A debate about whether gold coins or gold bars are the better investment forms has been raging in the financial world for years. Some believe that gold coins offer increased liquidity and safety over gold bars, while others argue that they offer less stability during economic and market turmoil. The present article is intended to answer the question, “Is it better to buy gold coins or gold bars?”
Why Invest in Gold?
For one to understand the debate, it is important to know why people invest in gold in the first place. Since gold has historically proven to be a haven during economic turmoil, many people believe it is a wise step to own some for protection. Additionally, precious metals such as gold can offer added stability and growth during market prosperity. Another reason to invest in gold is to diversify your portfolio.
Gold Bars or Coins?
Buy Gold Coins for Added Liquidity
Due to their lower values, gold coins offer an added level of liquidity that is not available with gold bars. During economic turmoil, investors often sell their precious metals holdings to make up for losses in other investments. In these cases, selling gold coins more quickly can be a big advantage over gold bars with a larger value. The faster you can sell your gold coins, the less likely you will lose money on your investment.
Flexibility
Gold coins offer flexibility because they are used to purchase products and services. For example, if you need to purchase a new car, you can sell your gold coins for cash to pay for the vehicle, but this is not possible with bars. Additionally, gold coins are easier to carry around than bars—you don’t have to worry about taking a bag of precious metal on a trip.
Small Investors and First-time Investors
Though gold is much lower than just a few years ago, it can still be quite expensive to invest in larger bars. The added cost makes it harder for small or first-time investors to buy larger bars.
Cost
Gold coins typically cost less than gold bars. They can sometimes be purchased for the same price as a single gold bar. The added flexibility that they offer more than offsets the smaller profit margin.
The downside to investing in gold bars is that the higher value used to purchase them can be a barrier for some investors. The lower liquidity offered by gold coins also makes it harder for people to sell their gold coins if their investment is a bad idea. Also, because gold bars are more of an investment product, their higher value becomes even more of a barrier if you want to use them in everyday transactions like buying food or gasoline.
Gold Bars to Provide Added Security
Gold bars offer greater security than coins, but they require trust in the store or refinery that you buy them from. Gold bars are typically bought by investors who can afford to spend or invest more money to gain greater security and liquidity. Most investors buy gold bars for added security in economic turmoil and reassurance that their holdings are “real” gold. In other words, buy a bar instead of a coin if you want a safe investment.
Changing Premiums
The price of some gold coins can change almost daily. Knowing when the right time to sell your coins may not be easy. The same is not true of gold bars, though the price can sometimes change by a few dollars or more each day.
Higher Resale Value
Although gold coins are often worth more than gold bars when you first buy them, in general, the resale value is higher for gold bars. It means that if you plan to sell your gold anytime soon, gold will make less of a profit on the market. This makes it more attractive than coins to those who don’t want to take on as much risk while investing in precious metals.
Conclusion
It is possible to purchase coins and gold bars, but most people will choose to invest in one form. It is also possible to create a combined portfolio that includes both investment forms. Gold coins and bars are popular with investors because they offer enhanced liquidity and safety in a world full of potential risks.
Gold is a great way to invest for its ability to provide an “in-demand” asset for portfolio diversification and its use as money. Gold coins are generally more popular than gold bars, which go by Gold Coins. This can be attributed to their lower cost and availability while in the market. In addition, they offer greater flexibility when it comes to purchasing goods and services. It’s wise to compare the value of gold coins and bars before investing in either. The best form of investment will depend on your financial goals and what you are looking for in an investment.