Buying Gold Bars vs. Coins: Pros and Cons

If you’re looking to delve into the world of physical gold investments, you must first determine your approach. 

Specifically, you need to determine the type of gold you intend to acquire. In the world of investment gold, the main choices are between gold coins and gold bars – each with its own merits and drawbacks.

Continue reading for our breakdown of the pros and cons of buying gold bars vs. coins.

At Nomad Capitalist, we create holistic strategies for high-net-worth individuals to protect all their assets, including physical gold. We advise on the best jurisdictions to buy, store and protect your gold investments outside the banking system.

Buying Gold

Throughout history, gold has maintained its position as a universally recognized currency. It is worth noting that the US government once backed the dollar with the precious metal, a period referred to as the Gold Standard. 

We now live in a time when many currencies, including the US dollar, no longer have this backing, making them more vulnerable to unpredictable market fluctuations, especially during political and economic instability. 

During times of economic turmoil characterized by soaring inflation rates and surging interest rates, allocating a portion of one’s investments to gold is a no-brainer. Physical gold stands out as a safe and secure tangible, and reliable asset.

Gold, a timeless investment, has captivated mankind for centuries. In our modern era, investing in this precious metal can take the form of buying physical gold or investing in paper gold that reflects its price fluctuations.

Are you considering adding gold to your investment portfolio? Discover the advantages of buying gold below.

Seen as a Plan B, gold offers investors a sense of security in the event of a market collapse. As a form of currency with thousands of years of history, gold has long been regarded as a safe haven for wealth preservation. 

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Gold Bars vs. Gold Coins

What sets gold bars apart from gold coins? A gold bar can be described as a solid chunk of precious metal. Granted, it is more refined than a mere lump, often shaped into a sleek cuboidal form, with its weight and purity engraved on its surface.

This appeals to investors who prioritize the inherent value of this yellow metal itself rather than its minting process or physical appearance.

On the other hand, a gold coin carries its specific appeal. Not only is it regarded as legal tender in many countries, but gold coins also possess a historical and traditional value.

Pros of Buying Gold Bullion Bars

In the debate of gold coins versus gold bars, let’s first look at the unique advantages that gold bars bring to the table. 

Purity 

The purity of gold bars is one of this method of buying gold attractive characteristics. Typically composed of 99.99 percent pure gold. 

Because of the high purity level, there is minimal room for the inclusion of other alloys within these bars. As a result, investors can take comfort in the knowledge that every gold bar they possess is constructed from pure 24-carat gold. 

With the weight and purity of the metal inscribed, you can be sure of the worth of a particular gold bar.  

In addition, gold bars come in a range of sizes, catering to various investment preferences. 

Investors have the freedom to invest as much or as little as they desire.

Hedge Against Inflation 

One factor to consider is the potential of gold bars to serve as an effective hedge against inflation. In the face of our current inflation and economic crisis, wherein the value of money steadily diminishes over time, investing in this precious metal can potentially shield your wealth from the effects of inflation.

Long-Term Stability and Value

While gold may not hold the same attraction as stock or cryptocurrencies, which offer the potential for quick gains and losses, it possesses a far more valuable quality. 

Investing in this precious metal offers remarkable stability. In fact, while stocks and other asset classes often experience significant volatility, gold steadily appreciates on average 10% a year. 

Undoubtedly, one of the standout attributes of gold bars lies in the ability of the precious metal to hold its value. 

Tangible Asset

Investing in gold bars possesses a remarkable trait: its tangibility while remaining highly liquid. 

Even if certain elements of investing in the precious metals market are complex, buying gold bars stands out for its simplicity. You buy a specific quantity and hold it as its value appreciates over time. 

Then when the time comes to sell, your gold bars can be readily liquidated. 

Portfolio Diversification

A well diversified investment portfolio is a wise approach that our founder, Mr. Henderson, advocates. It makes perfect sense not to confine your wealth to a single location or asset class. 

