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Gold Coins V Gold Bars

Gold Coins V Gold Bars

 

People often ask what the difference is between buying gold coins and buying gold bars, or bullion, as it is known in the industry. There are a number of differences and reasons why investors buy one over the other. Whether you are starting out as a gold investor, or whether you are a seasoned investor, our main piece of advice is always: do your research first.

 

We must preface this editorial with the fact that we are not giving financial advice here, we are purely giving advice on which type of gold product to buy to suit your needs.

Gold Bars/Bullion

Gold bars or bullion come in a variety of sizes and weights from 1 gram all the way up to 1 Kilogram bars.  There are larger bars than 1 Kilogram, but these are generally only traded between banks and governments.  The most common size for starter investors would be 1 ounce bars – there are 31.1 grams in 1 Troy ounce of gold.  Bullion is always 24 carat gold 999.9 (Four-nines) purity. One should always only buy bars from LBMA (London Bullion Market Association) approved refinery’s.  If you are looking to buy gold purely for investment purposes we would always recommend buying bullion. Some reasons for this are as follows; not only is the gold bar attractive in terms of appearance but the premiums are lower on bars when compared to coins as the production costs are lower. This lower premium also applies to the different sizes of the bars, as a one kilo gold bar will include a lower manufacturing cost than 10 x 100 gram gold bars. In this example, purchasing a 1 kilo bar opposed to 10 x 100g would save about 1%-1.5% in monetary terms.

Although the size of the bar you decide on will have an influence on the price you will pay, you should also take into consideration how flexible you want to be in terms of realising your assets. Smaller bars such as 1 ounce, 50g or 100g can be beneficial when re-selling gold bars, such as releasing some of your investment or part-selling.  Additionally when buying/selling one big amount of gold, you will face larger exposure to market risk as you will typically be trading on one gold price. When purchasing smaller bars such as the 1ounce gold bar, you will again face the higher premiums as packaging, serial and matching certificates will need to be produced.

Gold Coins

There are many different types of coins to choose from.  This gives you greater choice in sizes, carats and designs.  Coins are also very flexible in terms of re-selling, as smaller units of gold are easy to release when in need of quick access to cash. Another benefit with certain coins such as Britannia’s and Sovereigns are  that they are CGT (Capital Gains Tax) Free.  Selling coins also give you more flexibility as you do not have to sell everything at once, which gives you lower market risk as you are not selling on one gold price. Certain coins such as the Gold Sovereign also hold collectible value and over time these coins may accrue numismatic value which can increase your original investment.  There are many other coins including the Krugerrand, which is one of the most widely traded coins in the world, that tend to attract a smaller premium when buying.

 

The downside to buying coins are that there is a ’minting charge’ on coins so they will generally cost more than bullion weight-to-weight. The difference is not a lot on small quantities but it will start to add up the more you buy.  For instance; if you buy 3 X 1oz Gold Maple coins they will cost you approx.. €20 per coin more than buying 3 X 1oz bullion bars – think about that: both purchases are 3oz’s of 24 carat gold yet the coins are costing you in total €60 more…purely because they are coins. If you go to sell/or scrap the coins/bars you will get a price on the weight so you will not realise this price difference when you go to sell. Coins also do not come with certificates and not all coins are 24 carat (as many are 22 carat or even less for some coins). This can cause larger difficulty when calculating the worth of the coins. From an investment perspective, coins entitle larger premium when compared to larger bars which means that you will get less gold for what you pay. Investing in 32 x 1 ounce gold coins opposed to 1 x 1kg gold bar creates an obstacle if one wants to store the entire investment in one location (eg. safe deposit box).

 

Our advice on which gold product can be summed up by asking yourself: are you buying purely for investment reasons?  Or are you buying to have a nice collection of gold to look at and keep or give as  gifts?….If your reason is the latter – buy coins. If the former – buy bars/bullion.

 

For any further questions regarding buying bullion bars and bullion coins, or to get an instant price on a gold purchase contact our trading desk on: 0141 343 1305 or visit us at Scottish Bullion in Glasgow.

To view our website please click here: http://britishbullion.co.uk

 

Nigel Doolin

Head of Trading

British Bullion

 

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Gold V Shares… Which Is The Wiser Option For Investors?

The prolonged debate in the world of investing over gold v shares will never end. Varying opinions are offered on a regular basis with people aimlessly switching sides and losing money along the way. To ensure such a mistake is not made, it is important to understand the intricacies of such assets.

Let’s take a dip into this heated debate. Gold v shares which is the wiser option for investors?

