Those new to investing in gold and silver often ask us: ‘which is better, bars or coins?’. The answer is simple: there are pros and cons to each. In this week’s blog, we will compare both bullion bars and coins, which may help you make an informed choice as to which could be more suitable for you when investing in precious metals.
Gold & Silver Bars
Bullion bars are slabs of precious metals, produced by various mints all over the world, and are available to buy in an array of sizes usually between 1g and 1kg.
- Many bars, particularly larger size bars, tend to have the lowest premium over spot price, meaning better value and the potential to own more gold or silver for your money. This is largely due to lower production costs than coins.
- Bars are usually accompanied with an assay certificate of authenticity.
- Bars are easily stacked for storage.
- Bars are typically high in precious metal content, usually 999.9% Fine Gold or Silver purity.
- Many new stamped bars come in sealed, attractive packaging.
- Liquidity issues. Holding a larger bar rather than many smaller one-ounce coins may be more difficult to sell, offering you limited flexibility should you wish to trade off or sell during a financial crisis.
- Storing a large quantity of larger bars may be more difficult in your own home.
- Bars lack the collectability factor that coins possess. However, some manufacturers are now adding stamped images onto bars, although these do come at a higher premium.
- Bars are subject to Capital Gains Tax (CGT), which means you may be liable to pay tax on any profit you make over annual exemption amounts, whereas many UK coins benefit from being exempt from CGT.
- On resale, bars do tend to attract a lower buy-back price than coins.
Gold & Silver Bullion Coins
Gold and silver coins are available in a large variety of sizes and often feature attractive or historical designs and are stamped with a date, adding a collector element to precious metal investment.
- Coins are easily stored at home, easily slotted into tubes or boxes, making them easier to disguise and transport.
- Coins are available in a range of sizes and designs, appealing to both investors and collectors alike.
- Many coins are given a denomination, for instance; the UK gold Britannia has a monetary denomination of £100, which means that the coin is Capital Gains Tax (CGT) exempt to UK investors.
- Coins are usually stamped with a date, which can make them perfect to mark important dates such as birthdays and anniversaries.
- Coins can offer greater liquidity and flexibility – they are often easier to sell, as you can sell smaller amounts as or when you want to. This also applies the other way around; you can also purchase smaller amounts and spread your investment purchase over a longer time.
- Coins can increase in not only metal value, but also collectable or numismatic value. Over time, some coins can potentially accrue a collectable value, increasing your original investment.
- Some pre-owned silver coins can be sold using the ‘second-hand margin scheme’, meaning that these can be sold by us to you without added VAT, saving you money on your investment. This is only available on coins, not bars.
- Not all coins are accompanied with a certificate of authenticity. Only Proof coins are supplied with a certificate, bullion coins generally are not.
- Coins can vary in their purity. Some coins offer 999.9 (out of a thousand) Fine Gold or Silver fineness, some are 925.0, 900.0, or 916.7, such as the Sovereign.
- Higher production costs for gold and silver coins can mean, especially when buying larger investments, premiums can be a little higher than those of bars.
As you can see, there are a variety of considerations to purchasing both bars and coins, and as with any purchase, there are always pros and cons to be considered. Hopefully this blog has covered the basics for you and may help towards your research.
The buying of gold and silver coins or bars is an entirely personal decision as to what is most suitable for you. Some people may even opt for a mixture to diversify their portfolio, if they deem that is a good option for them. We do strongly recommend that you seek professional investment advice ahead of making your final decision.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.