Gold coins are a better investment than gold bullion for various reasons. While there are some basic reasons that make gold coins a better investment, there are certain misconceptions about gold bullion that make it seem to be a more attractive investment to certain people.
It seems that many people who are interested in investing in gold don’t realize what a gold bullion really is. In this article, we’ll show why it makes more sense to buy gold coins than to buy gold bullion.
What is gold bullion?
It is believed by some that the rectangular gold bars found in the vault of Fort Knox are the only available form of gold bullion, and the least expensive way to invest in gold. Some also have a hard time believing that gold in the form of coins can not be classified as gold bullion. Gold bullion is actually a recognized fineness and weight of gold, which can be purchased for whatever the current price of gold might be.
Other costs that will be involved in the investment are shipping, fabricating, and refining of the gold bullion. Simply defined, bullion is a stamped and refined weight of precious metal. These large bars of gold bullion are mostly owned by governments and central banks.
Liquidation of gold bullion
While these gold bullion bars can be a cost effective way to purchase gold, especially by entities involved in manufacturing, the arts, or electronics that may have a use for the gold they purchase, the bars can actually become costly to liquidate if there is actually no particular use for them. When trying to sell this form of gold, there can be various fees that may be involved, such as handling fees, refining fees, or assay fees, which will make this type of investment less profitable.
Trying to sell chunks of gold bullion, especially in larger quantities, can be much more time-consuming and difficult than selling a similar amount of gold in a more convenient size, such as gold coins. When trying to sell a brick of gold bullion, it is likely that finding a private buyer for the gold will be difficult and thus the seller of the bar would have to find a large dealer to sell the gold to. The bigger the bar, the more difficult it could be to sell, as it will not be easy to slice up the bar to try and sell it in smaller quantities.
A common misunderstanding about gold coins is that they are more expensive because of a limited supply, and are even looked at by many as collector’s items. One ounce gold bullion coins are nothing more than a smaller, circular form of gold bullion. These gold coins that are backed by a government rather than a refiner are efficiently mass produced, and compared to similar sized gold bullion bars are easier to resell and available at more competitive prices.
Gold coins are also minted by the millions every year. Pricing of the coins will be directly related to the rise and fall of the pricing of gold bullion.
Many people come to the conclusion that gold bullion bars are actually the best value for the money, but they fail to take into consideration that gold coins, especially older coins, can many times be sold to to private collectors at premium prices.
There are many more jewelers, dealers, and individuals who will purchase gold coins rather than gold bars. While many of these reasons make investing in gold coins a better alternative than investing in traditional gold bullion, it is the rare coin market that offers the best investment over investing in gold bullion.
Advantages of rare gold coins
There are some proven advantages in investing in gold coins that are part of the United States Rare Coin Market.
- Fixed and limited supply. U.S gold coins minted prior to 1933 have a limited and fixed supply, making them a sought after commodity in the growing coin collecting market.
- Old gold coins can’t be seized. Pre-1933 gold coins can not be confiscated by the government for any reason. Since they are considered collector, or numismatic, coins, they cannot by law be subject to seizure.
- Leverage in a hot gold market. In a bull market of precious metals, demand for these coins will be greatly enhanced. This means these types of coins can be sold for roughly double or triple the price of the recent value of gold bullion.
- Outperforms gold bullion. In the short-term, these coins are much less speculative than gold bullion. With the daily fluctuations of gold and silver prices, these rare coins will hold their value regardless of the rapid fluctuations in gold bullion pricing.
Trading in rare gold coins offers high upside potential and low downside risk. They are a great way to add leverage to an investor’s portfolio while being free from government intrusion and also offering safety in a time of crisis. This is a much safer long term investment strategy than investing in gold bullion.
Gold coins versus gold bullion
Investors in these types of gold coins have likely found that these coins have far outperformed any other type of investment they have ever made. The historical significance combined with the overall beauty and craftsmanship of these coins make them something that will maintain their profitability in the market for years to come.
While many collectors will find that newly minted gold coins have great value as well, the unique designs and overall beauty of a rare gold coin will not only add a more profitable option to their collection, but make their coin collection a more interesting one as well. Part of the excitement of coin collecting is acquiring a piece that not many other people have. The great thing about investing in such a rare piece is that sitting on it for three to five years and reselling it in a hot market can provide a profitable return that will be unlike any other investment.
Why are gold coins better than gold bullion? Simply put, they are easier to sell, easier to acquire, and can provide an investment opportunity, especially in the case of the older coins, that can rarely be matched by any other form of investment. Trying to sell bars of gold bullion could prove to be a trying experience. Trying to sell gold coins, however, will be something that will not only be easier, but can also provide a greater return on the investment in the long run.