Making the decision to invest in gold comes with many questions, especially if it’s your first time. You may feel unsure about how to go about the process and maybe even feel like you’re alone in your plan. Believe it or not, investing a gold is a common practice. You just need the insider information. The first thing to figure out is: is it better to buy gold bars or coins?
Difference Between Gold and Bullion
As you start your exploration into buying gold, you’ll come across the term ‘bullion’ quite a bit. What is bullion? Is it different than gold or is it an interchangeable word? The answer is that gold and bullion are not words of the same meaning, and it’s important to understand that before you begin buying gold in any form.
Bullion is a broad term. It encompasses all precious metals including silver and platinum, in all their physical forms like coins and bars. The term gold, on the other hand, refers specifically to the one precious metal and its various forms.
Another important distinction to keep in mind is the two different markets which you may hear of when you start buying gold. You will hear of the gold futures market and the bullion market. They are different so stay alert as to which market you’re buying your gold in.
The bullion market is the physical market. When you buy gold in the bullion market, you will make the decision to buy gold coins or bars and will receive them as soon as you buy them. The gold futures market lets you buy gold with a contract. The contract is an agreement that you will receive your gold at an agreed upon future date.
Factors to Consider When Choosing Between Gold Bars and Coins
If you decide to invest in gold in the bullion market, then you need to ask yourself: gold coins or bars which is the better buy ? The reality is that it’s a decision made from personal preference. Both types of gold are widely bought and used. In order to choose you need to know and consider the factors which should influence your choice.
Here are a few things to think about when deciding between gold bars and coins:
- Premiums: When you buy gold, you will need to pay premiums, which are the additional costs regarding manufacturing, handling, packing, insurance, and delivery. Overall, gold bars have smaller premiums than gold coins.
- Small or Large Investment: Depending on the amount that you want to buy in gold, different types of gold are more desirable. If you are making a smaller investment, you can explore both gold bars and coins. There are flexible bar sizes and coins available that may suit your small investment. Large investments are more suited for buying gold bars. Gold bars have better premiums and you have the choice to buy large bar sizes.
- Flexibility: You need to keep future possibilities in mind when buying your gold. There may come a time when you need to use some of your gold or resell it. That is why flexibility is important. Gold coins generally offer more flexibility than bars.
- Safe-keeping: Where will you store your gold once you buy it? This is an important thing to think about. Perhaps you want to keep a money safe in your home where you keep your gold. The main thing to consider is if you will store your gold all together or try to keep it in various places to avoid theft. Gold coins will offer more opportunity for separate storage.
Keep this factors in mind while considering what form of gold to invest in.
Gold Coins or Bars: Which is the Better Buy?
You can see from the various factors you need to consider that choosing between gold coins or bars is a very personal choice. There are pros and cons to both choices. What it comes down to is which form of gold will be the most convenient to your life and purposes.
If you are buying gold purely for the purpose of containing some of your monetary assets in a safe form and plan to keep the gold for yourself and your family, then gold bars may be the more frugal investment, considering their lower premiums. You will pay less in additional costs up front, and your gold will maintain its value.
If, however, you are considering selling your gold in the future, then you will want to invest in gold coins. This is because the premiums on gold coins are frequently changing. While you may pay higher premiums up front for gold coins, you maintain the potential to be able to sell them back at an even higher premium than what you paid. That means more value for you!
There is no better buy between gold coins or bars. Your decision must be made based on your intended purposes for your gold.
Investing in gold is a big step and a process that should be regarded with thought and caution. Take the time to consider your plans for your gold before buying. That will help you decide whether gold bars or gold coins are the right choice for you.