As of May 2023 we have seen such fluctuation across the gold market since the beginning of this year. This is due to several economic failings such as bank collapses and buy outs which have cast a ripple through the industry. With all these movements across stocks and the current UK financial market many investors are choosing to place their value into a safe-haven asset, which is why they are turning to the bullion market.
Maybe you are a first-time investor looking to expand your portfolio you may not know where to turn your focus when investing in gold for the first time. Or perhaps as a seasoned portfolio holder you may want to diversify your investment holdings.
I’m going to outline your investment choices for you and answer the bullion diversifying question, gold coins vs gold bars what should you invest in?
Here are 5 Pros of Investing in Gold Bars
1. PURITY
Gold bars are usually struck in a purity of 99.9% or higher, establishing a reliable store of value and investment.
2. SIZEABLE INVESTMENET OPPORTUNITIES
Gold bars can be purchased in large quantities, i.e the content of the bars range from 1g [gram of fine gold] upwards into kilos, which casts bars as a strong option for investors with a significant amount of capital to invest.
3. LOW PREMIUMS
Gold bars tend to have lower premiums than gold coins, which means that investors pay less for their investments over the gold spot price.
4. ACCESSIBLE STORAGE OPTIONS
Gold bars are easy to store and can be stored in a safety deposit boxes, home safes or external secure storage facilities.
5. EASY TO SELL
Gold bars are widely renowned and can be easily sold on to bullion dealer or other potential investors.
5 Cons of Investing in Gold Bars
1.COST
Gold bars can be expensive when purchasing, meaning investors may need to be willing to invest a significant amount of capital to purchase them.
2.STORAGE FEES
Investors May have to factor in storage costs, this meaning purchasing a safety deposit box, home safe or paying external storage fees.
3.RESTRICTED FELXIBILITY
old bars are not malleable and cannot be divided or sold in smaller amounts than they are cast within, which makes them less flexible than other forms of gold when looking to sell a portion of your portfolio.
4.COUNTERFIETS
Investors must be cautious when purchasing gold bars to avoid counterfeits or any restruck bars at lower purity.
5.LIQUIDITY ISSUES
Selling gold bars can require more legwork than selling gold coins, especially if the bars are larger, moving these on can be challenging if you do not have a buyer lined up or are not willing to take a loss if the market drops since your purchase.
5 Pros of Investing in Gold Coins
1.HIGH LIQUIDITY
Gold coins are widely renowned and can be easily sold on to bullion dealers or other potential investors.
2.BUDGET FRIENDLY
Gold coins can be purchased in smaller dominations such as 1g fine gold coins, making them a flexible investment option for both purchasing and selling on.
2.EASY TO STORE
Gold coins are much simpler to store than gold bars, due to their smaller nature and much easier to conceal, making the opportunity to keep home storage for your investments viable.
3.HISTORICALLY SIGNIFICANT
Gold coins often have historical significance and can be collector's items or established trading favourites such as gold sovereigns or Britannias.
4.POTENTIAL
Gold coins can appreciate value over time and due to demand or rarity, providing a promising return on investment. Such as increases in value above only weight and carat.
5 Cons of Investing in Gold Coins
1.HIGH PREMIUMS
Gold coins tend to have higher premiums than gold bars, which means investors pay a higher markup over the gold spot price.
2.LIMITED PURITY
Gold coins may have lower purity than gold bars, which can influence their value when sold on as weight and carat.
3.STORAGE COSTSs
Investors May have to factor in storage costs, such as purchasing a safety deposit box, home safe or paying external storage fees dependent on the amount of coins they have purchased.
4.COUNTERFIETS
Investors must be cautious when purchasing gold coins to avoid counterfeits.
6.RESTRICTED INVESTMENT OPPORTUNITY
Gold coins may not be a good option for investors with a significant amount of capital, as they are typically purchased in smaller quantities.
With these facts presented we can see there are several viable reasons why investing in gold in today’s market is a strong choice for a first-time investor or as a means to diversify your portfolio.
The key “cons” are clearly listed here, but this being addressed I feel really highlights the cons as merely somewhat avoidable instances for the savvy investor.
With regards to any counterfeit bars or coins you could come across throughout your investment journey, you can remove the risk of exposing your investment to restruck or plated coins and bars by making your purchases strictly with a reputable bullion house to ensure the purity and authenticity of the items you are purchasing.
Excess costs such as storage fees can be avoided if you are able to store your items yourself or negate the costs if you take advantage of free storage options bullion houses may be running, because they are out there, for instance Hatton Garden Metals currently offer 6 months free storage for all customers.
And for any investors facing high premiums when looking to purchase gold coins , these fees can be minimized by taking advantage of multibuy offers bullion houses offer or alternatively switching focus of their investment to purchasing gold bars. This too can be an option when wanting to offset any limitations investors feel with catering their capital against investment such as coins or bars.
So we’ve broke it down and where we stand within the current market with turning toward gold as a safe-haven investment that we know has potential and provides you with a hedge against inflation. When you are faced with making your investments your focuses should be as follows, If you have lower budget or just stepping into bullion investment, you should buy little and often and be sure to keep gold coins within your portfolio. Or alternatively If you have large capital and are looking to make a larger initial investment, take advantage of the lower premiums and know that gold bars are the stronger choice for you.
Regardless of your budget your investment choices for 2023 are open, worth within this market is a structure we’ve historically seen to hold if not appreciate worth, however this is not a guarantee as no one can predict the market or if the value of gold will deplete. We know from history it will never loose its worth as a value but the dominations of the spot price we see vary daily.
So yes gold does come with its risks and costs, however for many investors the benefits far outweigh the potential risks when choosing to invest in Gold.
Please note when considering investing in gold, be sure to do your research, understand the risks you are exposing yourself to before choosing to invest in Gold in today’s market.