Precious metals, like a gold bar or gold coin, is a good investment. Unlike cryptocurrency which fluctuates drastically, or real estate which requires upkeep and maintenance, precious metals are long-term investments that retain their value.
Even thousands of years ago, gold was a precious metal with a lot of value. As an inflationary metal, the price only rises (albeit slowly). So, if you’re looking for an investment that’s resistant to inflation and a stable way to maintain wealth, gold is the way forward.
Just one choice remains – gold bar vs coin. Which is best?
This guide will explore both gold coins and gold bars, to discuss benefits and disadvantages of both.
Summary: Gold Bar vs Gold Coin
Both gold coins and gold bars are good investments, but there are some key differences. Here’s what you need to know to make your choice:
- Gold bars are harder to liquidate, but they are much more convenient for keeping a large investment of gold. You may need a safe to store them if you intend to buy a large number.
- Gold coins are easier to liquidate and can have a value beyond their minted value or their scrap metal value. Rare coins can be worth a lot. Coins are also easier to sell, but to get their full value you will need to authenticate and grade them, which isn’t free.
Pick bars for a large fortune that you intend to keep long term and pick coins if you want an investment that could have a much higher value but requires more time and effort to collect.
Gold coins can also double up as a “hobby” as collecting rare gold coins requires some hunting online or at pawn shops. Thankfully, you can also buy freshly minted gold coins directly from the US Mint if coin collecting doesn’t appeal to you.
Both coins and bars are valid ways to invest and will allow you to enjoy the stability of gold bullion as an investment.
Gold bars are just that – bars made of gold. These solid metal bricks are made by private mints and are a good way to hold a vast amount of gold for your investment. Gold bars are often 0.9999% fine (also known as 24 carat) and hold a steady, high value.
You can often find gold bars in set weights. For example, 1 ounce bars, 5 ounce bars, and 10 ounce bars. This makes it easy to calculate how much they are worth. You just need to look up how much 1 ounce of gold is worth, then multiply that figure by the number of ounces you have total from your gold bar stash.
Owning gold bars is also very cool, you must admit. Taking you one step closer to being a Bond villain, gold bars are heavy and lavish. Of course, correct storage is essential to prevent a The Italian Job style catastrophe.
Gold bar drawbacks come from their brick-like nature – both literally and metaphorically. The size and weight of gold bars makes storage complicated, so get ready to install a hefty safe or go full-on Bond villain with a vault. Furthermore, having a 10 ounce bar of gold means that when you want to sell it and cash in on your investment, you have to find a place that will have the cash to pay for the whole hog.
Let’s take a closer look at these pros and cons.
Also Read: Is 10k Gold Worth Anything?
- You get a good price for gold bars – you are solely paying for the price of the gold, whatever the current value is,
- Gold bars are cheaper and easier to manufacture than gold coins, which are minted, so you often get better value for your money,
- Gold bars can be sold and traded around the world, while gold dollar coins may struggle to sell in countries that aren’t the US,
- You can quickly build a portfolio and find gold bars available to buy online from multiple places,
- You can quickly scale up your investment by adding more (or larger) gold bars to your collection,
- It’s a safe and easy way to invest, with very little fluctuation like that which you see with fiat currency or other investment types that are overly reliant on the economy.
- Gold bars are heavy and hard to store. If you have a large number of them, you will need a safe to house them,
- A large gold bar will be worth a fortune – you can’t just take it down to your local pawn shop to sell off. Selling large gold bars or large collections requires planning,
- Shipping costs for large and heavy gold bars isn’t cheap either!
- During times of market uncertainty, you may have trouble selling large gold bars,
- Small gold bars can come with a premium when they are bought, sold, or handled, as 5x 1 ounce bars requires more work than 1x 5 ounce bar.
Ultimately, gold bars are better long-term investments when you don’t intend to cash out your gold in the short term. You will need to install a safe for your gold bars and when it comes to selling them, you’ll need to plan in advance how to achieve this.
A good way to negate many of the drawbacks of gold bars is to simply choose smaller bars – a collection of 1 ounce bars will be easier to sell than a single 10 ounce bar. Furthermore, this would allow you to sell a small amount of your investment at a time, rather than all at once.
If you want more flexibility and want to feel more like Indiana Jones than a Bond villain, then gold coins may be preferable. Let’s learn about those next.
Gold coins are legal tender, so unlike gold bars you can actually take your gold coin into a shop and spend it – though the cashier might be a bit shocked! Gold coins must be sold by the US Mint to be legal tender, but even if your gold coin is a different currency or not a currency at all, you still have the value of the metal itself.
That’s the big draw to gold coins. While a gold coin may be minted as $1, for example, the value of the gold it is made of could be even higher. So, even if inflation makes that $1 worthless, you can still have the coin melted down to sell as gold scrap for a higher price.
But let’s not be so doom and gloom about inflation and the downsides of fiat currency. Having your gold in coin format rather than bars also comes with some great advantages that can make your investment even more valuable.
For example, a 1988 Gold Eagle $5 coin is valued at $7,850 according to PCGS, even though the value of the gold when sold as scrap metal is less than $200. So, finding coins that are rare, collectible, and made of gold is a good way to boost your investment further.
