So you’ve decided to start collecting gold – but how are you supposed to know where to begin? Are gold coins the best way forward or would gold bars be the better investment?
Even if you’re a well-established investor, deciding whether your next purchase is going to be gold coins or gold bars is a big decision. Plenty of research and consideration is needed!
Before making your choice, it’s worth bearing in mind that actually there’s no right or wrong answer here. It’s entirely down to your personal preference, and what your own needs and circumstances are. Over time, trends and market conditions will change so you should consider if you’re in it for the long haul.
Other factors you need to think about include what the value is of your investment, as well as the product premiums. Where and how will you store your gold coins or bars, and how might Capital Gains Tax come into play? Also, how are you planning to realise the value of your investment?
It really can be a bit of a minefield, which is why we’ve put together this quick guide to start you off.
Firstly – what is the main difference?
Essentially gold is gold. Its definition is of a yellow precious metal, with a chemical element of atomic number 79.
Gold bars are typically made by taking gold as a raw material and refining it so that it meets a very specific weight and purity. The category of weight and purity is what gives the gold bar its market value. The purer the gold, the more it’s worth.
This scenario is fairly similar with gold coins – however there are a few more facets involved and they often carry an extra premium depending on things like age, condition and rarity. Also, don’t forget even collectors’ coins can be used as legal tender.
Then of course there’s the sentimental value that many collectors will give to coins, especially ones with historic depictions and an interesting story to tell!
When might investing in gold bars be a good option?
If sentimentality isn’t really on your radar, then gold bars may be a good option. After all, they’re not the kind of items you sit and admire like you might do a gold coin!
Gold bars are also attractive to people who are looking to keep the premiums on their investment as low as possible.
Despite the fact that gold bars and coins will contain the exact same amount and purity of gold when purchased at an equal weight, gold bars are more commoditised. This makes it possible to save up to 1% of the entire amount you paid for it; a pretty hefty difference when bought in larger numbers!
One final point to note here: if you’re planning to make large purchases of gold, it’s gold bars that will provide the most cost-efficient unit sizes. This is because bars can come in larger sizes, so investors can make savings via bulk purchases.
And what about investing in gold coins?
Gold coins can be the perfect entry-level investment for smaller and first-time collectors, thanks to the attractive price point. Also, even lower sizes of gold bars require a fairly high minimum investment which can be off-putting. For instance, if you’re being careful and don’t want to ‘gamble’ too much for your first foray into gold, a 1/10 oz Maple Leaf is well worth a look. Especially when you compare it with the minimum investment threshold for gold bars, which can easily be twice that.
Another excellent pull for investors is the fact that coins such as gold Britannias do not attract any Capital Gains Tax. This can mean improved profits, with certain sovereign coins becoming even more valuable.
Whichever route you decide to go down, ultimately the choice is up to you. The important thing is knowing that the decision you’ve made completely reflects you, your interests and your goals.
If you have found this blog particularly useful, then why not take a look through our other blog articles too. You may be surprised at what you learn!
Whatever your thoughts or questions, our team would love to hear from you. Feel free to get in touch any time using our contact page.