Gold is a stable, smart and lucrative investment option when it comes to protecting you from currency depreciation and other financial crises. If you’ve decided to invest in precious metals to add to your portfolio, you should take some time to consider whether to invest in gold coins or gold bars. Whether you’re new to investing or not, it’s recommended that you make an informed decision depending on your individual needs and purpose of your investment.
In this blog post, we’ll cover the pros and cons of both gold coins and gold bars and explore the most suitable investment option for your portfolio.
Gold Coins as an Investment
One of the major advantages of gold bullion coins is that they’re produced and recognized by the issuing government’s mint. The coins come with face value, year of issue, weight, and purity stamped on them. Unlike gold bars, bullion coins with their unique designs can become costlier per ounce and are inherently collective.
Here are the pros and cons of gold coins as an investment.
- They offer a wide and diverse range of options to choose from in terms of design, size, weight, and valuation, unlike gold bars.
- Since they’re considered a legal tender and available at lower value denominations, bullion coins offer easier liquidity.
- With their small size and shape, they can be easily stored in single or multiple safe locations. When stored at home, they’re also less obvious than gold bars.
- Some gold coins are limited mintage, rare or collectables which possibly make a return on investment exceed the gains from the appreciation of the base metal over time.
- When buying gold coins, you’re charged with a premium that increases their cost above the actual gold spot price. Premiums are the additional cost attributed to manufacturing, packaging, handling, insurance and delivery costs.
- Not all coins are 24-carat. Some coins are 22 carats or even lower and when it comes to dealing with fractional purities, this makes it difficult to value your new coins.
- You need to verify the legitimacy of the supplier and the mint before investing in gold coins that don’t come with a certification.
Gold Bars as an Investment
They’re significantly larger in size and shaped in a rectangular slab. Produced by private mints, gold bars are available in many denominations and sizes. Here are the pros and cons of gold bars as an investment.
- Gold bars offer minimum premiums over the actual market price of gold.
- Most gold bars are 24-carat, which means they’re 0.9999% pure gold.
- Being certified, they enable new investors to quickly build a balanced portfolio.
- Owning a large chunk of a single community can put you in higher market risk. Although they offer the best value when purchasing, the resell value isn’t the best depending on the spot gold price.
- Since gold bars aren’t considered a legal tender, it’s harder to liquidate large gold bars.
Adding gold to your investment portfolio is an excellent move and now that you know the pros and cons of both, you can decide better. Larger gold bars are ideal for you if want to invest a large amount of money and plan to keep your gold for a long time without selling it. On the other hand, if you’re planning to invest in gold for releasing part of it for cash during financial crises, gold coins make a better choice as they offer greater flexibility at resale.
Depending on your personal preference and taking into account all these considerations, invest in bullions that offer the best intrinsic value of gold for your budget.