Should I Invest in Gold Bars or Gold Coins?

---

Whether you’re new to bullion investment or not, deciding whether to invest in bullion bars or bullion coins should take some consideration. Before making this decision, it would be advisable that you conduct your research as there is no definitive right or wrong answer, it will vary depending on the needs and circumstances of the individual investor. However, as when making any other investment there are a several factors to consider including the value of your investment and the product premiums, how long you plan on keeping it, where to store it, and how you plan on realising the value of your investment.

---

Premiums

The premium is the additional cost charged above the gold spot price attributed to manufacturing
costs, handling, packaging, insurance and delivery. Reputable bullion dealers charge investors
very small percentage premiums in a bid to be competitive, however they are unavoidable as even
bullion dealers have to buy gold above the spot price.

The most effective way to keep premiums at an absolute minimum is to buy gold bars, or silver bars
if you are looking to invest in silver bullion. Gold bars attract a smaller premium as opposed to bullion
coins due to their larger unit size resulting in lower manufacturing costs. For example, it is more cost
effective to buy a 1 kilo gold bar than to buy ten 100g gold bars for the very same reason. Despite them
both containing exactly the same amount of gold, you would expect to make a saving of around 1%
which is a fairly substantial saving. If you plan on keeping your gold for a long time and have no intention
of wanting or needing to sell part of your investment, then larger gold bars are ideal for you. However, be
mindful that this relatively small savings would result in a lack of flexibility.

It should be noted however that the above is true for larger units only, typically 1oz of gold or larger. With smaller bars and coins the premiums tend to flip. Mints will often produce smaller sized coins in fairly large numbers at lower cost. A small bar however will often have quite a large premium, particularly if it is a sealed, minted bar.

For large-scale investors then, gold bars offer the cheapest option normally. For investors who prefer smaller units however, gold coins may be a better choice.

---

Flexibility

Most investors buy gold bullion with the intention of preserving wealth and making a return on
their investment. Where the larger unit size gold bars or silver bars offer the best value when
buying, they do not necessarily represent the best value when it comes to selling your gold or
silver at a later date. Smaller unit gold bars such as the 1oz, 50g and 100g bars, and in particular
gold coins and silver coins offer greater flexibility at resale. There are many reasons where this
flexibility would come in use, releasing part of your investment for quick access to cash, or perhaps
part-selling which is often an effective way of getting a maximum return on investment.

Over time, individuals often want to change the balance of their portfolios, for example an investor may
have 20% of their liquid wealth held in a 1 kilo gold bar, but want to release half of this to reinvest in
stocks. At this point, the investor would either have to sell their entire gold bar or leave it and miss out
on the other potentially lucrative investment opportunities. However, if they had originally invested in
ten 100g gold bars, they could have easily sold half the bars to gain instant access to half of the money.
Better still, bullion coins represent even greater flexibility and are a very popular option for new and
experienced investors alike who are mindful of this and anticipate selling part of their bullion in the near
or distance future. Gold coins are available in a variety of sizes such as 1oz, 1/2oz, 1/4oz and 1/10oz
making them highly versatile, easy to store and ideal for trading if the banking system did ever collapse.

For the ultimate flexibility, perhaps consider silver coins which are substantially lower in value than gold coins and come in a 1oz size. Popular silver coins include silver Maples, silver US Eagles, and the silver Britannia coin which tends to be the very cheapest coin to buy from us. For ultimate flexibility, buying gold coins for investment is recommended, despite the slightly higher premium.

---

Small Investors and First Time Investors

It is advised that small and first time investors look into both coins and bars, despite coins being the
obvious choice for lower value investments. Bars come in a range of sizes starting from as small as
1 gram, while coins are commonly produced in 1/10oz (3.1g) sizes and up. Investors need not look at
the 1oz gold spot price, and immediately feel they are priced out of buying gold.

For silver investment, there are a whole host of 1oz silver coins available which are an ideal starter point.
It is advisable to look for the coin with the very lowest unit cost. As a UK dealer we often sell silver Britannia
coins as our lowest priced 1oz silver coins. We advise this as when selling your bullion, you only get the
intrinsic value of the metal, so the cheaper you bought them for originally, the higher return on the
investment you make.

---

Large Investors

With individuals looking to invest large amounts of money in gold investment bullion, the decision is less
complicated as it’s important to get the very best value for your money to maximum return on
investment. It would be best to buy the largest unit sizes you can so 500g gold bars, 1 kilo gold
bars and 5 kilo silver bars will represent the best value. Also, buying gold in volume can also
offer further savings as the unit price is reduced when you buy more than one due to the lower
costs incurred by the bullion dealer.

---

Changing Premiums

Bullion coins, with particular reference to gold bullion coins, have in the past demanded additional premiums depending on market factors at the time. A fine example of this was in the 1960’s there was a premium of up to 40% associated with buying and selling gold sovereigns. This is another factor worth taking into consideration when buying gold, where coins could potentially provide you with greater return on investment, bullion bars will only ever be worth the intrinsic value of the metal content.

---

Recommendation

At BullionByPost we encourage our customers to opt for the bullion products which offer the very best value for money as your investment, therefore obtaining the highest intrinsic value of gold and silver for your budget. The best way to buy gold ultimately depends on your individual situation. This is all about personal preference and circumstances, taking into account all factors mentioned above with particular reference to premiums and flexibility.

---

View our Top 5 Silver Investments and our Top 5 Gold Investments