Bars vs Coins: Choosing the Right Bullion Investment for You
Bullion investments, such as gold and silver, are highly sought after for their value and rarity. Investing in bullion can provide you with a secure way to diversify your portfolio, hedge against inflation, and even add to your tangible assets.
When it comes to choosing between gold bullion bars or coins, many investors may feel uncertain. In this article, we'll explore the history of gold and silver bars and coins, what you should consider when choosing between the two, and how Ainslie Bullion can help you make the right investment.
The History of Coins
The use of gold coins as a medium of exchange dates back to ancient civilizations, where they were used for trade, tribute, and taxes. Over time, coins evolved into various forms, with some being used as currency and others as commemorative items.
However, it wasn't until the 1960s that physical gold coins were first introduced for investment purposes. The Canadian Maple Leaf was the first gold bullion coin to be minted, followed by the South African Krugerrand in 1967. Since then, many other countries have released their own bullion coins, each with their unique designs and sizes, including the very popular Australian Kangaroo Coin.
Bullion coins are produced by national mints, and their value is based on their weight and purity. They are available in various sizes, from as small as 1/20 oz to as large as 1 kg, and they typically have an Australian dollar face value that is lower than their actual worth.
Most bullion coins have a fineness of 999 (99.9%+) or higher, making them highly valuable to investors.
The Difference Between a Coin and a Round
Commonly misunderstood, there is a clear definition between a bullion coin and a bullion round.
Coins and rounds are both forms of bullion, typically made of precious metals like gold, silver, or platinum, but they have distinct differences in terms of origin, legal tender status, design, and purpose. Here's a breakdown of the key differences between coins and rounds:
1. Legal Tender Status:
Coins: Coins are typically issued by government mints and are often considered legal tender in the country of issuance. This means they have a face value, and they can be used as a form of currency for transactions at their nominal value. However, the intrinsic value of the precious metal in the coin is usually much higher than the face value.
Rounds: Rounds, on the other hand, are not legal tender. They are privately minted bullion pieces and do not have any face value. They are produced solely for their precious metal content and investment purposes.
Coins: Coins are issued by government mints and bear the official emblem or symbol of the issuing country. They are often produced with a high level of craftsmanship and attention to detail.
Rounds: Rounds are typically produced by private mints or refineries. They may have various designs, ranging from simple to intricate, but they do not carry the official government seal or emblem.
Coins: Coins often feature intricate and historically significant designs. They may commemorate events, historical figures, or national symbols. Some coins are also produced for collector purposes and have numismatic value in addition to their bullion value.
Rounds: Rounds have a wide range of designs, but they are generally simpler and more focused on the bullion content. While some rounds may have unique or artistic designs, their primary purpose is to provide a convenient way to invest in precious metals.
Coins: Coins typically have higher premiums over the live gold price of the precious metal compared to rounds. This premium accounts for factors like the cost of minting, the coin's design, and its legal tender status.
Rounds: Rounds usually have lower premiums over the spot price since they lack the additional costs associated with government minting and numismatic value.
Coins: Coins often appeal to collectors due to their historical and artistic value. Collectors may be interested in specific coin series, rare mintages, or coins with unique attributes.
Rounds: Rounds are primarily sought after by investors looking to acquire precious metals at a lower cost over spot price. While some rounds may become collectible over time, their primary appeal is their metal content. This is especially important when it comes time to sell.
6. Audit Implications:
Coins: Coins are legal tenders and as such, in a SMSF need to be audited and stored by a third party - They are treated as "collectibles" and the same rules that would relate to fine art would apply
Rounds: Rounds are treated the same as bullion and there is more freedom surrounding the storage and auditing procedures within your SMSF.
In summary, the main differences between coins and rounds lie in their legal tender status, issuer, design, premiums, and collectability. Coins are typically government-issued with legal tender status, intricate designs, higher premiums, and appeal to both investors and collectors. Rounds, on the other hand, are privately minted, lack legal tender status, have simpler designs, lower premiums, and are primarily sought after by investors for their bullion value.
The History of Bars
Bars, on the other hand, have a much longer history. The first gold bars were produced in ancient Egypt, and they were used as a medium of exchange for international trade. Gold bars have been used throughout history for their value, durability, and rarity. Today, bars are produced by private mints, and their value is based on weight and purity, similar to bullion coins.
