Gold is one of the earliest traded commodities. Humans have been using this precious metal as a form of exchange for over a thousand years. In the ancient era, gold was common among royalty and wealthy families. It was both used as wealth storage and a status symbol.
A lot of investors have been venturing into the gold industry over the last few years. Unlike other forms of investments, such as stocks, gold tends to correlate negatively to market movements. Hence, it might maintain value during extreme economic downtime, such as inflation.
Before venturing into this industry, it’s important to understand several ways you can invest in gold. They include gold bullions (coins and bars), exchange-traded funds (ETFs), mining companies, and more. While you might think that any form of gold investment gives the same profits, it’s important to understand that each form has its benefits and downsides.
If you decide to invest in gold bullion, you might wonder whether you should invest in gold coins or bars. If you’re a newbie in bullion investment, it can be challenging to choose between the two options. For this reason, it’s important to conduct extensive research to identify the ideal bullion investment. It’s also important to understand there’s no right or wrong way to invest in gold bullion. Your preference will depend on your financial goals, needs, the value of your investment, and more.
The following is a quick rundown of what you need to know about gold bars and coins. It contains information you might consider using to help you choose the ideal investment plan. Keep reading.
Gold Coin vs Gold Bar
What You Need To Know About Gold Coins
People have been using gold coins as a currency for many years. In the modern era, gold coins are used as a store of value besides being universally accepted as a form of money. As mentioned above, gold has a negative correlation to market movements. Hence, it’s able to maintain its inherent value, protecting your whole investment in the long run.
Over the years, you can purchase gold coins from several vendors. Thanks to technological advancement, you can easily purchase them from the comfort of your home. However, it’s important to conduct extensive research to understand the price of a gold penny nowadays and avoid paying more for the same commodity.
Gold coins are available in different denominations, ranging from 0.5 grams to 50 grams in weight. However, the availability of the denomination you wish to buy may depend on your government, sovereign mint, and more. Regardless of the coin denomination you get, it’s important to ensure the coin is hallmarked. Hallmarking certifies the level of purity of the gold coin, saving you from being swindled by dishonest vendors out there.
What Are The Benefits Of Investing In Gold Coins?
The following are the advantages of investing in gold coins:
As mentioned above, gold coins are universally recognized as a currency. Hence, you can easily use them to make purchases if the fiat currencies collapse in your country. Also, due to the wide recognition of the gold coin, you can easily convert your investment into cash. However, it’s important to ensure you purchase your coins from reputable vendors to avoid losing your whole investment.
- Ease Of Storage
When investing in physical gold, it’s crucial to factor in the storage charges and convenience. Gold coins are essentially small in size, making it easier to store them either at your home vault or a reputable storage provider in your locality. Lower storage and management charges will greatly improve your savings margins in the long run.
What Are The Disadvantages Of Investing In Gold Coins?
The following are the downsides of investing in gold coins:
- No Regular Income
When investing, it’s your goal to earn income from your investment. However, this might not be true if you own a gold coin. If you store a gold coin in your home vault, it’ll not give any income or dividends regardless of how long it stays there. You’ll only benefit from your gold coin when its market value increases and you sell it.
- Higher Premiums
This is another con of investing in gold coins. When you buy gold coins, the vendor might charge premiums; hence, the cost of gold bullion will be higher than the current market value. Premiums are meant to compensate for costs, such as minting, distribution, marketing, and other charges. Thus, if you invest heavily in gold coins, the higher premiums may affect the amount of gold you’ll obtain from your investment.
What You Need To Know About Gold Bars
Gold bars have become one of the most sought-after investment plans over the last few years. They’re one of the best ways to diversify a portfolio and protect your investment against economic uncertainties and inflation. Like silver bars, gold bars are available in different weights and sizes to meet the needs and expectations of investors. As gold bars require less processing than coins, you might pay lower premiums.
What Are The Benefits Of Investing In Gold Bars?
The following are the benefits of investing in gold bars:
- Options For All Levels Of Investor
As mentioned above, gold bars are available in different weights and sizes. For this reason, you’ll still find the ideal gold bar to invest in, whether you’re a longtime investor or just getting started. These options give almost anyone at any income level opportunities to diversify their portfolio.
- Inflation Hedge
As investors, it’s important to understand factors such as civil wars might affect the value of your investment. The value of paper investments tends to decrease during economic uncertainties and inflation. However, gold might help protect the value of your investment during inflation and other market downtimes.
What Are The Disadvantages Of Investing In Gold Bars?
- Fraud Risk
The popularity of gold bars has expanded exponentially over the last few years. This has also led to increased cases of fraudulent vendors who want to take advantage of naive investors. To avoid falling victim to such, it’s crucial to conduct enough background checks to determine the vendor’s authenticity to avoid losing your hard-earned bucks.
- Storing Your Gold Bars Can Be Difficult
You’ll need a safe vault to store your investment when owning gold bars. Also, gold bars might have higher storage and management charges than gold coins due to their sizes. Thus, it’s important to ensure you choose a reputable vault to store the gold bars, protecting them from theft and other related issues.
As discussed above, people have been investing in gold for many years. If you decide to invest in gold bullion, you might find it challenging whether you should invest in gold bars or coins. Conduct extensive research to identify your financial goals, as well as the pros and cons of each option, so that you’ll eventually make the right and best choice.