Guide to Investing in Gold Bullion Coins and Gold Bars

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Bars and coins

Buying physical gold (bars and coins)

Small bars and coins accounted for approximately two-thirds of annual investment gold demand and around one quarter of global gold demand over the past decade. Demand for bars and coins has quadrupled since the early 2000s, and the trend covers both the East and the West. New markets, like China, have been established and old markets, like Europe, have reemerged.

Bars and coins come in many denominations and measures of gold content (also called fineness). Fineness is either measured in carats (the highest being 24 carats) or in parts of gold per thousands (usually 995, 999, or 999.9 parts per thousand).

Coins are commonly produced in denominations of 1/20, 1/10, ¼, ½, and one troy ounce. Bars can be purchased in 1, 10, 20, 50, 100, and 1,000 gram denominations as well as 1, 10, and 100 troy ounces.

Central banks, many gold-backed ETFs and other large institutions rely instead on the London Good Delivery (LGD) bar. The LGD bar is the standard gold bar used for clearing in London, and weighs approximately 400 troy ounces.

When buying gold in these forms, investors pay a premium over the spot gold price on bars and coins. Generally, the smaller the coin, bar or size of the investment, the larger the premium per ounce. Owning physical bullion may involve additional costs beyond the expense of the gold, including insurance and storage. Care and diligence are necessary when purchasing physical gold and the authenticity of the gold should be verified by the assay mark. Gold should be purchased from a bank or reputable dealer.

Should I buy Gold Coins or Bars?

Should you buy gold coins or gold bars?

The answer requires the potential gold bullion buyer to weigh a few factors aside from the gold bullion itself.

Things like the overall gold price, gold guarantee government or private mint, gold purity, gold-selling privacy, gold unit size, and more.

The best answer(s) require about 10 minutes of research for most gold bullion bar and gold coin, buyers. Many often choose a mix of both.

Which is better? Gold Coins vs. Gold Bars?

Let us begin the debate by defining both forms of gold bullion products in the 21st Century.

Gold Coins – (n) a precious metal wafer struck in a coin format by a government mint typically stamped with a legal tender face value (the most significant exception being the famous South African Krugerrand Coin). Sizes vary from fractional grams to kilos and larger.

Gold Bars – (n) precious metal lump or ingot struck by both government mints and private gold mints. Typically gold bullion bars do not carry legal tender face values and cost less per troy ounce or gram vs. gold coins.

The answer on which is better will be often get determined by the gold bullion buyers highest objectives.

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We shall discuss whether gold coins or gold bars have an advantage in the following determinants:

Overall Gold Price on Like-Kind Weight between Gold Coins and Gold Bars

Government vs. Private Mint Gold Bullion Guarantees

Gold Purity levels of Gold Coins vs. Gold Bars

Gold Bullion Coin and Gold Bullion Bar selling privacy factors

Gold Coin vs. Gold Bullion Bar size variances

PRICE: Gold Bars vs. Gold Coins?

In general, gold bars (even when struck by government mints) enjoy lower prices or premiums over the fluctuating gold spot price although the most economical price does not always win the day for gold bullion buyers.

Many gold bullion buyers will choose to pay a slightly higher price or premium per ounce or gram of gold to have a government guarantee and government mint hallmark.

If getting the overall lowest price is the most critical factor for your gold bullion buying, try buying highly respected private mint gold bullion bars like Republic Metals Gold Bullion Bars.

If a getting a low price yet having some government guarantee is essential to you, try Royal Canadian Mint Gold Bars .

In general as well, the larger the gold bar is the lessor its price per gold weight will be due to lessoned fabrication costs associated with large gold bars (whether private mint or government mint struck).

In terms of overall lowest price, in general, gold bars win out as they are typically slightly less costly than similar weight gold coins.

GUARANTEE: Gold Bars or Gold Coins?

Both private gold mints and government gold mints guarantee the several gold bars and gold coins they strike and issue.

The question a concerned gold bullion buyer might ask themselves perhaps is who enforces this guarantee and which entity has a longer potential to last.

For example, the US Mint has the US Secret Service helping to ensure that all US Mint gold coins issued never get counterfeited successfully.

The Royal Canadian Mint has the Royal Canadian Mounted Police ensuring its gold coins, and gold bars also never get counterfeited successfully.

Private gold mints have been faster to respond to fake Chinese gold bars by adding cutting edge technological applications to many of their products, like Sunshine Minting’s MintMark SI technology.

