Pros & Cons of Buying Gold Coins vs. Gold Bars
You want to invest in physical gold but are not sure whether you should buy gold bullion or gold coins?
Great! This article is exactly for you since I will show you the pros and cons of gold coins vs. gold bars in the following chapters.
Advantages of Buying Gold Coins vs. Gold Bars
- Gold coins often have collector’s value
- Gold coins may be more interesting than gold bars
- You can get thousands of different gold coins
- Some gold coins greatly appreciate in value
- You can show your attitude through the collection of gold coins
- Many people may envy and admire you for your coin collection
- Gold coins may be nice presents
- You can buy gold coins in pretty small units
- Collecting gold coins may be a nice hobby
- You may feel special by owning rare gold coins
- Gold coins may have historical value
- Gold coins may be part of a long tradition
Gold coins often have collector’s value
One advantage of buying gold coins instead of gold bars is that those gold coins often have collectors value and while you may be able to buy them just a little bit above gold value, you may be able to sell those coins for a pretty high price after a few decades and may be able to make a pretty good bargain on your investment, at least if you know what you are doing and also have a little bit of luck.
Gold coins may be more interesting than gold bars
Collecting gold coins may also just be much more interesting compared to just buying gold bars since they will usually look nicer and you can also enjoy many different motives so you can have real fun by having a look at your gold coin collection from time to time while your gold bars may become pretty boring sooner or later.
You can get thousands of different gold coins
If you collect gold coins, you can also be sure that you will never run out of options to expand your collection since there are thousands of gold coins out there and as long as you have enough money, you can always get new coins and will never run out of options in this regard.
Some gold coins greatly appreciate in value
There are also some gold coins out there that have increased in value quite a lot over the past years and decades and while not all gold coins appreciate in value, you may be able to hit the jackpot and may be able to buy a coin at a reasonably low price and sell it for a fortune sooner or later.
You can show your attitude through the collection of gold coins
Through the motives on your gold coins, you can also show your political and social attitude and can also make a stand for what you believe in so you can convince other people of your attitude towards life and may be able to fascinate other people for your lifestyle.
Many people may envy and admire you for your coin collection
Another benefit of gold coins vs. gold bars is that you can really impress your social circle with your gold coin collection since you can show your family and friends all those nice coins and your loved ones will therefore often envy or admire you for your nice collection and you may therefore be able to get a pretty high social standing among your peers.
Gold coins may be nice presents
Also in case you don’t want to keep your gold coins for quite a long time, buying gold coins may still make sense since they can not only be a nice investment but you can also give them away as presents to your loved ones and can really impress your family and friends by making this kind of present.
You can buy gold coins in pretty small units
While gold bars are often pretty big, you can buy gold coins in pretty small units and light-weight so you don’t have to spend a fortune on your first gold coins and can just start out by buying pretty cheap gold coins and can expand your collection from there.
Collecting gold coins may be a nice hobby
Buying gold coins can not only be a good investment but it can also make your life much better since it can become a pretty interesting hobby you may want to do for quite a long time and you will also learn a lot about those gold coins and about investing in gold in general in the long run.
You may feel special by owning rare gold coins
Buying gold coins may also feel special since you can just get pretty rare coins not many other collectors have and by getting those rare items, you will get a high standing in the gold coin collecting community and may also be able to have treasures inside your home most other people only dream about.
Gold coins may have historical value
The older gold coins get, the more they usually increase in value since many of those old gold coins have been issued due to important historical events and you can therefore also preserve ancient human knowledge by buying rare gold coins and storing them properly so that future generations can still appreciate those rare historical artifacts.
Gold coins may be part of a long tradition
You should also know that gold coin collection has a pretty long tradition and if your ancestors have already collected coins, you may want to preserve this noble tradition by collecting gold coins yourself.
As you can see, buying gold coins instead of gold bars can make quite a lot of sense.
Yet, there are also some drawbacks of collecting gold coins vs. gold bars that I want to discuss in the following so you will be better able to decide for yourself whether you want to get gold bars or gold coins according to your individual preferences and circumstances.
Disadvantages of Buying Gold Coins vs. Gold Bullion
- Many gold coins are overpriced
- Transaction costs for gold coins are often higher than for gold bars
- Many people make big mistakes by buying coins instead of gold bullion
- Huge swings in value of gold coins
- Gold coins may be harder to sell than gold bars
- Harder to determine the value of gold coins vs. gold bars
- Investing in gold coins may be more speculative than buying gold bars
- Gold coins are often not 100% pure
- Many fake gold coins out there
- Gold bars may be better if you want to buy large amounts of gold
- Beginners may be better off buying gold bars instead of gold coins
Many gold coins are overpriced
One problem with buying gold coins instead of gold bars is that gold coins are often overpriced and if you don’t know what you are doing, you will often pay far too much money for those coins and will regret it later on when you finally want to sell those coins and may not get more than the current gold price for them.
