Should I invest in Gold Bullion or Gold Jewelry?
Before you buy your first gold product, we highly recommend thinking carefully about how you choose to invest. While all types of gold products are minted using a valuable physical asset, not all product categories are created equally. It is often the case that new investors underestimate the importance of researching before their first big purchase. We highly recommend that gold consumers take the time to figure out which type of gold product they want to purchase before making the call.
Two common types of gold products are gold bullion and gold jewelry. While these commodities are common enough that most readers probably know what they generally mean, the subtle differences between gold bullion and jewelry can make a significant difference when it comes to investment results and objectives. Simply put, you get a different type of investment outcome when you buy gold bullion than you should expect when you purchase gold jewelry.
As a brief primer, you should know that gold bullion often provides consumers with a greater degree of certainty about their investment than gold jewelry. However, gold bullion can also be more difficult to unload for a fair rate, while gold jewelry can easily be sold – either at a pawn shop or to a licensed online reseller. Jewelry also comes with extensive added value; the rate of depreciation for a piece of jewelry can vary greatly and depends on a number of factors outside of the precious metal content of the item. As you might already know, pure gold bullion usually sells for a price close to the spot-price of gold itself.
Today’s guide is all about the main differences between gold bullion and jewelry. While Hero Bullion doesn’t sell gold jewelry, it remains a popular choice for investors all over the world. In fact, investment in gold jewelry is a practice with significant roots in cultures around the world. Are you struggling to decide between buying gold bullion and investing in gold jewelry? We have the answers you need in this Hero Bullion walkthrough.
Gold Bullion Versus Gold Jewelry: What’s the Difference?
To some readers, the difference between gold bullion and gold jewelry might already be perfectly clear. If this applies to you, feel free to skip over this section completely! However, many gold bullion consumers might be surprised to learn about the important distinctions between bullion and jewelry. Hero Bullion sells bullion products. Gold bullion products are products that are valued primarily for their bullion content. When you purchase gold bullion, the items are generally not worn on your body. Most investors carefully store their gold bullion products in safes.
Gold bullion is primarily valued for its gold content. This might not always be the case. Gold coins might be additionally valued for their design or rarity, for example. But for most bullion products, value is closely aligned with physical gold content. To determine the value of a pure gold product, you’ll need to find the spot price of gold at any given time. Certain gold products are valued almost exclusively for their physical gold content. One notable example of this type of product is a pure gold bar, which is generally simple in design and valued exclusively for its pure gold composition.
We won’t bore you with an exhaustive discussion of how gold bullion is distinct from gold jewelry. Generally, most consumers know what jewelry looks like when they see it. If a product is made of gold and meant to be worn, then this product is jewelry. If the product is made primarily for display and valued almost exclusively for its gold/collectable value, then it is probably bullion.
To organize today’s comparison guide, we’ll be discussing how gold bullion stacks up to gold jewelry in three main categories:
- Purchase Price
- Gold Content
- Resale Value
Gold Bullion Versus Gold Jewelry: Purchase Price
Gold bullion and gold jewelry can vary greatly in purchase price. The price of gold jewelry is dependent on far more than its physical gold content. In the gold jewelry business, the brand name, design, and gold content of a piece are all important factors in its purchase price. Some gold jewelry pieces may be less physically attractive than others but maintain a higher purity of gold at a similar price. Other pieces may be far more impure but sell for a higher price due to its brand name. While this is sometimes the case with gold bullion pieces, bullion is typically valued primarily for its gold content.
If you choose to invest in gold jewelry, you should shop carefully to find the right piece for your budget. While brand name gold jewelry might come at a hefty premium up-front, some collectable pieces may appreciate over time. This guessing game of future value can be unpredictable, however, so we recommend caution when investing in gold jewelry purely for its brand name.
Whether you choose to buy gold bullion or gold jewelry, several factors will contribute to a piece’s overall sale price. When you purchase gold bullion, however, the spot price of gold will generally be the biggest motivator of price shifts over time. Coins like the American Double Eagle are certainly popular investment choices because of their collectability and brand name, but price fluctuations due to perceived rarity are generally not as significant as price changes because of shifting spot price for gold.
If the goal of your investment is to invest in gold as a commodity, it’s worth considering gold bullion. Some gold jewelry pieces might appreciate in value, and all gold pieces will increase in value as the spot price of gold increases. But the better bet for people who are bullish on the future of gold itself is always going to be gold bullion, which is almost always composed of purer gold than gold jewelry.
But your choices don’t stop there. Once you’ve decided to purchase gold bullion instead of gold jewelry, you also need to figure out which type of gold bullion product you want to buy. We’ve written extensively on the subject. The bottom line is that gold coins provide a greater degree of collectability, but gold bars allow you to purchase more pure gold at a cheaper price. Because the premiums on both gold jewelry and gold coins are higher than gold bars, bars are typically the best choice for investors who want to invest in as much gold as possible for their cash.