Incorporating gold bars into your holistic investment strategy allows for a well-rounded and balanced mix of assets, safeguarding your wealth.

It is essential to maintain a balanced portfolio, and our gold expert Joshua Rotbart advises holding around 5%-15% of your portfolio in physical gold. 

So when weighing up between gold bars and gold coins, it is clear that bullion bars offer a distinctive set of advantages. Holding value in the long term, remarkable purity, and a variety of sizes, gold bars are a strong choice for investors.

Cons of Buying Gold Bullion Bars

Okay, so what are the challenges when buying gold bullion bars? 

Storage 

Ensuring secure storage is possibly the biggest disadvantage that comes with owning gold bars. While some choose to keep it under their bed, the security implications are obvious. Others may opt to store their gold in a traditional bank; the issue with this is that your physical gold is then vulnerable to government interference.

Keeping your gold in a professional gold storage facility is the better option, offering security, insurance, and opportunities to scale your investment. 

Risk of Fake or Counterfeits

Another drawback is the risk of purchasing low-quality or counterfeit gold bars. 

As the demand for gold continues to increase, unfortunately, there has been an uptick in individuals seeking to exploit gold buyers. 

As a gold investor, it’s essential to exercise caution and ensure that you purchase gold bars exclusively from trustworthy gold dealers who guarantee the authenticity of their products. Our gold people, J. Rotbart’s and Co., advise that in order to protect yourself from scams, always use xxx. precious metals industry.

Not Collectable or Rare

If you are interested in rare and collectible gold items, gold bars are not the solution. 

Gold bars lack artistic flair and rarity, and their value is solely based on precious metal content. 

For collectors, gold numismatic and rare coins are the way to go. However, we do not advise our high-net-worth clients looking to make gold investments to buy this type of gold as it is highly unpredictable and does not offer the same long-term wealth protection. 

Pros of Buying Gold Coins

Bartering

With widespread speculation that global economic conditions will continue to deteriorate further, “fiat currencies” may continue to lose value, with the potential to become virtually worthless.

Many find comfort in owning smaller gold coins, as they offer a potential method for bartering and purchasing goods in times of crisis. Particularly smaller denominations like 1/10oz gold coins or even smaller ones could facilitate the exchange of goods and services.

Price

Naturally, the larger and weightier coins tend to carry a heftier price tag. Smaller gold coins are ideal as they gradually enable investors to build a portfolio over time. Investors can make smaller, regular purchases.

Inflation Hedge

As with gold bullion bars, gold coins also provide protection against inflation. One of the primary reasons individuals invest in gold is to protect themselves against inflation. During periods of high inflation, stocks typically decline in value. Gold coins, on the other hand, tend to hold prices. 

Liquidity

Thanks to the inherent demand for this precious metal, gold is an incredibly liquid asset. There is always a refinery, a jeweler, or another eager buyer waiting ready to acquire your gold. The settlement process is swift, facilitated by the consistent interest in gold.

This is where entrusting your gold to a professional entity is profitable. By storing your gold with a reputable gold company, it is seamlessly integrated into the system.

Cons of Buying Gold Coins

While gold coins are clearly a wise choice for investors, there are certain drawbacks and associated costs to consider when investing in gold coins.

Higher Markup 

The production cost of manufacturing gold coins with less than an ounce of gold is typically higher for mints due to expenses. Consequently, gold coins incur a higher markup price compared to other gold bars, even if produced by the same mint.

Wear and Tear

Gold coins are more prone to wear and tear due to their smaller dimensions compared to gold bards. When you buy gold coins, you need to prioritize the protection of these assets to prevent any damage. It is advisable to utilize storage containers such as hard plastic holders to safeguard your collection.

By becoming a Nomad Capitalist client, we create your personalized holistic strategy designed to protect your assets, including precious metals, and take you where you are treated best. Contact our team today.