Transaction costs for gold coins are often higher than for gold bars
You should also not forget that transaction costs and premiums for gold coins are often far higher than for gold bars and if you don’t want to keep your gold coins for a long time but rather want to sell them rather quickly, you may be better off buying gold bars since you would not have to waste as much money on premiums you will never get back.
Many people make big mistakes by buying coins instead of gold bullion
In general, many gold buyers make big mistakes when buying gold coins since there are so many different coins and if you are not careful, you may just buy the wrong coins that will not have a big potential to appreciate in value and may never get your money back on your investment within a reasonable period of time.
Huge swings in value of gold coins
While gold bars and gold coins greatly change in value over time, you will still often see bigger swings in gold coin prices compared to gold bars and in case you are unlucky and buy the wrong coins, your coins may actually depreciate in value even if the gold price increases in case your gold coins become less popular and you have bought them far above gold and market value.
Gold coins may be harder to sell than gold bars
While you can sell gold bars close to the current gold price rather quickly, rare gold coins are much harder to sell since you would often expect a price far above gold value and it may be hard to find buyers who are willing to pay those high prices, especially during economic downturns when people often hold on to their money instead of investing.
Harder to determine the value of gold coins vs. gold bars
Another downside to buying gold coins vs. gold bars is that it will often be pretty hard to determine the true value of a gold coin since prices change quite frequently and if you are unlucky, you may buy gold coins at a much higher price than would be justified from an objective point of view while you will often buy gold bars at current market value and will not have the same risk of paying too much compared to investing in gold coins.
Investing in gold coins may be more speculative than buying gold bars
In general, as a rule of thumb, you can conclude that investing in gold coins may also be more speculative than investing in gold bars since you would often have to pay much more for gold coins than the current gold price and would have to speculate on further price increases in the future while you can be pretty sure that gold bars will appreciate in value in the long run.
Gold coins are often not 100% pure
While gold bars are often 100% pure, there are also many gold coins out there that are actually not 100% gold but may often be a mix of gold and other less valuable materials and if you are not careful, you may pay far too much for those mixed coins.
Many fake gold coins out there
You should also know that there are many fake gold coins out there and in case you are not careful and also don’t know a lot about gold coin collecting, you may spend far too much on gold coins that may look nice but may actually have close to zero value.
Gold bars may be better if you want to buy large amounts of gold
While buying gold coins may make sense in small units, buying gold bars may be far better if you want to invest lots of money in gold since the bigger the gold bar, the lower the premium vendors will usually charge and the more efficient you can buy gold without having to spend lots of money on transaction costs.
Beginners may be better off buying gold bars instead of gold coins
If you are still new to investing in physical gold, you may also be better off starting with buying small gold bullion instead of gold coins from official vendors since you will often don’t make the same big mistakes many other inexperienced people make when buying gold coins and may want to wait with investing in gold coins until you become more knowledgable.
Gold Coins vs. Gold Bars Pros & Cons – Summary List
| Buying Gold Coins vs. Gold Bars Pros | Buying Gold Coins vs. Gold Bars Cons |
|---|---|
| Gold coins are collectible items | Premiums for buying gold coins are often higher than for bars |
| You can buy gold coins in pretty small sizes | Transaction costs for gold coins are often higher |
| Collecting gold coins may be a nice hobby | Hard to find buyers for rather rare gold coins |
| You can impress your loved ones with our coin collection | You may pay far too much for gold coins |
| Gold coins may have historical value | Gold coins do not always appreciate in value when gold bars do |
| Collecting gold coins has a long tradition | You can make many mistakes by buying gold coins |
| Some gold coins greatly appreciate in value | Gold bars may be better than coins for bigger volumes |
| You may hit the jackpot by investing in gold coins | Value of gold bars may be less volatile than for gold coins |
| Gold coins may be more exciting than gold bars | Hard to determine the true value of gold coins |
| Thousands of different gold coins to collect | Beginners may be better off investing in gold bars vs. gold coins |
Should You Buy Gold Bars Or Gold Coins?
While buying gold bars may be better than gold coins since you will have to pay lower premiums and will also have an easier time selling your bars for a fair price, investing in gold coins can still make sense if you want to speculate on huge future price increases and if you really know what you are doing.
In the end, you should evaluate the advantages and disadvantages of gold bars vs. gold coins carefully and make your own judgement regarding whether you want to buy gold bars, gold coins or even rather want to invest in trading cards or other rather exotic asset classes.
Sources
https://en.wikipedia.org/wiki/Gold_coin
https://en.wikipedia.org/wiki/Gold_bar
About the author
My name is Andreas and my mission is to educate people of all ages about our environmental problems and how everyone can make a contribution to mitigate these issues.
As I went to university and got my Master’s degree in Economics, I did plenty of research in the field of Development Economics.
After finishing university, I traveled around the world. From this time on, I wanted to make a contribution to ensure a livable future for the next generations in every part of our beautiful planet.
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