The most common question first time gold buyers ask is, “should I buy coins or bars?”
The first thing to always keep in mind when deciding on buying coins or bars is that the melt value of the metal does not actually change depending on its form. An ounce of gold is going to have the same value across the board, whether it’s in the form of a coin or a bar.
Gold and silver coins are government-issued legal tender. In addition to their intrinsic value, there’s a value placed on them by governments that banks are legally required to exchange for readily-available funds. However, this value is always going to be lower than its intrinsic value, which is determined by the day-to-day fluctuations in precious metal prices. Coins have the potential to appreciate in historic value but the ability to exchange it for its full appreciative value is ultimately dependent on ephemeral demand. When it comes to investing in precious metals, collector’s items have no value until there is immediate demand for that specific coin.
Coins are more expensive to purchase than bars. The higher premium value of the gold or silver is due to the added costs of government branding. A coin is basically a blank piece of gold or silver that is produced by an outsourced vendor and then sent to a mint, such as the United States Mint facility at West Point, to be stamped with a government seal. Governments charge a surcharge for stamping the coins in their mints.
Gold and silver bars are made by private mints and are not commissioned by governments. They are a better investment than coins because they cost less, providing a greater difference in resale profits. If you’re looking to maximize the value of your investment, bars are more efficient. Serious investors prefer bars because they are looking for high quantity and high value.
Buyers who are interested in coins are often concerned with the ability to trade in smaller increments. People worried about an imminent financial crisis tend to go for coins. Buyers who opt for bars are simply ensuring that the profits will be higher in the event of resale because less was paid for it.
It’s worth noting that in any case, the larger the bar you buy, the less you will spend. It costs more to produce a smaller bar than a larger one, or a single bar versus a higher volume. Regardless of whether you choose to go with coins or bars, getting the highest possible return on your investment will require consulting with a dealer. At the end of the day, the intrinsic value of any precious metal does not change with its form. Both forms are excellent purchases to diversify your investment portfolio, protect your wealth and give yourself the gift of financial security.
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