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ABC Bullion

Coins or Bars: What type of gold should I buy?

31 August 2021

 

  • ‚ÄčKnow thy self
  • The ABCs of buying bullion
  • Coins, minted tablets or cast bars?
  • Buy from a trusted source

Dear Investor,

Shae Russell

Shae Russell,
Group Communications Manager

When it comes to buying gold for the first time, it can be a little daunting.

Don’t worry, I’ve been there. I’ll never forgot my first bullion purchase nearly two decades ago. It can be hard to part with your hard-earned money into something unfamiliar.

Yet, when that first ounce of precious metal touches your hand, it dawns on you…this is real. You can feel it’s heft as you gently move your hand.

…you instinctively know it’s valuable.

With that one decision to buy precious metals, you’re simultaneously holding a piece of the past while planning for your future...

Know thy self

‘Where do I start?’, is often the first question people ask when it comes to buying gold.

Beginning your precious metal investing journey can feel overwhelming.

Not only is it about adapting to a new mindset (swapping those zeros in your bank account for something tangible), but what to put said dollars in? How much should you buy? Big bars or small bars? Coins? Do you do it all at once or build your positions slowly over time?

The answer to many of these questions, depends on you and your investment profile. So, before you commit any money to precious metals think about what kind of investor you are.

Treat any investment in bullion as a multiyear investment. Don’t forget that physical bullion products come with a premium (that is, the fabrication cost on top of the spot price), so frequent buying and selling of physical metals may not be the best option for you.

Furthermore, don’t become obsessed with the daily prices of gold or silver. Remember, investing in precious metals is about long-term wealth protection.

The ABCs of buying bullion

There are some people who like to buy large bars in one purchase and then stop. Meaning they’ll pick up a few 1 kilo gold bars — or even this monster 400 troy ounce (toz) bar.

Others — like myself — aim to grow their gold and silver stash slowly. I like to convert my cash into bullion at different times throughout the year. This means I opt for small bars.

(Over $1 Million in each hand)

Though it does pay to think ahead. Ask yourself this: If the gold price rises, will you want to sell your whole bar to ‘take some profits’? It’s a lot harder to ‘cash in’ so to speak, with big bars, as you have to sell the whole bar.

This is where small bars may be better for some.

For example, you can still get a 1kg exposure to the gold price through a mix up of three 10 ounce gold cast bars and two one ounce minted tablets. You’ve still got a 1kg of gold, but it’s easier to sell a small portion when the price rises.

Alternatively, you may want to consider pool allocated products, as it’s simpler to upsize and downsize your position with the market. If you’re unfamiliar with the benefits of pool allocated products, stay tuned as I’ll cover it in more detail next week.    

The important thing to remember is, there is no right or wrong way to buy gold or silver, only the way that’s right for you.

Coins, minted tablets or cast bars?

If you’ve decided that hold-it-in-your-hands physical gold is for you, there’s plenty of options to choose from.

Now we get to the fun part — deciding what type of bullion to buy!

Are you after bang for buck? Are you looking at something that could be a gift? All physical precious metals have a premium, and the cost varies for each type of bullion. Let’s go through them now.

Coins

First, we’ll start with coins.

Coins are visually appealing and highly collectable.

Many cultures like to give gold as gifts at certain times of the year, and often use gold coins. The reason? They’re pretty. Their intricacy means they make fabulous gifts with their commemorative detail.

Coins are often what people choose to pass on down through the family. Yet their detail comes at cost. Basically, the fancier the coin, the higher the premium will be. In addition, because of the premium, it can take longer for the coin to show any return on investment.

The ABC Bullion Eureka
1oz gold bullion coin

The advantage of this however, is that coins come in small sizes. Some coins are 1/10th of an ounce, giving investors a smaller entry cost as a way to start accumulating gold.

Minted Tablets

Next up are minted tablets.

Minted bars are another way to buy gold and are quite popular.

Much like coins, minted bars can be bought in amounts smaller than an ounce.

You can pick one up for as little as one gram of gold (the minimum minted-sized silver bars and coins are generally one ounce). In fact, these one gram minted tablets are what I encourage my two kids to buy with their saved pocket money.

1oz ABC Bullion Minted Tablet Gold

The ABC Bullion 
1oz minted tablet

If you are buying gold for yourself to hold over the long term, minted bars may work for you. They make for neat, stackable storage…plus their protective case means no fingerprints on your gold!

Minted bars are appealing to look at and their fabrication costs are lower than coins, making them slightly cheaper.   

Cast Bars

Finally, there’s cast bars.

Cast bars are the cheapest way to access physical precious metals.   

With cast bars, there’s no intricate minting detail. Just pure ‘four nines’ refined gold, with ABC Bullion’s stamp on it. That’s it.

Simple, efficient and the lowest cost way to access physical gold. Cast bars attract the lowest premiums.

If you are buying gold in large quantities, cast bars are often the way to go.

ABC Bullion 1kg gold bars

Buy from a trusted source

Ultimately, what precious metals you buy come down to your investment goals.

However, as you begin your precious metals investing journey remember this: you want to buy your gold and silver from an internationally accredited refiner.

Look to buy your gold from companies that have meet the stringent guidelines from London Bullion Market Association (LBMA)) for example. Passing the LBMA’s requirements is no easy feat, which is why only 69 refineries globally have attained this.

ABC Bullion is proud to have LBMA accreditation on all our gold coins, minted tablets and cast bars.

Like what you read? Keep an eye out every Tuesday. Each week we’re going to go over the basics of investing in gold and silver…and even have some fun along the way.

Until next time,

Shae Russell
Group Communications Manager,
For ABC Bullion