Gold Bars versus Gold Coins

Gold Bars vs Gold Coins: Which is better to buy?

Here at ATS Bullion, we often have clients asking us which is the better option: Gold Bars or Gold Coins. In truth there is no short answer. Nevertheless, we thought it might be useful to do a comparison between the two types and hopefully answer any nagging questions you may have.


Gold Bars

Pros

Kilo gold bars

1 Kilo Gold Bar

– Newer bars come in sealed packaging and are presented attractively
– Bars are usually issued with certificates
– They are typically produced in 24 carat (999 or 0.9999 fine)
– When buying larger sizes, the premium on bars can be significantly lower than coins as the production costs are lower. For example: 1 Kilo bar is more economic to produce than 32 x 1 ounce gold coins or 136 x gold sovereigns.

Cons

– Liquidity issues when buying one big lump of gold. Holding a 1 kilo gold bar instead of 32 one ounce gold coins will offer you limited to no flexibility when realising your asset.
– You will have a higher market risk, as potentially you may only buy on one gold price when buying larger products.
– Production costs on small bars are significantly higher as the refiner will have to produce packaging, serial numbers and corresponding certificates for gold bars as small as 1g. Consequently, the premiums are higher on small gold bars compared to their gold coin counterparts.
– Storing bars can sometimes be a nuisance, particularly if you have bought a quantity of bigger bars.


Gold Coins

Pros

– Coins come in all sorts of sizes and designs. There is an abundance of choice when it comes to coins and aesthetics can certainly be a decisive factor.
– Coins are often stamped with a date, making them great for gifts marking important events such as Birthdays, Anniversaries and Weddings.
– Currency denominations are often used for coins which can sometimes come with benefits. For instance Britannia Gold Coins are technically given a £100 denomination; this confers on them the status of being Capital Gains Tax free.

Pre Decimal Sovereign

Gold Sovereign


– Greater liquidity and flexibility when buying gold coins as you can sell smaller amounts if you need to, when you need to.
– A lower market risk as you can buy smaller amounts and spread your investment over longer periods, buying on different gold prices.
– Gold coins can also be a lot easier to store, in boxes or tubes.
– Collectible value: when buying certain coins you are not only buying them for the gold price but perhaps for any numismatic or collectible value they may have. Over time, different coins may accrue numismatic value, increasing your original investment significantly.

Cons

– Coins typically don’t come with certificates – unless they are proof coins/coin sets.
– Not all coins are 24 carat, many are 22 carat or even 21.6 carat for some coins! This can make working out what your coins are worth a bit harder if you are dealing with fractional coins.
– When buying larger investments, the higher production costs for coins will push the premiums up, meaning you could potentially get less gold for your money.
– If you do happen to be buying hundreds of coins, you may end up with a massive storage headache!


As with any purchase, there are positives and negatives that have to be considered. We hope that this article goes some way to explaining some of the differences between gold bars and gold coins. It isn’t meant to dissuade anyone from any products or comment on what you may have bought in the past. I for one have bought a number of small gold bars, even though I know they aren’t necessarily the cheapest form of gold to buy into. Quite frankly I don’t care as they look great!

This article is to be used as an aid and not for investment advice. Please seek professional advice if you are uncertain about any elements of investing.

For any further information regarding this article or any questions you might have, please call 020 7240 40 40 and speak to one of the ATS Team.

Michael Cooper

Bullion Executive

email:-michaelc@atsbullion.com

 

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