics, meaning a buyer can select the one that best suits their needs.  

Gold Coins 

Legal-tender investment-grade gold coins are very popular among investors. They are produced by sovereign mints that guarantee their quality and the purity of their gold content. The most popular coins are highly recognisable and as a result are very liquid, meaning they are easy to sell when the time comes. Many minted coins due to their characteristics and security features and unique weight and dimensions, are difficult to counterfeit.  

UK investors that purchase Gold Sovereigns, or Gold Britannias can benefit from them being CGT (Capital Gains Tax) free. This means that if you sell these gold coins for more than you bought them for, you will not be liable to pay any capital gains tax.  

Due to the more intensive processes and craftsmanship involved in minting gold coins, they are sold at higher premiums than gold bars. The larger the coin the smaller as a percentage of the value of the coins that these costs are. Therefore, usually the larger the coin the lower the premium.  

While gold coins come in many different sizes, one-ounce coins are by far the most popular for investors. They represent a great balance between liquidity and value for money. They also represent good divisibility, meaning that if you own 100 one-ounce gold coins, it is easy to sell a portion of your gold holdings by choosing to sell a few coins at a time. Compare this to owning a 100-ounce gold bars and you will quickly see that it is much more difficult to sell a portion of your gold holdings as you would only have the option of selling the whole bar.

Gold Bars 

There are many reasons why investors opt to buy gold bars as opposed to coins.  

Gold bars come in a range of sizes from 1 gramme to 400 ounces. The most popular size formats are 1 ounce, 10, ounce, 100g, 250g, 500g and 1 kilo gold bars.  

Gold bars are supplied by sovereign mints and private refineries. Smaller gold bars are minted using heavy machinery, whereas larger gold bars are cast by pouring molten gold into a mould. 

Each bar bears the name and logo of the sovereign mint or refinery, and bigger bars have a serial number to be considered investment grade. These safeguards help prevent counterfeiting and to prove authenticity. Many smaller format gold bars come in tamper-proof packaging for added security.
Minted bars tend to command a higher premium than cast bars due to the more intensive nature of the minting process. However, as gold bars are not as detailed and crafted as gold coins, they tend to command a lower premium than gold coins. This can make them more cost effective for investors. Smaller format gold bars also offer a similar divisibility to gold coins while larger bar formats can be more cost effective for larger investors, due to their lower premiums.
So, when choosing between gold bars or coins, opt for the format that best matches your needs in terms of liquidity, divisibility, security, and cost-effectiveness. 

https://www.goldcore.co.uk

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