Gold Bullion Versus Gold Jewelry: Gold Content
As we mentioned above, gold jewelry is less likely to be as pure as gold bullion. The reason for this has to do primarily with the softness of the metal. Gold in its purest form is surprisingly malleable; it can be beaten or shaped relatively easily. This is what makes gold jewelry – and gold coins – possible in the first place. But because of this malleability, gold of too high a purity wouldn’t make very good jewelry. Just imagine the pain of immediately scratching or breaking your pure gold chain on the way home from the shop!
Some gold jewelry pieces are made using 24k gold. 24k gold jewelry is made using 100% pure gold. However, this jewelry almost always needs to come with a strong precious stone for the gold to hold onto. Gold chains using 24k gold exist, but they’re not a wise or popular choice for people who plan to use/wear the piece frequently.
Gold bullion faces a similar problem. 100% gold coins are generally not sold because the material would be too malleable for the coin to maintain its design over time. However, it is very common to find 99.99% pure gold coins, as well as rounds. While it might not seem like a huge difference, the .001% alternative metal content in these coins can make quite a bit of difference; this additional metal can allow the coin to maintain its shape for many years.
The highest purities of gold are generally found in gold bars. Like we mentioned in the above section, gold bars are usually the investment product of choice for consumers who are excited about the prospect of owning as much gold as they can. Bars, especially gold bars with a high purity and little-to-no design fanciness, offer a lot of gold at a lower premium than their coin or round counterparts. Gold bars are almost always minted using a purity of .9999, meaning that they’re almost entirely composed of gold – and gold alone.
One last part of the equation to cover is the source of your gold. Gold bullion, especially bullion pieces sold by Hero Bullion, is heavily regulated by federal laws regarding bullion assets. This means that you can always verify the source and origin of your gold when you purchase bullion from a licensed distributor. This can sometimes be true for gold jewelry – but it is not always the case. Especially when you’re buying gold jewelry from small retailers or independent sellers, verifying the gold content and source of your gold can be a difficult task. The added security and verifiability of gold bullion might be worth the extra cost over the price of gold jewelry.
Gold Bullion Versus Gold Jewelry: Resale
If you haven’t already caught on, we believe that the value of jewelry versus bullion depends heavily on a number of factors. When it comes to resale value, our position remains the same. Gold bullion and gold jewelry both appreciate in price when the value of gold increases, but a couple of elements should help inform you as you decide which type of gold investment is going to be easier to unload when it is time to sell.
First, it might be easier to quickly sell jewelry than gold bullion. There are a number of gold bullion companies willing to buy your bullion, but the verification process for gold bullion might take a bit longer. If you’re ever in a spot where you need quick cash for your gold, it is often easier to unload a piece of beautiful gold jewelry than a massive gold bar. For the well-educated gold investor, quickly liquidating a bullion supply should be no trouble. But inexperienced gold buyers may have trouble navigating the channels necessary to get maximum payment for their gold bullion.
Second, gold bullion offers a greater degree of predictability and stability than gold jewelry. Fashion trends come and go, but the value of gold is an easily calculable variable. If you’re holding onto a gold bar, watching the spot price of gold increase will give you a pretty accurate idea of the value of your investment over time. The same cannot be said for impure gold jewelry, the value of which is often dependent on consumer interest, appearance, condition, and more. Pure gold bullion is far simpler to evaluate when it comes to price at the time of resale.
Final Thoughts: Is Gold Bullion or Gold Jewelry the Better Investment?
After highlighting the nuances, we understand you may still be interested in the question that brought you here: should you invest in gold bullion or invest in gold jewelry? There are no easy answers when it comes to your financial future and investment strategies. Both gold bullion and gold jewelry come with advantages and disadvantages for new and seasoned investors. When comparing gold bullion versus gold jewelry, we recommend first deciding on your long-term investment goals. Are you interested in buying as much pure gold as possible, or are you purchasing gold for its appearance and potential liquidity? Do you care about the beauty of your gold piece, or do you want to maximize the bang you get for your buck?
Regardless of whether you choose to buy gold bullion or gold jewelry, we recommend buying/selling through a reputable dealer. Working with a licensed bullion distributor means that you’ll get the security of knowing where your gold comes from and how the piece was minted.
The bottom line is that it’s hard to go wrong with a gold investment of any kind – whether you choose to invest in gold bullion or invest in gold jewelry. Whether you should buy gold bullion versus gold jewelry is purely a matter of your personal investment objectives.
About The Author
Jake HaugenFollow @herobullion
Hero Bullion provides an environment that is informative and safe for those looking to own physical gold and silver bullion as an investment. We love helping folks at all stages throughout their bullion journey making progress towards acheiving their financial goals. Whether you are a seasoned bullion investor or brand new to the game of gold and silver bullion ownership, we're here to help and serve you in any way we can.