Gold Bars Vs Gold Coins – What’s the Better Investment?
At a Glance:
- Gold coins are more expensive than gold bars, but are also worth more to collectors.
- Gold bars tend to be a better choice for investors looking for cheap gold.
- A combination of gold bars and gold coins can diversify your portfolio.
Gold Bars Vs Gold Coins: Finding the Best Way to Buy Gold
The importance of gold to a diversified investment portfolio is hard to deny. As Forbes explains, gold is a fantastic “hedge against inflation.” During the last great recession, gold performed exceptionally well, according to a study by the Bureau of Labor Statistics. Over the past century, many of gold’s highest prices have coincided with disruptions – or recessions – in the traditional economy.
It’s understandable why so many investors are turning to gold in 2024. While the U.S. economy appears to be moving in the right direction, the country is still quite a long way from total recovery to its pre-COVID numbers.
Gold prices are on the rise, and new investors have an important choice to make. Gold bars vs gold coins: what’s the best way to invest in gold? Gold coins are the best choice for investors who prefer beautiful designs, government backing, and high numismatic value. Gold bars, on the other hand, offer lower premiums and exceptional liquidity.
Check out a basic comparison of gold bars vs gold coins:
| Gold Bars | Gold Coins |
|---|---|
| Lower Premium Costs | Government Backing |
| Easy to Store | Higher purity (.9999) |
| High Liquidity | Great Divisibility |
| Classic Look and Feel | Beautiful Designs |
Advantages of Investing in Gold Bars
Gold bars offer low premiums, simple storage, high liquidity, and an undeniably classic look and feel. Investors who prioritize budget when shopping for gold products tend to prefer gold bars. Compared to gold coins, bars offer simple, straightforward designs and are sold primarily for their precious metal content.
Low Premiums – More Gold For Your Cash
One of the biggest reasons investors buy gold bars is their low premiums. A premium is a small fee added to the top of a product’s melt value, which refers to how much a product would be worth if it was melted down for its precious metal content. Premiums vary from product to product and are determined primarily by investor demand and production cost.
Low production cost is the main reason why gold bars are sold at lower premiums than gold coins. Gold coins are made by government mints and feature intricate, artistic designs, which makes them more expensive to produce. By contrast, most gold bars are produced privately and include simple, uninspired designs.
Since gold bars are cheaper to produce than gold coins, they’re also cheaper to buy. Low premiums make gold bars the best choice for investors who want to get as much gold as they can for their money.
Simple Storage
Whether you invest in gold bars or gold coins, finding a way to store your gold is important. Because they’re not usually valued for their designs, gold bars are easier to store than gold coins. Gold bars feature simple, barebones designs, and they’re usually valued almost exclusively because of the gold bullion they contain. Storing gold coins properly requires collectors to find a way to keep their coins from scratching against one another – or against the surface of a home safe.
Scratched gold bars aren’t worth much less than pristine bars. When you store gold bars, you don’t need to be concerned about the bars rubbing against one another and becoming too damaged to sell. While it’s not a major issue, some gold stackers love not having to worry about finding the right way to store their gold bars.
High Liquidity
Because gold bars are bought and sold for close to spot price, it’s never hard to find a buyer willing to pay a reasonable price for your gold bars. High liquidity is a major advantage to buying gold bars. Liquidity refers to how easy it is to buy or sell an asset. Selling a gold coin means finding a buyer willing to pay a high enough premium to recoup your investment’s cost. Ready to sell a gold coin? Make sure to figure out the current going rate for your coin, given its condition, year, mintage, and popularity.
Gold bars are usually easier to sell than gold coins because their value is derived entirely from its precious metal content. Want to sell a gold bar? Find a buyer who wants to invest in gold – and you’re done!
Classic Look and Feel
Some investors also love the simple, classic look and feel of a gold bullion bar. Gold bars don’t appeal to every investor; some people prefer the intricate, artistic designs found on coins like the American Gold Eagle.
If you’re a fan of classic, refined, no-frills designs, gold bars are a better choice than gold coins.