Gold Protects ‘Purchasing Power’. Purchasing power is key and gold protects it on the investor’s behalf.

But what does this mean? The value of the asset is not going to depreciate in a way where one will not be able to get a return of some sort on what is in their portfolio.

Shares Are Volatile. The economy has a greater role to play with shares and they can often be extremely volatile. There is a lot of ‘guesswork’ involved with investing into shares. This risk might not be worth it for most people and that is why gold is often found to be more reasonable as an investment choice.

The likes of Warren Buffet have often said Gold is a ‘sterile’ place to invest in because it is not going to pose a massive risk to your portfolio. Most people would think that is the whole point in investing!

It might not grow as fast as you would like it to, but it will grow.   The smart and/or educated answer would be to consider diversification. Gold and shares should both be an integral part of anyone’s portfolio. Those who choose one or the other will have to sift through this piece again to decide which pros or cons fit their needs.

In essence, gold is the wiser option as it is usually going to trend upwards on most occasions if one was to choose a singular option.   To put it simply, Gold v shares which wiser option is for investors? For security the answer is gold, for greater/quicker possible gains it would be shares.

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Understanding the Gold Market

 The gold market is one of the most popular safe-haven commodity markets in the world. Investors who are reluctant to put money into the volatile currency market, or the fragile equities market, often turn to gold because it is a commodity that will always be in demand. Since it is a physical item, it will be valuable even if there is a global economic collapse.

When you invest in gold, typically you are investing in either gold coins or gold bars. Krugerrands are one of the more popular types of gold coin – they are the second most popular coin in the US, and in Europe they enjoy greater popularity than the US Gold Eagle. In fact, a higher number of Krugerrands have been made throughout recent history than any of the other modern gold coins.

A Krugerrand is made of 91.67% gold, with the remainder being copper. In theory, there are four sizes of Krugerrand: 1oz, Half-ounce, Quarter-ounce and tenth-ounce, however the fractional-ounce ones are rarely available and not as sought after as the full 1 ounce coin.

dedededThere have been around 42 million Krugerrands minted since the coins were released to the market in 1967, with the majority of them having been minted in the 70s and 80s, when inflation fears were driving more and more investors towards gold.

When the US Congress lifted the import ban on the coins in 1994, there was a massive influx of Krugerrands to the USA, however the coins did not manage to take over the market, since US Gold Eagles were already established as being the default and most popular coin for US investors. This means that US Gold Eagle prices remain higher, and the coins remain slightly more sought-after in the US.

In Europe and the rest of the world however the Krugerrand is more popular.

Krugerrands are the second most popular way of trading gold in the USA, and they have the most active secondary market – there are usually thousands of the coins changing hands every day, making them even more popular than gold bars.

 Gold bullion bars come in many weights from 1gram all the way up to 1,000gram bars.  These bullion bars are more ideally suited to pure investors into the commodity who have no interest in the various coins for collectability, but are in the market more so for hedge and speculation purposes.

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Gold Coins

Gold coins are the most dynamic type of gold in that they serve as both a kind of bullion speculation and as a collectible. Despite the fact that a few coins are more lavish than others, essentially every one of them will be sold at a solid premium over the current cost of gold contained inside the coin. The motivation behind why gold coins cost more every ounce than gold bars is a direct result of the coins’ collectability, scarcity, and high demand.

Every single real coin command another variety consistently, and once a certain year’s creation is finished, that variety of the coin will never be delivered to market again. This pushes an irregularity and interest that goes past the estimation of the gold contained inside every coin. This is restricted to gold bars and rounds, which can be created by any gold mint on the planet, and subsequently are less significant and collectible.

Reverse of the American Buffalo gold coins, st...

There are actually hundreds of different types of gold coins that have been stamped all through the world and throughout the past hundreds of years. Adversly, between these coins, there are just a modest bunch that are routinely purchased and sold on an extensive scale: the Australian Kangaroo, the American Eagle, the Chinese Panda, the Canadian Maple Leaf, the Gold Buffalo, the South African Krugerrand, and the Mexican Libertad. A greater part of the normal gold coins are additionally delivered as silver coins.

Albeit numerous gold coins, for example, the Australian Kangaroo and the Chinese Panda, contain 99.9 percent or 99.99 percent gold, a few coins, for example, the American Eagle, don’t. The American Eagle is a composed of 22-karat gold, which has about 91.67 percent gold, joined with about 5.33 percent copper and around 3 percent silver. This combination makes a more sturdy coin, as 100 percent pure gold can be somewhat delicate for a flowing coin.

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