Gold bars vs. coins: Which is better for investors?

Gold has long been considered a smart way for investors to diversify their portfolios and protect their wealth in times of economic uncertainty. And there are many ways to invest in the precious metal, from stocks to IRAs to ETFs.

For investors who prefer to keep it simple, physical gold (or bullion) is an easy way to get started. It's straightforward, tangible and can provide a sense of security and satisfaction that more abstract investment vehicles like futures cannot. But when it comes to investing in physical gold, which is better: bars or coins?

Both have their pros and cons. Which is best for you ultimately comes down to your preferences and investment goals. Knowing the key ways these options differ can help you make an informed decision.

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Gold bars vs. coins: Which is better for investors?

Keep the following considerations in mind when deciding whether to invest in gold bars or gold coins.

Cost

One major factor influencing your decision is the amount you're prepared to pay for premiums and additional costs. Gold bars tend to be less costly to produce and, therefore, generally sell for closer to gold's current spot price.

By comparison, gold coins are costlier to mint due to their intricate designs. They're also considered collectible, which can lead to higher premiums for coins that are seen as especially valuable. That said, coins can be less expensive to store than bars, which may help offset the price difference for you.

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Storage

Both gold coins and gold bars must be stored securely and insured against theft or damage. But since coins are considerably smaller, they can be easier to store discreetly, such as in a fireproof safe at your home. Bars, on the other hand, are bulky and often require purchasing a pricey safety deposit box or bank vault.

Collectibility

Investing in gold is mainly a financial consideration, but aesthetics may also matter to some investors. Gold coins come in various designs and often feature historical figures or events, making them attractive to collect and display.

Plus, collectible coins have a numismatic value, or an additional value beyond their inherent worth based on factors such as condition and rarity. If you prefer sentimental value and take pride in building collections, coins could be a good way to add coins to your investment portfolio and also enjoy these benefits.

Liquidity

Another factor to consider when investing in gold is liquidity or the ease with which you can convert your investment into cash. In general, gold coins are more liquid than gold bars.

Because coins are so much smaller, they can be easier to sell quickly and in increments customized to your needs. However, their collectible nature means some coins may be in much higher demand than others. And to get the highest price, you must keep collectible coins in excellent condition.

Gold bars can be challenging to sell due to their bulk and storage considerations. In addition, you can't sell a portion of a bar, so coins are better if you'd like the flexibility to sell in small amounts. As a result, bars are better for long-term investors looking to preserve their wealth rather than focus on buying and selling for short-term profit.

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The bottom line

So, which should you buy: gold bars or gold coins?

The answer depends on your personal preferences and investment goals. If you have a large sum of money to invest, buying gold bars with lower premiums could help you maximize your investment — as long as storage and insurance costs don't cut too far into your potential profit.

If you're a collector or someone who prefers liquidity and the flexibility to sell in small amounts, coins may be better for you.

Regardless of your choice, gold is a valuable asset that can contribute positively to your investment portfolio. Research your options, identify your goals and don't hesitate to speak with an adviser for guidance tailored to your situation.