With economic and geopolitical uncertainty on the rise, many investors are looking to physical gold as a way to diversify their portfolios. But when it comes to investing in gold, should you choose coins, bars, or other forms of bullion? There are pros and cons to each option that are important to weigh. This article will examine the key factors to consider when deciding whether to invest in gold coins or gold bars.
Gold coins offer investors greater liquidity and divisibility
Gold coins like the American Gold Eagle or Canadian Maple Leaf are produced by government mints in standardized sizes. This makes gold coins highly liquid, as they can easily be bought and sold in markets around the world. Coins are also more divisible than larger gold bars, allowing investors to purchase a specific dollar amount. For investors looking to periodically sell a portion of their gold position, the enhanced liquidity and divisibility of coins are major advantages.
Gold bars minimize the premium paid versus spot price
Gold coins carry higher premiums than gold bars due to the added production costs of the coinage process. Gold bars in larger sizes, such as 1 kilogram or 400 troy ounces, will have the lowest premium to spot price. Investors with a long-term buy and hold strategy may want to minimize costs by purchasing gold bars over coins.
Coins offer greater anti-counterfeiting measures
Government produced gold coins often utilize complex surface engravings, unique markings, and holographic features to prevent counterfeiting. These security measures give investors assurance that their coins are authentic. Gold bars lack some of these anticounterfeiting protections, requiring investors to be vigilant in scrutinizing any potential purchases.
Gold coins provide more design variety
While gold bars are produced in fairly standard designs, gold coins offer investors much more aesthetic variety. Governments frequently issue new coin designs and limited edition sets, which some investors find appealing. This can help add numismatic, or collector, value to certain gold coins over time.
When weighing a decision between investing in gold coins versus gold bars, there are good arguments on both sides. Investors planning to trade a portion of their gold frequently may favor coins for their liquidity and divisibility. Those focused purely on long-term preservation of wealth may prefer gold bars to minimize premium costs. There is no definitively superior option, so investors should examine their specific objectives when choosing physical gold bullion.