Gold coins have many benefits that are the same as gold bars (namely the benefits that come from gold as a material), but they also have unique properties that worth considering. Here are the pros and cons of keeping gold coins as an investment.
- Your coin may one day become worth more than just the value of the precious metal, due to the rarity of the mint,
- You still have that precious metal value to fall back on, if the coin doesn’t become rare,
- Coins are easier to store in your home, or hidden away without the need for a safe,
- As coins are much smaller than bars, you can easily transport them and liquidate them when you need to cash in,
- People like to collect coins, so you have a wider audience to sell to or buy from,
- Coins look cool – who doesn’t want their investment to look like pirate treasure?
- If you want to invest hundreds of thousands of dollars in gold coins, you will need to buy a lot of coins and will need a safe to store them in – so you might as well get gold bars instead,
- Gold coins tend to be less pure than gold bars, which brings the price down,
- Gold coins are easier to lose or accidentally spend!
- You will need to get your gold coins authenticated and verified, which isn’t a free service,
- If you want to cash in your entire investment, you have two choices:
- Sell them as a bundle, which is quick but won’t get you the full price,
- Sell them each individually, which will take forever but get you the full value of your investment.
Ultimately, gold coins are a great thing to own. They’re interesting and valuable. Furthermore, unlike gold bars, they can develop values that are far beyond the initial price of the gold precious metal. If you want to pass on your investment to your kids or grandkids, coins make wonderful gifts too and can have a much larger sentimental value compared to solid gold bars.
The main drawbacks with gold coins are that they’re too much work if you want a huge investment. Investing a few thousand dollars in gold coins is great – select a few choice coins with a high value and add them to your portfolio. But when you want hundreds of thousands of dollars invested in gold, bars are much more convenient to buy and liquidate.
So, Who Wins Gold Bar vs Coin?
There’s no real winner here! Gold bars and gold coins are valid investments. This isn’t an “apples and pears” kind of scenario, but rather a comparison between different apple varieties. Although coins and bars have different advantages and drawbacks, they both benefit from the stability of gold as an investment.
Like other precious metals, gold retains its value no matter what happens in the world. Economic uncertainty, health pandemics, war, and Wall Street crashes haven’t been able to seriously shake the value associated with gold. Whether it’s made into coins or bars, gold is durable and long-lasting. You can also take gold to any country in the world, and it will always be a valuable commodity.
Why Gold Is a Good Investment in 2023
In 1971, the US dollar was no longer backed by gold. That meant that the US treasury no longer needed literal gold in their reserves to back up every single dollar floating around in the world. As a result, the value of gold began to climb in the free market.
Despite having some ups and downs in the years since then, Forbes predicts that gold is going to continue growing at a high rate in the next few years. This is mostly due to the rate of inflation and how the Fed has been printing paper money at a rate we’ve never seen before. As the economy and US dollar plummets, gold becomes more and more attractive as an investment. With higher demand for gold, the value will only increase.
In the long term, we can expect gold to remain fairly stable too. For over 5000 years, gold has been a valuable currency for humans to trade in and hoard – that’s unlikely to change within our lifetimes.
So, whether you opt for gold coins or gold bars, you are making a sturdy investment.
Is it better to buy gold coins or gold bars?
Coins are best for small investments, as they provide more flexibility and convenience. Bars are best for larger investments that you plan to retain long-term.
Which is easier to sell?
Coins are easier to sell, as you can sell a smaller portion rather than your entire investment in one go. There are also many coin collectors online – creating an auction for a rare coin can increase the price you ultimately receive for it. There is a lower market risk for coins too. Selling gold bars means finding a buyer that will buy a large investment in one go, so it’s less flexible and requires more planning.
Should I spend my cash on gold for an investment?
Cash can be spent instantly, but as an investment it has drawbacks. With low interest rates, you won’t earn much off a bank account full of cash. Furthermore, inflation can eat away quickly at your cash pot. By purchasing gold, you are adding more stability to your investment. Gold is currently going up in price quicker than US dollars and makes a good long-term investment, especially if you choose gold bars over gold coins.
What is the best form of gold to buy?
For convenience, we recommend small gold bars (1-ounce, if possible) as they offer more flexibility when you want to sell them. They are also easier to store than large bars. Gold coins can also have value (especially if they are rare) however they are unlikely to be 24 carats like gold bars are. So, just looking at the precious metal materials, bars are superior to coins.
Are there disadvantages to making an investment in gold?
Yes! Gold is a physical commodity that you need to store, which means that it could be stolen. Cash in the bank is unlikely to be stolen and so long as you aren’t a victim of a scam. Furthermore, while the value of gold will steadily increase, you can’t draw dividends from your gold stash, and you can’t enjoy the interest from it either.
Do you pay tax on gold investments?
Owning physical bullion is certainly taxable. Before you invest, you should find out the taxes that apply. In the US, the IRS considers gold (whether it is coins, bars, or another format) as a collectible capital asset. As a result, gold is subject to capital gains tax – this is applicable when you sell your gold and should be noted on your tax return. The amount of tax you pay varies depending on which tax bracket you fall into, which depends on your overall earnings.