Buy Bars or Coins?
So, now that you’ve made the decision about which precious metal you would like to invest in, the next stage is to decide upon the type of product that you are interested in. Gold and Silver are available in a wide range of weights and forms including bars, coins and rounds.
It is worth remembering that each product that you buy will have built in fashion charges from the manufacturer to cover the costs of production and any decorative packaging supplied along with the item. Manufacturing costs also vary considerably between minted coins, minted bars or rounds and cast bars.
When deciding between products you should also consider your future needs with regard to realising the value of your asset, known as the liquidity of your investment. For example, if you invest in a single larger bar you will be unable to release only a small percentage of the overall value in the event of an emergency. It may therefore be wiser to invest your chosen amount into several products which have individual values that more closely match your likely requirements in the event of future financial need.
Naturally you should carefully consider your future requirements and only invest an amount that you are comfortable with. You should always seek independent financial advice if you are unsure about your investment strategy.
Minted bars are usually produced to a high class finish, many with beautiful and interesting designs. In contrast, cast bars can have an irregular appearance as they are created by pouring molten metal into a mould. There is a price differential between minted and cast bars as the production costs of minted bars are higher and they are usually attractively packaged to prevent damage.
Investing in larger bullion bars will usually achieve the best purchase price in terms of price per gram of metal but this can cause liquidity issues in the future if a large investment piece has to be sold to fund a relatively small expense. The range of bars available allows investors to plan ahead, combining perhaps a single larger bar, to be held long-term, with smaller bars that can be sold as and when required to satisfy a single, or even multiple unexpected financial needs.
Bullion Coins are legal tender in their country of origin and benefit from legal protection against counterfeiting due to this status. Coins have a face value and are guaranteed by the government producing them in terms of quality. They may also have a limited production run which can increase the collectability value beyond the base value of the metals in the coin. You can browse the current European Commission list of accepted bullion coins and the additional UK list.
Production costs for coins are relatively high compared to some bars and typical metal content will be up to 1 Troy Ounce though larger versions up to 1 kg, particularly in Silver, are produced by some of the more prestigious mints.
UK bullion coins, predominantly gold Sovereigns and Britannias and Silver Britannias, also benefit from exemption from Capital Gains Tax on future profits when the assets are eventually sold. This can be a valuable consideration for diverse holdings that may have to be sold in the same tax year as it can limit the overall CGT payable.
The fact that coins are dated can also be an advantage in making them collectable in sets, desirable due to historic dates or even important family dates such as birthdays. In addition, there are often numismatic factors such as rarity that attract collectors to certain coins. These factors often combine to produce increases in value that exceed the simple metal value of a coin.
Due to the many factors influencing the prices of coins, they are usually very easy to sell at short notice without the need for a specialist buyer and this is an important consideration when considering future liquidity.
Rounds are very similar to coins in their overall appearance but are not considered legal tender. Rounds have slightly less appeal to collectors as they are produced in greater numbers using the same design for many years and are generally regarded in the same way as minted bars. Rounds can be a useful way of getting precious metals into your portfolio as they can provide an additional interest alongside bars and coins.
The Choice Is Yours
Which type of precious metal, in which form, are decisions that only you can make as they will be based on personal taste, current financial position and future plans and expectations. We are happy to provide any additional information that you need, just call or email our knowledgeable Customer Services Team.