Buying Gold bars Vs. Buying Coins – Which One’s More Secure?

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First time gold buyers are always a little frazzled when it’s about choosing what kind of stuff to go for. Either it’s the gold bullion they want to invest in, or is the gold coins that have always been a medium of currency since the medieval ages.

Well one thing is for sure that gold is no longer a currency, just like it used to be in ancient courts – it’s just that the modern version of gold is more like an investment or money-making scenario. In this context, the question that often pops up in a potential investor’s head is:

Both metal forms have their own advantages and disadvantages over one another, which makes it suitable to investors. Gold bullion always has its shiny stamps and universal sense of approval, whereas gold coins have the mint value, alongside par value and stuff.

Tax Exemptions on Gold coin in the UK: Understanding VAT and CGT Policies.

In the UK, both VAT and CGT (Capital Gains Tax) exemptions apply to certain gold bullion products, particularly those from The Royal Mint. Coins produced by The Royal Mint, including Britannias, Sovereigns, and Queen’s Beasts range, are exempt from CGT for UK residents as they are considered legal British currency. This exemption extends to all gold, silver, and platinum bullion coins issued by The Royal Mint.

Furthermore, national coin bullion such as Britannias and Sovereigns are classified as coinage and are also excluded from CGT. Therefore, when selling these coins, individuals do not incur tax on their profits. This exemption becomes especially significant in light of the recent halving of the annual CGT allowance to £6000.

Moreover, gold bullion in the UK is VAT-free, with specific exemptions for bullion coins and assayed bars primarily used for investment purposes. This excludes items like jewellery.

In The US.

Residing in a US state with no taxes on bullion purchases while potentially facing capital gains tax upon selling gold at a profit adds an extra layer of consideration for investors. Navigating these tax implications is crucial, but it’s equally important to reflect on personal investment strategies and preferences.

One key question to ponder is whether you prioritize stacking by weight, aesthetics, or a combination of both. While certain coins may command higher premiums, the emotional satisfaction of holding a beautifully designed coin, like the Buffalo, can be significant. Despite their higher premiums, the allure of these coins may outweigh practical considerations for some investors as they find themselves drawn to admiring their collections.

While bars typically have lower premiums, they are also more susceptible to counterfeiting. Conversely, coins are more liquid, making them a safer option for many investors.

In the United States, popular coin options include American Eagles, American Buffalos, and Canadian Maples, highly sought after and readily tradable. For instance, you can currently acquire a 1-ounce maple for only 4-5% over spot at Provident Metals or JM Bullion, both reputable companies with whom I’ve had positive experiences. Eagles and buffalos may be slightly more expensive, with prices hovering around 6-7% over spot.

Understanding your investment goals before diving into gold ownership is crucial. Gold can serve as a hedge against poorly performing financial assets over the long term, but it’s essential to strike a balance in your portfolio. Coins, with their anti-counterfeiting measures and liquidity, may be a preferable option for many investors.

In the long term, the debate over premiums may fade into insignificance. A hundred-dollar premium today might seem substantial, but over a decade, its impact could diminish considerably. Therefore, adopting a balanced approach—investing in both coins and bars—can offer diversification and peace of mind. Ultimately, focusing on the enduring value of gold investments and their potential to weather market fluctuations is paramount.

In this YouTube video, SilverDragons discusses the debate between investing in gold bars versus gold coins. He outlines several factors to consider:

  1. Trust: There is a perception that there may be more fake gold bars on the market compared to gold coins. While both can be counterfeited, some argue that it might be easier to detect fake gold coins due to additional tests that can be conducted, such as examining diameter and thickness, as well as conducting a “ping test” for sound authenticity.
  2. Liquidity: Both gold bars and gold coins are generally accepted by coin shops and bullion dealers. However, there may be differences in resale value, with bars typically fetching slightly lower prices compared to coins. Additionally, rare or numismatic gold coins may be harder to sell at desired prices, especially if their premiums were high upon purchase.
  3. Price: SilverDragons compares the buy-back prices at his local coin shop, noting that bars tend to have a better spread compared to coins. However, he also acknowledges the additional value that coins may offer in terms of aesthetics and collector appeal.

Try understanding both entities as tradable forms or money doubling ideas. What would you do if it’s about buying gold bullion vs. buying gold coins thing? Knowing that gold bullion has more finesse and trademark stamp, its value and refinement is slightly notched up, would you prefer coins over it?

Let’s see if gold bullion works for you. If it doesn’t, then you can take a look at gold coins related stuff at the end of this post:

  • With Bullion investments, there’s always a strong chance that you can get paid back heavily.
  • Gold bullion bars are accepted globally, which makes it easier to liquidate them anytime. However, the cost of liquidation has to be considered as well.
  • The premium cost for bullion investment is lower.
  • Bullion bars also take some time to get their rates up. The overall period between buying and selling could almost take one year on the minimum.

Moving on towards the topic of gold coins, their small size also makes them a sign of preference all over the world. Some people buy gold coins because they can sell them anytime, they want to. Compared to gold bars, the premium on gold coins is kind of lower. Ever since the 1960’s, gold experts have reportedly witnessed a maximum premium of 40% over gold bar trading, which is definitely a high price to pay.

Conclusion: we recommend gold coins.

Gold coins can also be stored a collector’s items. It means that once the coin has become old, it kind of reaches beyond its maximum value, giving way to a completely new stream of profits. In our honest opinion, we recommend gold coins instead of gold bars. It’s just that the coins have a lower premium and they’re easy to deal with. Bars just take a lot of time despite of their high ROI factor. If a person needs emergency cash, he’d have to make deals in gold coins, rather than gold bars.

