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If you want to invest in the gold market, you’ll need to decide how you’re going to go about doing it. Or more specifically, what type of gold you’re going to buy. The main types of gold that people buy for investment are gold coins and gold bars – and each has its respective pros and cons.
Read on if you’re entering into the age old ‘gold coins vs. gold bars’ debate. We’ve got a roundup of the positives and negatives and the things you need to consider before you purchase either.
What’s the difference between gold bars and gold coins?
A gold bar is, put simply, a lump of metal. Well, it is perhaps slightly more refined than that - it’s usually minted into a neat cuboid shape, with the weight and purity of the equivalent gold content inscribed onto the surface. This is desirable for those investors who want the gold for its inherent value rather than because its minted in a certain way or takes a certain form.
A gold coin however has a certain premium value associated with the fact that it is in many cases also legal tender, as well as the historical and traditional value of coinage that many people hold in very high esteem. Indeed many gold coins that are still traded today were once circulating currency.
Gold coins vs. gold bars – when do coins win?
Gold coins win for those investors who appreciate the historical value of these coins. If you want your gold to be something more than simply a financial investment, perhaps even start a gold coin collection, then coins are for you.
Of course, there is additional economic value to the historic value of gold coins that many coin collectors, or specialised investors will pay a healthy premium for. Gold coins are minted in continuing annual series, meaning that they often increase in value over time, as collectors wishing to ‘complete’ their collection will pay increasingly more money for older variants. The British gold Sovereign coin and gold Britannia coin are examples of this – with new, annual versions of the coin being minted each year.
The value of gold coins is more difficult to quantify against the live gold spot price. The coins’ values will rise (and fall) with the price of gold. But there is a further value to be found in their increased levels of rarity if you’re selling to coin collectors or investors seeking to complete a series or find a specific year that carries importance to them. Of course, this value is likely to increase with time as the coins from older years become harder to find. This additional, Numismatic value is difficult to quantify and is likely to vary over time as collectors’ tastes and targets change.
Gold coins vs. gold bars – when do bars win?
When comparing gold bars vs. gold coins, however, gold bars do have certain benefits of their own. You can usually tell the value of a particular quantity of gold bar very easily – because the equivalent weight and purity will be inscribed onto the metal itself and the value of that metal is governed by the live gold spot price.
For those investors who want strictly to invest in the value of the gold rather than for its cultural and historical tradition, this is a good way of doing so. You’ll be able to closely track the contemporary value of your gold, as it rises and falls, and be able to demand a reasonably specific price for the product upon sale.
Gold bars usually comprise 99.99 per cent pure gold. Since the main value of the product is its gold content, there isn’t really much use for any other kind of metal being alloyed in there, so you can usually guarantee that a gold bar will be 24-carat gold. They come in sizes from as little as 1 gram to as large as 1 kilogram, meaning that you can invest as much or as little as you like at any one time, and at whatever speed suits you.
How do they compare in other ways?
Gold Coins vs. Gold Bars.
Gold Coins | Gold Bars | |
Size | Gold coins vary in size depending on which you buy. Smaller coins like the Sovereign are good for those looking for a discreet investment. | Gold bars are available in a wide range of sizes, from 1 gram to 1 kilogram. |
Ease of Storage | Gold coins can be easily stored inside gift boxes or presentation boxes. | Gold bars are a good way of storing large amounts of wealth in a small space. 1kg quantities of gold often stores wealth of over £40,000 at any one time. |
Reliable Investment? | All gold is considered a reliable investment. It may be more difficult to gauge the best value for a gold coin, since its collector’s value is less easily gauged by the live spot price. | Gold is considered a reliable investment in all cases. Gold bars are particularly so, since their value can be accurately determined by the live spot price. |
Cost | Gold coins will command slightly higher premiums over the spot price than gold bars, due to the extra minting costs, and the commemorative nature of their value. | Gold bars should be priced very closely to the gold spot price, with just a small additional margin from the mint and merchant. |
Historic/Traditional Value? | Gold coins come with a high traditional value. Historic gold Sovereigns have been known to command premiums of 35 per cent over and above their contemporary gold value. | Gold bars hold little historic or traditional value and are traded exclusively for their gold content. |
Tax Advantages | Gold coins are VAT free if they qualify as investment gold under HMRC regulations and EU Commission rules. UK coins which are legal tender are also CGT free in the UK. These include gold Sovereigns and gold Britannias as well as many limited and special editions of coins from the Royal Mint and other producers. | Gold bars are VAT free if they qualify as investment gold under HMRC regulations. |
Where can I buy gold coins or gold bars?
If you want to get the best return on investment from your gold products, you’ll want to buy from a merchant who charges the most competitive gold premiums on their products.
In this regard, The Gold Bullion Company has you covered. Since the prices of our gold bullion products are automatically updated in line with the live gold price on our website, you can always be sure that our prices are going to be amongst the best around.
Browse our selection of gold bars and gold coins to start your gold investment plan.
Greetings, fellow gold enthusiasts! As a seasoned expert in the realm of precious metals, particularly gold investments, allow me to delve into the intricacies of the 'Gold Coins vs. Gold Bars' debate. My extensive knowledge and hands-on experience in the field make me a reliable source for unraveling the pros and cons associated with each form of investment.
Let's start by understanding the fundamental differences between gold coins and gold bars. A gold bar is essentially a refined lump of metal, often minted into a neat cuboid shape, with inscriptions of weight and purity. On the other hand, a gold coin carries a premium value, often being legal tender and holding historical and traditional significance.
For those captivated by the historical allure of gold, especially in the form of coins, there's a unique appeal. Gold coins, such as the British gold Sovereign and gold Britannia, are not only financial investments but also items of historical value. The annual minting of new coin variants contributes to their increasing rarity, attracting collectors and investors seeking completeness in their collections.
Conversely, gold bars offer certain advantages, particularly for investors focused solely on the gold's intrinsic value. The inscribed weight and purity make it easy to determine the value, closely tied to the live gold spot price. Gold bars are typically 99.99% pure gold, ensuring that the main value lies in the gold content. They come in various sizes, allowing investors to tailor their investments according to their preferences.
Let's compare these two forms in various aspects:
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Size:
- Gold Coins: Vary in size, with smaller coins suitable for discreet investments.
- Gold Bars: Available in a wide range of sizes, from 1 gram to 1 kilogram.
-
Ease of Storage:
- Gold Coins: Easily stored in gift boxes or presentation boxes.
- Gold Bars: Efficient for storing large amounts of wealth in a compact space.
-
Reliable Investment:
- Gold Coins: Considered a reliable investment, but their collector's value is less easily gauged by the live spot price.
- Gold Bars: Particularly reliable, with value accurately determined by the live spot price.
-
Cost:
- Gold Coins: Command slightly higher premiums due to minting costs and commemorative nature.
- Gold Bars: Priced closely to the gold spot price, with a small additional margin.
-
Historic/Traditional Value:
- Gold Coins: Carry high traditional value, with some historic coins commanding premiums above contemporary gold value.
- Gold Bars: Hold little historic or traditional value, traded exclusively for their gold content.
-
Tax Advantages:
- Gold Coins: VAT-free if they qualify as investment gold under regulations. Some UK coins are also CGT-free.
- Gold Bars: VAT-free if they qualify as investment gold under regulations.
For those seeking optimal returns on their gold investments, selecting a reputable merchant is crucial. The Gold Bullion Company stands out, ensuring competitive gold premiums and up-to-date prices aligned with the live gold market.
Embark on your gold investment journey wisely, considering your preferences, objectives, and the unique characteristics of gold coins and gold bars. Happy investing!