The penalties for counterfeiting government legal tender gold coins, for example, are punitive Federally as well as counterfeiting private mint gold bars .

In terms of overall guarantee between gold coins vs. gold bars, the entities with the longer track records and monopoly on violence win this debate; government mints have the edge.

PURITY: Gold Coins or Gold Bars?

Many government mints still issue 22k gold coins today. They often get traded mainly on their overall gold content. For example, a 22k, 1 oz American Gold Eagle Coin which has a 1.09 oz weight overall due to additional copper and silver added. They are traded based on their overall one troy ounce of gold content.

These 22k gold coin issuance typically have additional silver and copper mixed into their makeup to make the gold coins harder and resistant to dents or warping.

Two of the most popular gold coins in the world are, in fact, 22k gold.

The most popular gold coin of the 1970s 1980 gold bull market was the 22k South African Krugerrand Coins.

The Gold Krugerrand coin remains very popular and well trusted to date.

Today the most purchased gold bullion coin remains the 22k American Gold Eagle Coin.

With either .999 fine gold coins or .999 fine gold bars, one could rather easily make an indentation in then with a fingertip of pressure applied. That is how soft pure gold is.

This fact makes 24k gold coins very fragile in terms of protecting them from dings or wear. Mainly this is why most modern .999 fine gold bullion coins come in protective plastic tubes and slips. Even many small 1 ounce or lessor sized gram .999 fine gold bars come in protective packaging as well.

Often government gold mints and private gold mints will make gold coins with .9999 or even .99999 purity. Achieving this four-9 or 5-nine fine purity level frankly is mostly gold refining differentiation and for marketing purposes. Just do the math.

The value of 0.0009 oz of gold is worth $1.22 in fiat US dollars, based on a gold spot price of $1350 oz USD.

Move the decimal over to the left again, and 0.00009 oz of gold is worth just over 12 ¢ USD based on the same spot price (i.e., a cupronickel dime and zinc-based pennies of legal tender face value, in other words not much value).

Gold purity can matter when moving gold across national or governmental boundaries. For example, .999+ fine gold can go into Canada tax-free while 22k gold gets slapped with taxes. Mostly this situation is due to governments setting up laws to give their respective government gold mint an advantage versus other competing government gold mints (i.e., Royal Canadian Mint gets an edge over competitors like South African Mint and US Mint).

This debate is a draw, dependent upon a gold buyer’s overall preference of gold purity hardness and the ability to move gold internationally if desired.

PRIVACY: Gold Bars or Coins?

Based on current bullion privacy rules in 2020 within the United States, if you sell gold bullion to a gold dealer in a short related time frame, the questions of (#1) what kind of gold you are selling and (#2) how much gold you are selling to the gold dealer are crucial to whether the transaction gets reported to the IRS via the IRS 1099-B form.

Of course, regardless of the transaction being private or not, the IRS wants all capital gains and losses to get reported on investor income tax reporting. Consult your professional tax advisor with any questions you may have.

Will Coins And Bars Save Gold?

There is a disconnection between paper and physical gold prices and the former has to catch up with the latter eventually. Myth or fact? We invite you to read our today’s article about demand for gold coins and bars and find out whether it will save the yellow metal.

The best stories are about the conflict between good and evil, or light and dark. In the precious metals market, we also have such a narrative, or actually several variations on the theme. But one of the most popular thread is the ‘disconnection’ between paper and physical gold. The characters are clearly identified: paper market is the powerful Empire while the physical gold is Rebellion, which heroically fights a stronger and more vicious opponent.

The battle is about gold and silver . The paper market suppresses their prices by malicious use of derivatives, mainly futures, and other techniques of manipulation. Luckily for the Rebellion, these actions are doomed to failure. When the fraud is exposed and the paper gold market collapses under its own weight, ‘real’ market forces come to the fore, pushing the gold prices eventually back to the fundamental level which would be reflected in the pure physical price market. In other words, after being manipulated for years, the ‘true’ price of gold will surface.

According to this narrative, the declines in the gold prices are practically always seen as something suspicious or even fake. Hence, many investors do not react adequately to market changes, but wait for the “imminent” rebound, missing many opportunities to gain.

The fact that the prices of bullion coins or bars typically lag behind the spot price only reinforces the belief in the disconnection between paper and physical markets. It’s true that prices of gold bars and coins are above the spot price, but this is due to premium for refining or minting and selling to retail investors. Bullion dealers quote prices higher than London fix, since they bear higher costs than wholesale players and add some markup to make a profit.

