subject: Buying In Bulk? Gold Bar Vs Gold Coins: 3 Important Points [print this page] You simply must try this at least once in your life: hold a big bar of gold in your hand and study it. The glittery, slippery feeling coupled with the impossible weight explains everything.
Unlike bank notes and stocks, which are just little pieces of IOUs, or even mortgages, which are bigger versions of the same thing, gold will always retain its value so long as people can't find a way of manufacturing it from other materials. Since three thousand years of alchemy and nuclear technology have yet to discover such a way, we can safely say that this heavy metal is the most secure bet of them all.
However, it becomes quite problematic when you're trying to actually buy some from a shop. The majority of retail gold comes in the form of bars or coins, and what follows is a no-frills explanation between the two.
*Bar: A Big Stick To Wave Around: Gold bars essentially come with a bulk discount, because they have by far the lowest premium over the market value for gold. As standardised issues, there is less hassle when it comes to authentication and tracing, and since you can't quietly shave off a bit of it and sell it to another party, they are widely traded. However, you still need a buyer who has hopefully more cash than what you paid for the bar in the first place, and this can be an arduous search in a private market.
*Coins: A Tiny Thing To Throw Around: Since they are easily tradable, gold coins are a lot more popular with the small-scale investor. But this means that the relatively high demand for gold coins over bars puts it at a higher premium. The minting process, as well as the vastly higher overhead in making these transactions, make it an easier if less lucrative choice of investment.
*There Are No Vintage Coins: If you position yourself as an investor and not a collector, avoid older or rarer coins like the plague unless you know exactly what you're doing. They will be priced a lot higher than standardised mint editions, and the add-on value tends to be inflated away unless there is genuine interest in the historical aspects of your collection. Of course, exceptional cases abound, but a prudent investor would do well to at least investigate the matter fully before making his or her first purchase.
by: Adrian Getty
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