Advantages of Buying Gold Coins
Gold coins also have quite a bit to offer new precious metal stackers.
Beautiful designs, high numismatic value, government backing, and exceptional divisibility are the four main advantages of buying gold coins. Compared to gold bars, gold coins are both more expensive and more collectible.
Beautiful Designs
Since the 1800s, gold coins have been a staple for American collectors. The U.S. Mint has perfected its artwork for American gold coins over the past two centuries, and we have plenty of beautiful collectable coins to show for it.
Even coins produced by foreign governments are extremely beautiful. Like we mentioned earlier, the high cost of producing a new gold coin helps to explain why coins tend to be more expensive than bars. This increased cost isn’t wasted, though. Because of how much money mints spend to produce gold coins, their designs are more beautiful than what investors will find on privately minted gold bars.
Throughout this section of our guide, we’ve included pictures of some of the most popular gold coins on the market. Compared to gold bars, gold coins are extremely beautiful. Investors who plan on displaying their investments should consider gold coins because of their intricate, beautiful designs.
Numismatic (Collectable) Value
Beautiful designs also give gold coins more numismatic value than gold bars. Numismatic value refers to the value a bullion holds aside from its intrinsic precious metal content. Rare and exceptionally beautiful gold coins have numismatic value, so they’re valuable for more than just the precious metal they contain.
Gold coins are the preferred investment vehicle for many investors because these products offer numismatic value and can become more collectable over time. It’s a common myth that only old U.S. coins are numismatically valuable. Even popular modern coins like the American Gold Eagle have carry numismatic value and can become rarer and more desirable to collectors decades after their release dates.
Building numismatic value into your portfolio is a fantastic strategy for diversification. Portfolio diversification involves adding assets with multiple different value sources to your portfolio. Even if the value of gold declines, numismatic coins might still appreciate over time because of their collectability and numismatic value.
Government Backing
Most gold bars come from private mints. This might mean lower production value and a cheaper end-product, but it also means that gold bars don’t come with the quality and security assurances associated with government-produced bullion.
Gold coins can only be minted by government mints, and they almost always feature some sort of face value, which is also known as a denomination. The backing of a federal government provides gold coins with several advantages that gold bars cannot offer.
For one, government-produced investments like gold coins feature more sophisticated security features than anything you’ll find on the private market. The 2024 Gold Britannia is produced by the British Royal Mint and includes the most advanced security features we’ve ever seen on a gold bullion product.
Gold coins also take advantage of the superior resources and minting technologies available to government mints. While this means that gold coins are more expensive than gold bars, the resources at the disposal of government mints also makes them far more beautiful and collectible.
Divisibility – Fractional Gold Coins
Another major advantage of buying gold coins is their divisibility. Divisibility refers to how small of units an investment can be broken into, and it’s very important for liquidity. If you’re looking to sell some of your gold, it’s much better to have several small gold coins than one large gold bar.
Fractional gold coins are gold coins that weigh less than one ounce. Most popular gold coin series are available in 1 oz, ½ oz, ¼ oz, and 1/10 oz denominations. Buying smaller denomination gold coins is a great way for investors to increase the liquidity of their portfolios. By investing in small gold coins, you can always sell part of your stack for quick cash without having to liquidate everything.
Which is the Better Investment – Gold Bars or Gold Coins?
The choice behind gold bars and gold coins is a tricky one, especially for new gold investors. Gold bars tend to be a better choice for stackers whose main priority is to buy as much pure gold as possible for their money. Gold bars also offer superior liquidity, since gold bars are sold primarily for their gold content and aren’t value-dependent on numismatics or investor demand.
Gold coins are a superior choice for investors who want to add diversity to their portfolios by purchasing numismatically valuable, beautiful bullion products. Backed by the sovereign governments of the world, gold coins offer unparalleled beauty, pure gold bullion, and a level of quality assurance that gold bars struggle to match.
It’s tough to go wrong with gold coins or gold bars, and many investors choose to add both to their portfolios. Whichever option you choose, you’re guaranteed to put money into one of the world’s oldest and most consistently valuable assets.
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About The Author
Michael Roets
Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.