Warren Buffet once said, “Put all your eggs in one basket and then watch it carefully.”  Taking the same statement in the context of gold investment, there’s a very less degree of risk involved. Gold bars and gold coins will always have a fixed value; it’s a metal that’s globally recognized. Unlike stocks and ETFs, gold isn’t subject to rapid economic changes, at least not that much.

Quick Look At Gold Coin and Gold Bar Investments:

  • Gold Coins:
    • Small Market
    • Absence of sellers can make it hard to sell them. Waiting really sucks so be wary of that.
    • Sometimes the premium can reach to 40%, or even 100%.
    • If you’ve bought the wrong kind of gold coins that nobody want, you’re in for it.
  • Gold Bars:
    • Recognized on a large scale
    • Will always have an open market
    • Making profits is easy because you only have to oversee a 5 – 15% increase in rates

Purchasing Gold Bars: A Beginner’s Guide

In this guide, we’ll walk you through everything you need to know to make informed decisions and avoid costly mistakes. Warren Buffet once said, “Put all your eggs in one basket and then watch it carefully.”  Taking the same statement in the context of gold investment, there’s a very less degree of risk involved. Gold bars and gold coins will always have a fixed value; it’s a metal that’s globally recognized. Unlike stocks and ETFs, gold isn’t subject to rapid economic changes, at least not that much.

Types of Gold Bars to Buy When it comes to selecting gold bars, it’s essential to stick with reputable brands and popular options. The market offers various types of gold bars, but starting with well-known brands ensures ease of buying and selling. Here are three popular choices:

  1. Perth Mint Gold Bar: This 50-gram gold bar from the Perth Mint in Australia is highly popular and comes with a government guarantee. It’s an excellent option for cost-effective stacking with its 99.99% pure gold content.
  2. Credit Suisse Gold Bar: Minted by a Swiss commercial bank, this one-ounce gold bar is widely recognized, especially in Europe. With its 24-karat purity, it’s a trusted choice for investors.
  3. PAMP Suisse Gold Bar: Known for its widespread availability, PAMP gold bars are trusted worldwide. These bars, minted since 1979, offer a rich history and high recognition, making them easily sellable.

1 oz Gold Bar vs. 1 oz Gold Coin – Which Holds Greater Market Fluidity?

The focus is on exploring the relative liquidity of 1 oz gold coins, including popular choices such as the Gold Maple, Gold Eagle, and Gold Buffalo, in comparison to 1 oz gold bars like those from RCM, Valcambi, Perth, and Pamp. The author delves into the significance of this distinction for Local Coin Shops (LCSs) and other precious metal enthusiasts, particularly in the context of the United States. Having primarily stacked gold Maple Leafs, the author contemplates the prospect of broadening their portfolio to include gold bars and ponders whether the perceived liquidity affects this decision, considering the marginal difference in premiums between coins and bars.

Coins vs. Bars – A Detailed Analysis

In the world of precious metal investments, the choice between 1 oz gold coins and 1 oz gold bars has long been a subject of discussion among investors. The general sentiment leans towards coins being more liquid, but as our analysis unfolds, nuances in the market dynamics become apparent. For instance, when dealing with Local Coin Shops (LCSs), the preference for coins like the Buffalo over bars like Valcambi is evident. While coins may fetch a slightly higher price due to their legal tender status and government minting, the consensus is that an ounce is an ounce to most dealers.

1 oz bars look cool but are easy to counterfeit

Some people might disagree, but many probably got into bars without fully considering the risks, simply because they look awesome (and they do). Modern bars, no matter the maker, are easy to counterfeit. Those in “assay cards” are a counterfeiter’s dream, limiting your ability to scrutinize them. Modern troy-ounce-based Non Circulating Legal Tender (NCLT) coins from big bullion countries are a safer bet.

For liquidity, better coins that bars, exept in Asia.

Contrary to the belief that coins universally command higher premiums, it seems that local markets play a crucial role. In regions like California, dealers pay more for Eagles and Buffalos, often at or slightly above spot, compared to maples and krugerrands, which may go for 3-7% under spot. This regional variation extends to Europe, where bars generally have lower premiums but sell at around two percent under spot when compared to coins. Interestingly, perspectives in Asia seem to differ, with a reported preference for bars over coins..

While there’s a tradition of gold coins in countries like the US, UK, and Mexico, the purchase of gold bars for non-industrial purposes is a concept that gained prominence later. This article emphasizes the importance of slabbed coins for low premiums, especially those with high numismatic value. However, the practicality of buying physical gold for short-term resale is questioned, with the suggestion that such investments might be better suited for those with a long-term perspective.

The varying sources of value for coins and bars are explored, highlighting that coins have both intrinsic and numismatic value, making them more complex in terms of valuation. Bars, on the other hand, derive their value solely from the intrinsic value of the precious metal, leading to a lower premium to buy. The ease of authentication for coins, coupled with their potential delicacy, is contrasted with the straightforward and stable value proposition of bars.

We shouyld also touches upon the regulatory aspects of gold investments, as seen in the differentiation made by some regions between sovereign coins and bars for purposes such as taxation. Ultimately, the reader is left with a nuanced perspective on the coins vs. bars debate, with considerations ranging from regional market dynamics and cultural traditions to the practicalities of authentication and potential regulatory implications. The decision to stack coins or bars is presented as a matter of personal goals, with the importance of buying from trusted dealers emphasized throughout the analysis.

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