So you've chosen to invest in precious metal bullion. Now what? During times of economic uncertainty, smart investors turn to precious metals to diversify their portfolios and protect their hard-earned wealth. Paper currency constantly fluctuates in value, driven up and down based on unpredictable political and social circumstances. To avoid the risks associated with unstable paper-based currency, those looking to make a secure investment decision are turning to gold, silver, platinum, and other precious metals.
If you've decided to convert some of your assets into precious metals, you've taken the first step on the right path. Yet there are important decisions to make before you take that leap. One of the first questions investors often ask is which bullion should I buy coins or bars? Whether you're a large investor or a private citizen interested in owning moderate amounts of physical metals, we've compiled some valuable information on the pros and cons of adding bullion coins and bars to your position.
What You Need to Know About Coins
What is the difference between a coin and a bar? This is an important question, especially if you're a novice investor. So let's start by discussing the definition of a coin.
Coins have the status of legal tender and are produced by a sovereign government's mint. Each side of a coin includes an intricate design, which often varies year-to-year. Most coins feature a face value and year stamped on the obverse (or front), and their purity and weight is inscribed somewhere on the reverse (or back) of the coin.
In addition to purchasing standard gold and silver coins, investors can order "junk coins." Junk coins are any whose value is driven solely by its metal content.
Junk silver coins like wildly popular quarters, dimes and half-dollars from before 1965 are not pure silver, but rather have a percentage of precious metal ranging from 35 to 90 percent. Because they contain less pure silver, junk silver coins are less expensive than silver rounds or sovereign silver coins. Adding junk silver to your portfolio is a way to invest in your financial future while protecting yourself against inflation.
Pros and Cons of Purchasing Coins
Aside from physical differences, coins and bars each carry unique advantages and disadvantages. Choosing which type is best for you comes down to your motives and goals for investing, how much you are looking to acquire, and potential resale value.
One disadvantage to owning coins is that the premium is generally a bit higher than the metal's spot price, mostly because of their collectability, status as legal tender, and rarity.There are a number of advantages to investing in precious metal coins:
- More collectible than bullion bars
- Junk silver coins can be purchased close to spot price
- Legal tender status (though the metal content is more valuable than the face value)
- Barter: coins are easier to trade in a crisis, making them highly liquid
What You Need to Know About Bars
Next up, gold bars. Are gold bars a good investment, or are you better of sticking with coins? Buying physical gold is an excellent way to protect your wealth during times of economic crises and instability, and many investors prefer to hedge their bets with gold bars and "ingots" rather than coins or rounds.
Bars are thin, rectangular slabs of precious metal produced by private mints. They are not considered legal tender, but they are a great way to own raw precious metal in 1-10 ounce sizes.
Compact, stackable and easy to store, bars are a great way to purchase bullion in any amount that works for you.
Pros and Cons of Investing in Bars
Gold and silver bars and rounds generally have the lowest premium over spot price. That's why they are often favored by serious, large-scale investors interested in owning as much precious metal as possible at the lowest price (as opposed to collecting legal tender coins).Bars provide investors with a wide range of benefits, including:
- Easy to store and transfer. You can stack bars from various mints
- Lowest premium over spot price for gold and silver
- Allow new investors to quickly build their financial portfolio
- New bars are sealed and attractively packaged
- Bars are typically issued with certificates authenticating their value
Of course, bars do not have the collectability factor that coins do, so investors interested in that aspect of owning bullion are better off sticking with coins.
Also, the largest bars (10 oz gold bars or 100 oz silver bars) are more difficult to barter than smaller bars or coins in the event of a financial crisis.
One of the most important factors to remember when deciding between coins and bars is that any type of precious metal bullion is a better investment than paper currency.
After you’ve done your own research — either through our investors’ blog and knowledge center or elsewhere — and you know which type of bullion is right for you, we hope you’ll turn to Provident Metals for your silver and gold bullion investment needs.
We have a wide selection of bullion and numismatic coins, including gold, silver, platinum, palladium and copper. Browse our online store and place an order using our secure system. If you prefer to place an order by phone, or if you have any questions, feel free to us toll-free at (800) 313-3315 today.