Gold coins and bullion

Buying Gold – Coins V Bars

– Nigel Doolin, Head of Trading at Core Bullion Traders.

One of the questions most investors ask when getting into gold is: Should I buy coins or bars? The answer should be one that the investor themselves must make, but in order to do so you should be aware of all of the information and variables. Bars will generally be better value for money, as coins will have a ‘minting charge’ on them – add to this the fact that some coins will be more in-demand than others due to collectors – and you could end up paying anything from 1% to 8% more for a 1oz coin than a 1oz bullion bar.

Reselling Gold Coins

The issue here is that you will usually not make that premium difference back when you sell your gold, if you are selling to a gold dealer – as most gold dealers pay on weight alone. You can of course get a higher premium when selling your coin if you deal with a coin dealer/collector, however coin collectors can be difficult to find and sometimes difficult to deal with.

Why Invest In Gold?

Ask yourself some questions before buying; are you investing for purely financial reasons? i.e. are you buying for hedge reasons or to diversify your financial portfolio? If the answer is ‘yes’ then
you should most likely be buying bars – you will generally get more ‘bang for your buck’ if you buy bars especially the larger weight bars. Buying larger gold bars over smaller ones is like economies of scale in reverse. For instance, there are 32.15 Troy ounces in a 1 Kilo Bar – if you were to buy 32 individual 1oz bars this will end up costing you more than buying a single 1 kilogram bar as, with 1 large bar you do not have 32 individually packaged and numbered bars so your cost will be slightly lower.

Bang For Your Buck

You should most likely be buying bars. You will generally get more ‘bang for your buck’ when buying the larger weight bars. Buying larger gold bars over smaller ones is like economies of scale in reverse. For instance, there are 32.15 Troy ounces in a 1 kilo Bar. If you were to buy 32 individual 1oz bars this will cost you more than buying a single 1 kilogram bar. Because, as with 1 large bar you do not have 32 individually packaged and numbered bars so your cost will be slightly lower.

Premium On Coins

Do you want to start a nice collection of gold which you may give to loved ones or pass on to your children? If the answer to this is ‘yes’ then maybe you should consider coins over bars. But be aware as has been explained above. You will most likely end up paying more for the coins than bars. The only exception to this is if you can find a gold dealer who offers ‘Special Offers’ on gold coins…or reduced premiums on coins – if you can find a gold dealer who offers this then the coins will usually equate to the bar prices.

As with most features of buying gold bullion or coin, the advice is simple; do your research and chose the best option for yourself and your budget.

Nigel Doolin is Head of Trading at Core Bullion Traders – A gold trading company based in Dublin, Ireland. Nigel can be contacted directly at: nigel@corebulliontraders.ie or Tel: +353 (0)1 447 5975