Buying Gold Bars Vs Coins
Deciding whether to buy gold bars or coins depends on the following factors: benefits of gold coins, advantages of gold bars, size, shape, purity, price, taxes, and costs associated with both types of investment products as well as their traditional value.
Investing in gold is a great way to diversify your portfolio and protect your assets against inflation. With that in mind, you may be wondering whether buying gold bars or coins is the better option for you.
So if you're ready to start investing in gold, let's dive in!
Benefits of Gold Coins
If you're looking to invest in something with historical and traditional value, gold coins are an excellent option. They offer premium value associated with legal tender, as well as increasing in value over time due to rarity.
Gold coins can also be easily stored inside gift boxes or presentation boxes, allowing for discreet investment. Additionally, they're VAT-free and CGT-free if they qualify under HMRC regulations and EU Commission rules - meaning investors won't need to worry about additional taxes on their coin investments.
In addition to this, UK legal tender coins like gold Sovereigns have high traditional values that many specialized investors are willing to pay a healthy premium for. Gold coins come in varying sizes with smaller ones like the Sovereign being ideal for discreet investment.
Furthermore, despite it being difficult to quantify their exact value against the live gold spot price, rare variants command a numismatic premium that increases their overall worth significantly. This is why gold coins make a great choice for those who appreciate their historical value and want to start collecting coins as part of their portfolio diversification strategy.
Overall, investing in gold coins offers various benefits over other types of bullion products such as bars; from higher premiums due to historical/traditional value - making them attractive investments for collectors - through to the ease of storage and tax advantages when they qualify legally under HMRC regulations. It's no wonder so many investors flock towards these timeless pieces when looking at ways of diversifying their portfolios with gold investments.
Advantages of Gold Bars
Investing in gold bars is a great way to store large amounts of wealth in a small space. They typically have higher purity than coins and come in sizes from 1 gram to 1 kilogram, so you can invest at any speed and amount. Their value is accurately determined by the live spot price, and they usually comprise 99.99% pure gold. You don't need to worry about traditional or historic value as these are traded exclusively for their gold content.
Gold bars are also VAT-free if they qualify as investment gold under HMRC regulations and have different premiums over the spot price compared to coins. The Gold Bullion Company provides competitive gold premiums on their products, which are automatically updated with the live gold market price on their website.
So, if you're looking for strict investment in the value of gold itself rather than historically or culturally significant pieces, investing in gold bars may be suitable for you.
Size and Shape
Whether you're looking for discreet investments or larger amounts of wealth, gold coins and bars come in a range of sizes and shapes to suit your needs.
Gold coins are typically minted in smaller sizes than gold bars, such as the Sovereign coin which is 7.98g with 22 carat purity. This makes them ideal for those who want to invest discreetly - they're easy to store and transport compared to a larger bar.
On the other hand, gold bars can hold large amounts of wealth in a small space - from 1 gram all the way up to 1kg. The 99.99% pure gold content means that their value is accurately determined by the live spot price without any additional numismatic value like coins may have.
The shape of both coins and bars is also worth considering when selecting an investment option. Coins often have intricate designs on one side while the other displays weight and purity information, adding aesthetic value to their overall design which some collectors might prefer over a plainer bar shape.
For those wanting more flexibility with storage, gold coins can be stored inside presentation boxes or gift boxes in contrast to a bulky bar shape that can take up more room.
Purity and Price
You'll want to be aware of the purity and price when it comes to making an investment, as these factors can help determine the value of your purchase.
Gold coins are usually minted with 99.99% pure gold or higher, while gold bars may range from 95%-99.99% in terms of purity. This means that gold coins tend to command a higher premium over their spot price than gold bars do.
Additionally, since gold coins often have a historical or cultural value associated with them, they tend to have a higher premium compared to gold bars which are usually traded exclusively for their gold content.
The prices of both types of investments will fluctuate depending on the live spot price of gold. Generally speaking, investors should consider buying during times when the prices are relatively low and selling when prices peak in order to maximize profits and reduce losses on their investment portfolio.
It's also important to note that UK legal tender coins including Sovereigns and Britannias qualify for CGT-free status in the UK, so if you're looking at investing in these specific types of coins then that could be another factor influencing your decision-making process.
