New investors or seasoned investors in deciding whether to invest in gold bullion bars or bullion coins will succeed with preparation, review of research and determining investment needs. There is no definitive right or wrong answer in choosing coins or bars. Some of the factors to consider when deciding include how much will you invest, what are the premiums, where will you keep your investment and when will you plan on selling?
Gold Bars and Gold Coins
The most effective way to keep premiums and a minimum bid to buy gold bars. Gold bars due to the larger size can be manufactured at lower cost and will therefore typically have a lower premium. It is more cost effective to buy one 500 gram bar than to buy five 100 gram bars for the same reason. The premium is a charge above and beyond the spot price of gold by its weight attributed to the manufacture, packaging, insurance, and delivery. In order to remain competitive most respectable bullion dealers charge investors only a small premium. For long term investing the largest size gold bar you can purchase saves on premiums and your overall cost. If you expect to sell part of your gold investment, gold coins are smaller bars will provide the flexibility needed. Determining your needs as much as possible and advance will help illuminate the decision to buy gold bars or coins.
Situations may arise with need for quick cash, or there may be a need to adjust the percentage of gold holdings. Part-selling the gold investment is an effective way of maintaining maximum return on the investment. Having invested in five 100 gram bars, the investor is able to easily part sell, whereas one 500 gram bar would have to sell the entire bar to make the cash available. Gold bullion coins represent a better alternative for investors who are mindful of this and expect selling part of their investment over time. They are easy to store, ideal for trading as a hedge in times of bank strain, and ideal for part-selling. Gold coins may be bought in sizes in range from 1 oz., ½ oz., ¼ oz., and 1/10 oz.
Bullion coins are popular with first time investors, for their flexibility and low premiums. The well-known South African Krugerrand coins because of their purity attract lower premiums. Investors seeking to invest large amount of money with CGT free status commonly use British bullion coins, such as the gold sovereign, half sovereign, and gold Britannia coins. Silver coins provide an even more flexible investment as they are substantially lower in price than gold coins, and come in a 1 oz. size. There is a complete host 1 oz. silver coins available to buy. The silver Maples, the silver Britannia coin, and the silver Philharmonic coin provide the lowest price coin options.
Small investors and first time investors, do well to consider both gold bars and gold coins. Starting out with a 100 gram bar costing around $5,500 or a 1 ounce gold bar costing around $1,700, bars and coins provide common entry points for first time investors. Gold British coins, particularly the gold sovereigns and half sovereigns offer a much lower price with the smaller units starting around $500 for a sovereign. Whether it is gold or silver, get the intrinsic value when selling. The cheaper you bought them for originally, the higher the return on the gold investment.
With large investments is important to get the best value to maximize return on investment. The 500 gram gold bars, 1kilo gold bars and 5 kilo silver bars provide the best value. Volume purchases will lower the premium as bullion dealer incurs lower cost. The decision is less complicated primarily targeting the lowest premium with long term holding and minimal flexibility. Gold coins afford wealthy investors flexibility and part selling when needed to improve the portfolio. Due to their status as British Legal Tender Gold Britannia coins, particularly sovereigns do not accumulate capital gains taxes (CGT). Sovereigns will command a slightly higher premium than gold bars, however, the flexibility offered and liquidity in time of need, offer wealthy individuals a much needed liquidity tool in their investment. The best value comes from cheaper mixed year gold sovereigns as they have a small premium.
Changing premiums of bullion coins, in particular gold bullion coins have seen wide variations depending on market influences. During the 1960 there was a 40% premium on buying gold sovereigns. The influence of economic conditions is worth taking into consideration when buying bullion coins. Bullion bars will provide you the intrinsic value based on precious commodity and daily market spot price. Coins will potentially provide a better return in terms of market influence of the premiums.
Storage of gold bars will be easier and more convenient to store than ten times the number of coins. The large one kilo gold bar is a single unit and can be confined to one storage place, a safe, deposit box or concealed part of your home. With a large number of coins you have the ability to split the storage. Of thirty coins, you might store ten in a deposit box, ten with a bank and ten safely hidden around your home, keeping them physically available. With a small investment storing your gold bullion coins in creative places may be the best option.
In choosing the best gold bullion products, you will want to seek out the vest value for your money to obtain the highest intrinsic value of gold for your budget. Given individual circumstances there are preferences and factors to be considered including premium, flexibility, and capital gains tax. By preparing with research you can find the best value for your investment.