For some, investing in gold is a way to protect their assets, pass down their wealth, and diversify their portfolios. For others, collecting gold heirlooms and coins is a hobby they feel is worth investing in.
The choice to invest in gold coins or bars is a personal one, and there is no right or wrong answer. Gold bars are often bought to preserve wealth and diversify portfolios, while coins are more expensive and collectible.
Whatever the reason, if you are thinking about buying precious metals, you will first have to decide if you want to buy coins, bars, or both. But which is better?
Gold: Coins and Bars
Before we can dive into a discussion about which one is better for you, it is important to understand what each item is.
What Is Gold?
Gold is a precious metal that is often found as nuggets or grains and used for jewelry, coins, and other heirlooms. It has long been used as a form of currency and was minted as coins prior to the 1930s. Today, people still invest in gold because of its stability and diversifying effects.
What Are Gold Coins?
Gold coins are, as the name suggests, coins that are made almost entirely from gold, with copper and silver making up a small part of the coin. Although it is possible to invest in gold through coins, most people are drawn to their collectability. The value of each coin is determined by several factors, including size, age, and design.
What Are Gold Bars?
Gold bars are, as the name suggests, gold that is shaped in the form of a bar. Gold bars are often referred to as gold bullions or gold ingots and are manufactured by both private and government mints.
What Is the Difference?
The obvious difference between the two is size and shape, with gold bars often being larger than gold coins. Additionally, coins will have specific designs that increase their face value. Another difference between the two is that gold bars are often purer than gold coins. However, despite this, coins often cost more because of their historical value.
| Coins | Bars | |
| Size | Coins vary in size from the smallest quarter-franc gold coin to the largest one-ton Australian Kangaroo. | Bars are available in multiple sizes from 1 gram to 1 kilogram, which makes finding an investment in your price range easy. |
| Storage | Coins are discreet and easy to store in your home or safety deposit box. Larger collections may need more space and care. | Although larger than coins, bars allow people to store a lot of money in a smaller area. However, large collections can be heavy and hard to move. |
| Investment | Depending on the coin, they may sell for more than their worth in gold. However, their value depends on the collector’s market. | Bars are often priced close to the spot price which makes their value easy to calculate. |
| Cost | Coins often sell for more than the live spot price of gold because of their historical and collector value. | Bars will often be priced close to the spot price with an additional fee for minting. |
| Historical Value | Coins have a much higher historical value with some gold coins being more desirable than others. For example, a $20 U.S Liberty Gold Coin is currently selling for $2,141 (2022). | Bars hold little to no historical value which makes them harder to trade or sell. |
Source: The Gold Bullion
Advantages of Gold Coins
Coins are one of the most recognized forms of gold and are often more accessible to the average person. Although they cost a bit more than bars, there are several advantages to buying gold coins.
Large Variety
Coins can be found in multiple sizes, designs, and price ranges. They are a worthwhile investment for both big and small investors because people can find something that will fit into almost any budget.
Flexibility
Coins allow investors the choice of either holding onto a certain amount or selling a certain amount, while bars cannot be divided into multiple pieces. This gives investors more flexibility in their investments.
Usefulness
Gold coins are not only a promising investment, but they are practical. In case of an emergency, many coins are guaranteed at a certain face value, which means they can be spent as legal tender if needed. Good luck trying to do that with a gold bar!
Liquidity
Because coins offer so much variety and flexibility, investors have more control over their portfolios. They have more buying and selling options and can take advantage of inflation in the market.
Collectability
Not only are coins worth their gold, but some also have the bonus of being a highly sought-after collector’s item. In fact, there are some coins on the market today that sell for much more than their gold price. There are many collectors who enjoy the thrill of trading and building their collection just as much as the investment side of things.
Passing Down
Although both bars and coins can be a good way to pass your wealth on to future generations, coins are much easier to gift than bars. Recipients can easily trade, sell, or store the coins vs inheriting a slew of bars they do not know what to do with.
Disadvantages of Gold Coins
Like most things that have advantages, coins have their disadvantages as well. For starters, they often have a higher premium than bars, which means that you will pay more for less gold. Additionally, if you decide to invest in collector coins, you will have to do some research to learn which coins are worth investing in. However, if you wish to avoid this, you can opt to buy bullion coins instead of collectors, proofs, or commemorative coins.
Advantages of Gold Bars
In many ways, coins seem like the better choice. They are worth more and are slightly less intimidating to the average person who might otherwise not know where to buy gold bars. However, bars are often cheaper to buy, hold their value well, and are an effective way to invest large sums of money.
Variety
Variety is an advantage that both coins and bars share. Like coins, bars can be bought in a variety of sizes, which makes it possible for both big and small investors to find something that fits within their budget.
Longevity
Most coin collectors are actively buying, selling, trading, and building their collections. However, bars are better for long-term investments. They do not need to be protected as a coin collection might be, and they are easy to store.
Cheaper Premium
Because of their straightforward design, bars are often cheaper to manufacture and have smaller premiums than their coin counterparts. This is especially true if you are buying larger bars, as the larger the bar, the cheaper the premium will be.
Diversification
Because they are easy to buy, bars are a quick way to build and diversify your investment portfolio. If you are looking to buy a lot of gold quickly, bars are not only faster, but you will get more gold for your money.
Security
Although it is unlikely that a $20 gold coin bought for $2,000 will drastically plummet in value, there is always a slim chance that the historical value will decrease. However, when you buy bars, you can almost guarantee that they will hold their value. Additionally, when dealing with things whose value hinges on a collector’s market, you might find yourself waiting for the right buyer. With bars, however, you can sell them quickly with little hassle.
Disadvantages of Gold Bars
Despite the many advantages to investing in gold bars, there are some disadvantages as well. The biggest disadvantage of large bars is their lack of flexibility. Because they cannot be split or divided, investors cannot split their investments if they wanted to shift money to other areas of their portfolio. However, buyers can avoid this by buying smaller bars.
Which One Should I Buy?
Since there is no right answer, the ideal situation would be to invest in both. Gold coins are a good starting point for people who are just starting to invest in gold because they offer flexibility, but it can take time and research to break into the collector’s market. Since bars are typically cheaper, they are better for larger investments. Ultimately, it depends on you and your reasons for buying gold.
You may also like the following posts: