Gold plays a major role in making one’s investment portfolio strong. Seasoned investors buy gold bullion to protect their wealth. But which form of Gold bullion is ideal for investment?
“Should I buy gold bars or coins to achieve my financial goals?” This question must have popped up in your mind if you are a beginner.
The answer to this question solely depends on individual preferences and investing needs. Whether one buys gold bullion bars or coins or a mix of both will also depend on the time when one decides to purchase and market trends.
Numerous other factors can impact your decision. You need to answer the following questions. Is it a long term investment? How much are you planning to invest? Where will you store your bullion investment? What premium you will be paying? What will be the impact of Taxes such as Value Added Tax (VAT) and Capital Gains Tax (CGT) on your investment?
If you are caught in a dilemma, here we are presenting a beginners guide that will help you decide whether to buy gold bars or gold coins. So without any further ado, let’s get started.
Gold Bullion Bars
Gold Bars are slabs that are rectangle in shape and contains .999 pure gold. They are available in numerous sizes ranging from grams to kilograms.
The yellow metal in the form of bars, along with silver bullion bars, makes for the easiest way to build one’s investment portfolio.
If you are planning to invest a large sum of money then going for larger size gold bars is likely to offer the best value for money. And you are likely to get high returns on your investment in the long run. The only downside about heavier bars is that they have lower flexibility.
For beginners, it is recommended to go with a mix of both, bullion bars and coins, depending on your research and market trends.
You can find gold and silver bullion bars at the lowest price online on the Central Bullion platform. On their global bullion marketplace, they offer high purity precious metals, perfect for diversification of your portfolio.
Premium is a crucial factor
Premium is the additional amount on the spot prices, it includes manufacturing and other expenses.
If you consider equal weight and fineness, larger size gold and silver bars are available at lower premiums as compared to precious metal coins. So, to minimise premiums, you can consider to buy silver bullion and gold bars.
The production cost of a bar is lower than that of a coin. As coins come in numerous designs, their labour cost is higher and this makes them a bit expensive. The rarity and demand of some coins also make them costly. On the other hand, a gold bar’s price mainly depends on its weight.
Note that the premiums on bars and coins of the same weight and fineness would almost be similar when the bars are smaller in size.
Impact of VAT & CGT
Now, let’s consider the impact of taxes on bullion investment. In the UK, gold investment, be it bars or coins, is VAT free. If you ask, what about the Capital Gain Tax at the time of selling? Any British legal currency is CGT exempt, which means that if you buy any coin produced by the Royal Mint, you will not have to pay CGT.
Silver and Gold Britannia, Gold Sovereigns are considered officially legal tenders and therefore they are exempt from CGT. At the time of buying, gold coins may cost a little higher compared to bigger bars but can give higher returns when selling as they are CGT free. This is the reason why most investors diversify their portfolios with gold coins.
Which one is more flexible?
As mentioned above that the large size gold bars offer value for money but at the time of reselling, this may not be true. On contrary, smaller bullion bars and coins have more flexibility at the time of selling.
In case of any financial emergency, with a larger bar in your portfolio, instantly finding a buyer can be a difficult task. On the other hand, if you have numerous smaller bars, you can sell a part of your investment to generate some cash when required or invest it somewhere else.
Along with your investment needs, there are numerous factors, such as flexibility, premium, taxes and the amount you want to invest, which impact your decision to buy gold bars or coins. Hope after reading this article you will be able to make an informed decision.