When I first got into precious metals investing, I had a tough time deciding what I should invest in: gold bullion or coins? Frankly, I was leaning toward gold coins at first, especially the spectacular St. Gaudens double eagle. They seemed so glamorous, bullion so dull.
I still think bullion is dull, though some coin bullion is pretty enough. But I don’t buy bullion because it’s pretty. I buy it because when I look at it, I see dollar signs. So no gold coins for me — and I believe you should follow the same road.
What’s Wrong With Gold Coins?
Not a thing. There are good and valid reasons for people to buy gold coins, but those people should be coin collectors. You see, they’re investing in a combination of metal value and the rarity of the coin itself. That’s fine, but you can’t guarantee that the rarity of the coin will consistently drive its value.
The collectible value of gold coins can be quite volatile — much more so than the value of their gold content. Plus, you’re paying a big premium over the actual gold price when you purchase a rare coin. As an investor in precious metals, you must focus on the metal value of your gold, never the collectible value.
Two more reasons to avoid coins: recently, overseas counterfeiters have been flooding the rare coin market with convincing fakes, a practice that’s damaging coin values. Plus, you can’t legally melt down American coins anymore, so their value as bullion has decreased.
Bullion is easier to sell, harder to fake, and tends to be purer than coinage; plus, the premium tends to be lower. So why bother with gold coins, except as a hobby?
Here’s another good reason not to muck around with rare gold coins: bullion rounds (also known as coin bullion) are plentiful, easily available, and tend to be quite pretty. Many resemble classic coinage anyway, but are deliberately designed to have little or no numismatic value.
With coin bullion, it’s all about the gold. As it should be.
If you plan to purchase coin bullion, we recommend government issues, especially U.S. Mint strikes. The American Gold Eagle, which comes in tenth-ounce, quarter-ounce, half-ounce, and full ounce weights, is a great choice, since the purity, weight, and content are all backed by the federal government.
Even better, it features the famous St. Gaudens double eagle design. Win-win!
Coin Vs. Bar
But what type of gold bullion is preferable: coin or bar bullion?
There are cogent arguments for both. For aesthetic reasons, many investors prefer coin bullion, with its eye-catching designs, over plain gold bars. It tends to be easier to purchase in small amounts, too; while smaller gold bars do exist, it’s more common to see them in weights of ten ounces or more.
At $1450+ per ounce these days, many investors can’t afford larger bars very often, so bullion rounds are more attractive. Plus, they tend to be easier to liquidate, since their weight, purity and content appear right on the face. This isn’t always the case with bars.
However, gold bars tend to have a lower premium cost per ounce, so bar bullion has its own level of attraction, since it saves a bit of money in the end. It all comes out in the wash, as they say.
Be that as it may, there’s one thing you can be certain about here: when it comes down to a question of gold bullion or coins, bullion is the clear winner.