Gold Coin or Gold Bar: Which is Better to Buy?
When people earn money, they use some money for their daily needs and save some part of it to meet their future needs. Rather than keeping this ‘extra money’ idle at home, people prefer investing it so that their savings grow with time. Among Indians, gold is one of the most preferred investment options. People buy gold as it has an emotional value and provides a perfect hedge against inflation. One way to buy gold is by buying gold jewelry. But this is more for self-use or gifting rather than investment. The two standard modes for buying gold are gold coin or gold bar for investment purposes.
What is a Gold Coin?
Being sold in the shape of a coin, and hence the name, gold coins are a popular investment option. Available in different weight denominations, a gold coin is 22-carat gold, which is about 90-92% purity.
Advantages and Disadvantages of Buying a Gold Coin
Gold coins are very popular as an investment option and for gifting on festivals, weddings, or other occasions. These coins can be melted and used in the future to make gold jewelry.
Some advantages and disadvantages of buying a golf coin are given below:
- Gold coins have a collectable value. They appear fancy compared to gold bars and can also be used for gifting.
- Available in smaller sizes starting from 1 gram. This makes it easy for small investors to invest and also when you want to gift gold, but you have a limited budget.
- Since they are small in size and weight, they can quickly be sold in case of a crisis. This makes the gold coins highly liquid. In some cases, they may be used as legal tender.
- Many jewellers, banks, and NBFCs sell gold coins. Most coins are minted by the government only. This provides some credibility to the purity of gold coins.
- Investors need not worry about inflation or capital gains tax till they do not sell it.
- The gold coins come at a premium, because of their collectability legal tender status.
- They are expensive compared to gold bars, because of the manufacturing and design cost involved.
What is a Gold Bar?
Gold bars are a very popular investment option for seasoned and large-scale investors. They are available in various shapes and sizes depending upon the weight. These bars also may be melted and used to make gold jewelry when required. Since these bars do not have any other functional use, they have a higher purity of gold, as high as 99.9% purity.
Advantages and Disadvantages of Buying Gold Bars
- Available in multiple sizes from 1 gram to 1 kg. So, investors may choose any size depending on their budget.
- Gold bars are cheaper to manufacture. There is no design cost either. Hence, they are less expensive as compared to gold coins.
- It is ideal for big investors, who have no intention to sell it in the short term. They prefer keeping it as a part of their portfolio.
- They come in a standardized form and can be exchanged with any bullion dealer for cash.
- Because of their weight, small investors cannot invest in gold bars.
- There is no collectability associated with gold bars.
- Because of its weight and higher price, selling it is not easy, as it involves a considerable amount.
- Compared to a gold coin, melting a gold bar and giving it a new shape is a difficult and costly process.
Should I Invest in Gold Coin or Gold Bar?
If you are buying gold purely for its inherent value and as one of your portfolio investments, you should invest in gold bars. However, if you are looking for gold to be something more than a financial instrument, maybe as a collectible, you should invest in coins.
What is the Difference Between Gold Coin or Gold Bar?
A gold bar is just a lump of metal minted into a cuboid shape. The weight and the purity of gold are inscribed onto the surface. A gold bar is suitable for investors who want the gold for its inherent value rather than minted into some shape or beautiful design.
On the other side, a gold coin is a gold minted into a proper shape with a beautiful design. These coins may have certain traditional, historical, or even emotional values attached to them. Indeed many gold coins that are still traded today were once circulating currency. Hence, they have a collectible value as well. Also, in some cases, they may be used as legal tender. Due to all these reasons, gold coins come at a premium.
Gold Coin or Gold Bar – Which Gold is a Better to Buy?
Apart from the physical differences, there is not much difference in gold coins or gold bars. When selecting between the two, the choice boils down to individual preferences, personal motives, and investment goals. It also depends on how much one is looking to acquire, the period for which one is ready to hold, and the potential resale value which one is looking for.
Generally, small investors looking for short-term gains prefer going for gold coins. Large investors who prefer having gold as a part of their investment portfolio for the long-term prefer gold bars.
Buy Gold Coins or Bars in India
There are several days, especially Akshay Tritiya, Dhanteras, and Deepawali when gold is in high demand. Apart from the jewelers, several banks and other NBFCs sell gold coins. For buying gold bars, one has to visit a jeweler.
Frequently Asked Questions
Q1: Is it better to buy gold coins or gold bars?
Ans: This totally depends on the investor’s individual preferences, personal motives, and investment goals.
Q2: Are gold bars more valuable than gold coins?
Ans: Gold bars come with a higher purity of gold. Hence, they are more valuable than gold coins.
Q3: Where is the safest place to buy gold coins?
Ans: Various banks and online platforms, like OroPocket, allow you to buy gold in digital form.
Q4: Are gold bars pure gold?
Ans: The gold bars contain pure gold not alloyed with any other metal. Hence, they have purity as high as 99.9%.