Gold today is available in various sizes, ranging from small bars weighing a few grams to large bars weighing up to 1,000 oz. They are typically produced in standard sizes, making them more uniform and easier to store. Bullion bars usually have a higher purity level than bullion coins, with most being 9999 (99.99%+) or higher.
What Should You Choose – Bars or Coins?
When deciding between bullion bars or coins, there are a few factors to consider:
Your investment goals should guide your decision. If you're a new investor with the ability to invest a large amount of capital, gold or silver bullion bars may be a better choice, as they typically have lower premiums than coins. However, if you're looking to invest a smaller amount, coins may be more suitable, as they come in smaller denominations and are easier to liquidate. It is also important to consider the pricing upon selling as as all silver and gold bullion are typically bought back at the same price, regardless of purchase price or size. This means that at the point of sale the more competitive prices will be the larger bullion bars.
If you're looking for a more portable way to store wealth, coins are a better choice. They are smaller in size and weight, making them easier to store and transport.
Some investors may be interested in collecting bullion coins as a hobby, as they often feature unique designs and limited mintages. If collectability is important to you, then coins may be the better choice. Collectability, often referred to as numismatic value, is the price above spot the investor receives when they sell gold coins based on perceived value beyond the intrinsic value of the metal itself. Some gold coins with low mint rates can be considered a safe bet for investors who are looking to make a greater return on their investment. Although it is worth noting that there can be an element of risk to this as most bullion dealers will not differentiate the pricing for any gold products when it is time for an investor to sell, so they must rely on the private market.
The premiums you pay for bullion bars and coins can vary depending on the size, weight, and purity of the item. Generally, bullion bars have lower premiums, but this can depend on the specific item you're interested in. When investors buy gold bullion or gold coins this is one of the most important things to consider.
When it comes to liquidity, bullion coins are typically more liquid than bars. Coins are generally more internationally recognisable and easier to trade in small amounts, whereas bars may require larger transactions and a trusted buyer. However, this can depend on the specific market and demand for the type of bullion you own.
Buying Bars and Coins with Ainslie Bullion
At Ainslie Bullion, investing in physical bars and coins is a simple and straightforward process. Here are the three easy steps to follow:
Step 1: Choose Bars or Coins
You can browse through our extensive selection of bullion products on our website or visit one of our showrooms to view our products in person. Our team of consultants will be available to assist you in choosing the right investment option for your portfolio.
We offer a wide variety of bars and coins in different weights and sizes, ensuring that you can find the perfect fit for your investment needs. You can view images and videos of our products on our website, and our in-store consultants can show you each item in person.
Step 2: Buy Bars or Coins
At Ainslie Bullion, you can purchase gold bullion online, over the phone, or in-store using your preferred payment method. We accept cash, card, or bank transfer, depending on your preference. Our website is user-friendly and allows you to place an order and make a deposit easily and securely.
If you prefer to place your order over the phone, one of our consultants will assist you and send you an invoice for the full amount. In-store purchases can be made with cash or card, and you can take immediate delivery after payment.
Step 3: Pay and Receive Bars or Coins
We accept a 10% deposit for online orders and secure the remaining 90% payment through our website's safe payment methods. Alternatively, we offer PayID as a fast and secure payment option for you to pay the full balance immediately. For in-store purchases, you can take immediate delivery after payment. For phone orders, we'll send you an invoice for the full amount, and you can make your payment via bank transfer.
Once your order is fully paid, we'll hold it for pickup within 30 days or securely and discreetly pack and deliver it to your address fully insured. You can also opt for the 'remote control convenience of a secure and fully insured Ainslie Storage Account.
Alternatively, you can store your bullion in your own safe with our partner vaults, Reserve Vault and The Melbourne Vault. Our delivery options ensure the safety and security of your investments, and we'll inform you when your items are available in the vault.
Investing in bullion bars or coins can provide a secure way to diversify your portfolio and hedge against inflation. At Ainslie Bullion, we offer a wide range of bullion products in different sizes and weights, making it easy for you to find the perfect fit for your investment needs. Our simple buying process, secure payment methods, and delivery options ensure that your investments are safe and secure.