Whether you're looking at buying a one-off piece or building up a whole collection over time, it's important to consider the purity and price when investing in either gold coins or bars. This way, you can ensure you get the maximum return on your money while minimizing any potential risks associated with investing in precious metals.
Tax and Costs
Investing in precious metals can be a costly endeavor, so it's important to factor in any associated taxes and costs when considering your options.
The VAT status of gold coins versus gold bars is an important factor to consider. Gold coins are usually VAT-free if they qualify as investment gold under HMRC regulations and EU Commission rules, while gold bars may still incur a VAT charge. Both UK legal tender coins, including gold Sovereigns and gold Britannias, are also CGT-free in the UK.
The premium that you pay for buying physical gold is another cost that needs to be taken into account when investing in either coins or bars. Generally speaking, buying from a reputable dealer will help ensure you get the best value for your money.
Gold coin premiums vary depending on type and rarity but can often reach 35% over their contemporary spot price due to their historic value. On the other hand, bullion bars usually carry lower premiums than coins since they are traded exclusively for their content rather than any cultural or historical significance.
It's also important to consider storage costs when investing in physical gold - coin collections tend to require more space than bullion bars which can be easily stored inside gift boxes or presentation boxes. As such, storing large amounts of wealth is much more convenient with bullion bars than it is with coins.
Ultimately though, deciding whether to invest in coins or bars comes down to personal preference and should take into account all associated taxes and costs before making a decision.
Gold IRAs
When considering these variables of gold ownership, choosing a gold IRA with a long-established and trusted gold IRA company can be all the more appealing. Also, a dedicated gold IRA company can provide competitive prices, transparency, reliable customer service, and security of your precious metals.
Depending on whether you are a high-net investor looking for the most competitive prices or require a lower investment minimum and affordable entry to the gold market, we have researched and reviewed our best 4 gold IRA and precious metal investment companies that meet those individual needs. Whether you prefer a gold IRA or owning the physical gold in your place of residence.
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Tradition and Value
When it comes to your investments, you'll want to consider the traditional and emotional value associated with both gold coins and bars.
Gold coins have a premium value due to their legal tender status, historical significance, and numismatic value. They can also be easily stored inside gift boxes or presentation boxes - making them ideal for investors who appreciate historical value and want to start a coin collection.
On the other hand, gold bars are usually minted into neat cuboid shapes with weight and purity inscribed on the surface. These bars hold little historic or traditional value but are traded exclusively for their gold content:
1) They provide a good option for investors who want to strictly invest in the gold market;
2) Are available in various sizes from 1 gram to 1 kilogram;
3) Have benefits as they can store large amounts of wealth in a small space;
4) Offer competitive premiums over the spot price compared to gold coins.
With either choice, all gold is considered a reliable investment with UK legal tender coins also CGT-free in the UK.
But it's important that you understand what type of investor you are before investing - whether you're looking for something more historically valuable or something purely based on its monetary worth.
Conclusion
You've now seen the key differences between buying gold coins and bars. Both have their own unique benefits, such as size, value, purity, and price.
Variables like the state of the markets, inflation, and the health of the US dollar will determine whether precious metals are a good investment at that specific time.
No matter how you choose to invest, gold is always a reliable option - providing tangible wealth, security, and peace of mind. Investing in gold coins or gold bars both offers unique advantages for the investor.
Gold coins are typically minted annually and have historically significant designs that increase their numismatic value. They also often come in smaller sizes than gold bars, allowing for more discreet investments.
Gold bars are usually 99.99% pure and come in a variety of sizes from 1 gram to 1 kilogram. This allows investors to buy exactly as much as they need without worry about whether the coin is too large or small for their needs.
Gold has been used historically as a store of wealth and continues to be trusted by many people today due to its stability and low risk compared to other investments such as stocks or bonds.
It's important to remember the additional costs associated with each option, such as taxes and premiums imposed by Gold Bullion companies. Ultimately, it's up to you to decide which is best for your investment needs.
Take your time researching your options, so that you can make an informed decision when investing in gold bullion products.
Historically, precious metals have served as wealth insurance during turbulent economic times. To learn more about silver and gold investing, see the links below to access the free investment guides from the best gold IRA and precious metals investment companies that we have thoroughly researched.
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Adam ONeill
Author, lifelong investor, and creator of PreciousMetalsInvestmentPortfolio.com