subject: Should I Buy Gold Coins Or Bars [print this page] In today's world of economic downturn, many people are curious to find out other modes of investment which can profit them in the longer run. People want to know which is a better mode of investment regarding Gold, is it gold coins or gold bars? The information regarding this subject matter is relevant for both the big financiers and the small scale financiers.
The large scale investors, who are serious about investing in gold, can buy gold bars. It is a simple and efficient way to invest. The larger bars are cheaper than the smaller ones, and you also pay fewer premiums on them. The smaller bars are costly because their selling demand is high. A larger bar, on the other hand, is not a flexible selling option. For instance, if you own a gold bar of one KG, and you want to sell, say 100 grams, it is very difficult to slice off 100 grams from it. It will be hard for you to find a buyer; you have to find a big dealer who could buy gold from you. Most people are not aware about gold bullion bars, so it will be hard for you to find a private buyer. Now let us look at gold coins.
As for the gold coins, they are more popular than gold bars due to the advantages attached to it. The first advantage is that the gold coins are guaranteed by a government, whereas gold bars are guaranteed by a refiner. These coins are efficiently produced in large numbers, so they are cheaper than the similar size bars as they are produced in bulk. They can be easily sold as almost everyone is aware about the gold coins.
To understand it in a better way, we must look into the premium factor on different gold items. The premium on gold sovereigns was as high as 40 percent almost five decades ago. However, the situation is totally different now as premium can change very quickly. It changes after every hour according to the market demand and supply factor. It is beneficial to pay premium on older coins, like sovereigns, than modern coins such as Krugerrands, because the premium on 1000 sovereigns is very close to 100 Krugerrands.
When we are in the process of acquiring gold we only regard percentage premium. To further elaborate this explanation we can presume that huge financiers would assume that the kilo gold bars are the most excellent to make maximum profit, but on the other hand they fail to recognize that the older gold coins can be sold at premium prices with no difficulty whatsoever, besides this these coins can again be resold confidentially to collectors at more privileged prices.
The amount of premiums that used to be paid almost a decade ago were 10% premium for sovereigns and around 4% premium for Krugerrands, besides this they were various discounts also offered on the gold costs. Since many of the dealers and jewellers were becoming aware of the quality of gold coins they started to favour them over the gold bars.
The interesting tie is between old traditional coins and modern one ounce bullion coins. People are in a fix to decide if they should go for older traditional bullion coins, such as British sovereigns, or one ounce bullion coins, such Krugerrands. If you wish to buy in a small quantity, you should go for one ounce coins, but if you like to buy in large quantities, the premiums on both old and modern coins are comparable. However, a lot of things depend on current market conditions.
In a nutshell, if you get British gold sovereigns at about 1% or 2% above premium on Krugerrands, go for them, or your best option is one ounce Krugerrands as you can find them at lowest price.
