You’re considering buying gold. That’s great! Maybe you’ve even picked out who you will buy it from, or perhaps you’re working with a gold IRA custodian. Unfortunately, the process isn’t as simple as walking up to a seller and asking for gold. You have to know what form of gold you want, which generally means deciding on gold bars vs gold coins.
Why Buy Gold?
Before you ask if it’s better to buy gold coins or bars, you may wonder why you should buy gold in the first place. Precious metals may have been around for a while, but gold and silver are still valuable purchases today. Gold in particular is known for its ability to resist inflation. When the country goes through periods of economic or political uncertainty, such as a recession, people tend to buy gold. This means that the financial market falling actually causes gold to increase in value, which is why gold is known as an inflation hedge.
Why does this matter to you? Say you have $10,000 sitting in your wallet right now. The current inflation rate is about 3% per year. That means that a year from now, that $10,000 will only be worth $9,700. As you can imagine, this can lead to significant losses in value over the years. For example, if you had $10,000 in 2014, it would only be worth about $8,000 in 2024. That’s $2,000 of value gone simply because of the financial market.
Now imagine you have $10,000 worth of gold. Because of gold’s unique inflation-resistant qualities, that $10,000 could still be worth $10,000 at the end of one, ten, or even twenty years. You’re still putting in that same $10,000, but now you’ve essentially gained $2,000 by putting it in gold.
Is It Better to Buy Gold Coins or Bars?
While you can buy gold in a few different forms, the debate largely settles to gold bars vs gold coins because they are pure forms used mainly for asset protection. While you can also own gold jewelry, this is not as pure and costs more per weight in gold because of its functional uses. When considering gold coins vs. bars, there are a few points to keep in mind.
Gold Coins
Gold coins put gold into a round, coin-shaped form. These coins can take a wide variety of forms and are minted by governments around the world. The size of the coins can vary widely, and they usually have intricate designs, often representative of their country of origin.
Advantages of Buying Gold Coins
- Collectibility: If you are interested in having a distinguished collection, gold coins are definitely the way to go. Many have become famous in the precious metals world. Even if you aren’t interested in a collection yourself, having a gold coin can drive up its value for buyers who do want to start a collection.
- Size: Gold coins are smaller than bars. This may seem minor, but it fits into the gold bars vs gold coins question because a smaller size is easier to hide if you are storing gold in your home. You can easily fit them in a jar or other small container.
- Liquidity: Is it better to buy gold coins or bars when it comes to turning it into cash easily? Gold coins are usually more liquefiable because their smaller size means you can sell them in smaller increments.
Disadvantages of Buying Gold Coins
- More Expensive: An important factor for gold coins vs. bars is price. Gold coins cost more money to mint, which means they can be more expensive to buy. Coins that are valuable to collectors can also be worth more than the gold itself.
Famous Gold Coins
- American Gold Eagle: This is a true homegrown example of a collectible that has become popular all around the world. The American Gold Eagle depicts an eagle on one side and Lady Liberty on the other. It has a 0.9167 purity and you can purchase them in various sizes, including 1oz, 1/2oz, 1/4oz, and 1/10oz of gold.
- Krugerrand: The Krugerrand hails from South Africa and has been in circulation since 1967. It depicts an antelope on one side and former South African president Paul Kruger on the other. This coin has a 0.9167 purity and you can purchase them at 1oz, 1/2oz, 1/4oz, and 1/10oz.
- Gold Maple Leaf: This particular coin is from Canada and boasts a 0.999 purity, making it one of the purest coins in the world. It depicts a maple leaf design on one side and Queen Elizabeth II on the other. You can purchase coins in a variety of sizes from 1/20oz to 10oz.
- British Britannia: The Royal Mint produces these coins and they depict various significant points of British history. They also now boast a 0.999 purity, and they come in a variety of forms including depictions of Queen Elizabeth II and King Charles III.
If you’re interests in learning include what coins to buy, check out our article on the top ten precious metal assets.
Gold Bars
Gold coins may seem to have more advantages in the gold coins vs. bars debate, but whether it is better to buy gold coins or bars largely depends on what you are looking for. Gold bars are not there to look pretty or display craftsmanship. Instead, they are a no-nonsense option that prioritizes monetary value over symbolic value.
Advantages of Buying Gold Bars
- Less Expensive: When considering gold bars vs gold coins, you shouldn’t neglect the simple effect of price. Gold bars tend to be closer to the spot price of gold. They are cheaper to make and don’t have fancy designs, so the bars can be cheaper than the same weight in coins.
Disadvantages of Buying Gold Bars
- Size: Gold bars are larger than coins. This is not a problem if you are storing either asset in a safe or depository. However, if you want to store these items in your home, size can be a disadvantage.
- Liquidity: Gold bars contain larger increments of value. This can make them more difficult to liquify, and it gives you less control over how much gold you want to liquify at once.
Gold Bars vs. Gold Coins: The Bottom Line
So, is it better to buy gold coins or gold bars? Ultimately, your gold coins vs. bars choice depends on why you are buying gold in the first place. If you are a collector, you definitely want to buy coins. In case of an emergency, you may want to keep gold coins in your home. Allowing quick access to high value in the event of massive market changes. They are easier to hide and easier to liquify, so you can better take advantage of your gold if you find yourself in a tough financial situation.
If you are buying gold for its long-term asset protection, your answer to the gold bars vs gold coins question is probably the bars. With bars, you get more value for the same weight in gold. Additionally, if you want long-term savings, storage and liquidity are not as huge of concerns. Generally, a professional depository is a smarter choice for long-term storage than home storage, in which case the size of the asset doesn’t matter.
How Should You Store Your Coins and Bars?
There are many different gold storage options [insert link to blog post here when that is ready], also dependent on why you want to buy gold. Generally, your choices narrow down to storing gold in your home or storing it in a professional depository. Home storage offers more autonomy and potentially cheaper costs at the risk of decreased security. Professional storage is more secure and lets you store your gold worry-free. If you want to employ the tax benefits of a gold IRA, you have to use professional storage.
Should You Get a Gold IRA?
A gold IRA lets you buy gold, silver, platinum, and other precious metals and put them in a long-term savings account for retirement. Your choice for gold coins vs. bars can be accommodated either way. And you can even choose which specific coins or bars you want to put in your portfolio. And if you’re still not certain if it’s better to buy gold coins or bars, your gold IRA provider may be able to provide some advice. The key benefit of a gold IRA over just purchasing the gold yourself is that you don’t have to pay capital gains taxes. You can also get either tax-deductible contributions or tax-free withdrawals, depending on the type of IRA.
Whether a gold IRA is right for you partially depends on the reasons you provided for your gold bars vs gold coins decision. If you want to buy gold because you are desire long-term asset protection, you may as well get a gold IRA so you can maximize your value. However, if you are looking for an easily accessible coin stash or a distinguished coin collection, you probably want to just buy the gold yourself.
If you are looking for a gold IRA provider, consider Safe Haven Metal for all your gold IRA needs. We are happy to help you choose which precious metals to buy and settle the gold coins vs. bars debate. To start now, call Safe Haven Metal, at (323) 676-0558.