Gold Coins or Gold Bars — Which Investment Is For You

Published: 20th March 2012
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Despite constant changes of its price, gold offers stability as its price does not reflect its true value. This is because the economic forces that determine the price of gold are different from those that predict most financial assets. Contrarily, the market and other economic forces affect the cost of gold in direct opposition to just how it affects other investments. This only means that the value of gold usually goes up when there is a decline in the price of U.S. stocks or treasury bonds and bills. It is an exceptional means for a progressive investment as it helps diversify an investor’s portfolio. This sort of investment puts him in a low risk investment considering that the demand for gold is greater than its actual supply. So how does one get started in gold investment?

For individual who desire to invest in gold, understanding how the market works is imperative as a way to attain the most favorable result. The most commonly advised for novices is the method of dollar cost averaging.

It is a method of determining your average investment in a time period. Once the average cost is determined, any price that goes higher than your average investment will certainly be your profit if you would like sell your gold. Once you have the knowledge the financial market and economic forces affect the cost of gold, you can adjust your monthly investment according to your advantage. Most investment managers recommend beginners to invest between 5 to 10 percent of their monthly earnings to maintain a stable investment. When utilizing the average dollar cost method, it is more advantageous to keep on investing over a longer time period.

So now, the final question is whether to invest in gold coins or gold bar. The answer is determined by you as the investor, and your goals and the amount of capital that you're prepared to invest. For serious scale investors, large size gold bars are the most convenient way to invest in gold as they can be availed at the lowest premiums, while smaller bars and coins tend to cost more. But, large bars are not very flexible in terms of selling. That could be, in case you own a kilo gold bar and you wish to sell simply a hundred grams, slicing off a hundred grams from the bar is not really quite convenient. Looking for a buyer for a large bar can also be quite limited as you need to sell them to large scale dealers. Also, given the fact that only a very few private buyers are familiar with gold bullion bars, so it is more unlikely that you can easily find one who is interested in make a trade.

However, gold coins which come in small sizes are very advantageous to the small scale investors because they can be easily kept and transported. Although gold coins might not offer a lower premium comparative to gold bar of the same weight, finding a dealer or private collector is less complicated to locate if you wish to trade them. Gold coins are also guaranteed by a government which makes them much better to resell compared to gold bars which is guaranteed by refiners.

Considering whether investing in gold coins or gold bar is a personal choice; each has its pros and cons. Among gold coins are Krugerrands, Sovereigns, Swiss francs, and others, have benefits and drawbacks comparative to each other. Likewise, gold bars from various refiners also differ from each other. This information is meant to give basic information for starters before making an investment. For other specific information, you may read other articles in this website.

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