Now that you’ve made the wise decision to add precious metals to your investment portfolio, should you choose gold bars or gold coins? Let’s explore the differences.
As with any investment option, there are pros and cons to investing in gold coins vs. bars. Now, gold has proven to be a stable, lucrative, and intelligent investment choice for individuals and institutions for hundreds – even thousands, of years! But today’s investor enjoys the power of choice. Are gold bars the way to go, or should gold coins become part of the investment portfolio instead? Let’s take a look at both options to determine the best fit for your balanced portfolio.
Produced by private mints, gold bars are significantly larger in size than coins – measuring anywhere from one to ten ounces, and shaped in a familiar rectangular slab. Gold bars aren’t considered legal tender, but they are easy to stack and store and the many denominations and sizes means you can select a bar that equates to your intended investment amount. Here are some of the pros and cons to gold bars:
* Bars are easy to store in small quantities.
* You’ll pay the lowest premium over spot price (both gold and silver bars).
* New investors can quickly build their portfolio with certified precious metals.
* Most bars are 24-carat, or .9999% fine.
* Market risk may be higher since you own a large chunk of one commodity.
* It can be harder to liquidate a large gold bar in the event of market uncertainty.
* If you have large quantities of gold, you may have to invest in a costly safe or off-site storage.
* Small gold bars may cost a premium when compared to large ones as the refiner has to deal with five 1-ounce bars in a different manner than one 5-ounce bar.
Gold bars are a terrific addition to any investment portfolio, but there is another option if you’re ready to invest in gold – coins.
Gold coins are unique in that they are considered legal tender and are produced by and recognized by the issuing government’s mint. The coin will have a face value stamped on it, along with the year of issue, and the purity and total weight will also be stamped somewhere on the coin. Coins are inherently collective – mainly due to the unique designs stamped on each run of gold coins, which can make them costlier to own, per ounce, than simple gold bars. Let’s look at some of the main pros and cons of gold coins:
* You have variety when it comes to design, size, valuation, and more when you opt for gold coins instead of gold bars.
* Coins offer easier liquidity than bars due to their lower value denominations and legal tender status.
* Some of the coins are collectible or limited mintage, so the return on investment may possibly exceed the gains earned from the base metal’s appreciation over time.
* Gold coins are quite easy to store and are less obvious than gold bars when stored at home.
* Gold coins are sold at a premium over a comparable weight of gold in bar form.
* Some coins are 24-carat, but others may be as low as 21.6 or 22 carat making it more difficult to value your new coins when dealing with fractional purities.
* Not all coins come with certificates, so you’ll want to verify the mint and the legitimacy of the supplier before investing.
Adding gold and other precious metals to your investment portfolio is a wise move, and now that you know the main differences between bars vs. coins, you can more easily work with your broker and ask intelligent questions to find the perfect assortment for your unique needs