Another thing is that there is a limited capacity to produce them, which lifts prices. For example, only the US Mint (surprise, surprise) can mint US Mint coins. When strong demand meets limited supply we have higher prices. However, it proves neither a shortage of gold, nor the disconnection between physical and paper market. It rather demonstrates the lack of enough equipment for coining.

Moreover, the fact that bullion dealers slowly cut the prices of coins and bars should not be very surprising. You should know the mechanism from the gas stations: the price of gas rises much faster than it falls in a response to changes in the crude oil prices. One reason for this is limited competitive pressure. But it’s also true that gas stations wait with cuts to cover the costs of the higher-priced gas still in their tanks. The same applies to bullion dealers. They reduce retail prices with some delay, as they wait to cover the costs of the higher-priced coins and bars still in their inventory.

The best example of the perma-bull mindset is the immediate reaction to the plunge in gold prices in 2020. After a decade-long bull market, the sudden dive was a bitter pill to swallow. Therefore, people deluded themselves that the decline was an anomaly. The quote from Doug Casey is very telling:

My first reaction is to suggest that this is only an aberration, and that the fundamentals of the depreciating value of paper currencies will eventually take the price of gold much higher, making it a buying opportunity.

He wrote these words in April, 2020, after the price of gold slid to $1,400 level. Five years later, it is lower, not higher, at the level of about $1,200, as one can see in the chart below. Of course, the price of gold may eventually go higher. But a term “eventually” is not very useful in trading and investments. If the price is going to decline and provide an ultimate buying opportunity at much lower price levels, it simply makes sense to close the positions and reopen them much lower (perhaps profiting from the decline). And you know: Didi and Gogo waited for Godot for a long time, but he never arrived.

Chart 8: Gold prices (London PM Fix) from January 2020 to November 2020.

To be clear, we are not admirers of our monetary system based on paper currencies. We acknowledge that it is more inflationary than the gold standard and may collapse one day. We like gold, but we like objectivity and truth much more. And we care about our clients’ portfolio’s returns much more than we do about the profits of gold sellers and producers that would prefer one to believe that gold is going to always go up and never decline. Still, we are sympathetic to part of gold bulls’ arguments. At first glance, it makes sense: the supply of money increases, the currencies systematically depreciate, so the price of gold should only rise.

However, such reasoning does not take into account market sentiment and investors’ psychology. People react differently to low and high inflation. If we have hyperinflation, or just high and accelerating inflation, gold will shine, without a doubt. But we have modest inflation. Moreover, the US dollar is not the only currency which depreciates – all currencies depreciate in a similar pace. Actually, thanks to strong demand for greenback (due to its status of international reserve), and contained inflation, the dollar looks quite attractive. Especially given that gold does not bear any yield.

The bottom line is that the gold price discovery might indeed not be perfectly honest. Perfect honesty is very rare on Earth, perhaps even rarer than gold. But it does not mean that there is a disconnection between paper and physical gold prices. It’s a perfect… nonsense, as any price differential would create enormous arbitrage opportunities. There might be a disconnection between the paper and physical prices in the future if there is a shortage of a given precious metal (it’s unlikely that we’ll see shortage of gold, but silver is a different story), which has already happened in the palladium markets about two decades ago, but this is unlikely to happen anytime soon and very unlikely without a powerful parabolic upswing in prices beforehand. We have definitely not seen one recently.

How to Store Silver Bullion Bars and Coins at Home (With Video)

Jeff Clark, Senior Analyst, GoldSilver

There are lots of reasons to buy silver — it’s a real asset, the coins are beautiful, it will likely outperform gold and it’s more affordable. But that affordability comes with a catch: how to store silver in a way that’s secure but practical.

Storing silver can be a lot different than storing gold at home. Once you start to accumulate a stash, you’ll quickly realize that silver requires a lot more storage space than gold. It’s relatively easy to hide some gold coins in a sock drawer or cookie jar — though we don’t necessarily recommend such an obvious hiding space. But those same places are impractical for the same dollar amount of silver.

So how do we store our silver bullion both efficiently and safely? And should it be stored at home anyway? This video and the article below both provide solutions for those investors that are stacking silver. Here are just a few of the things we look at:

  • The value of keeping silver on hand
  • Important storage factors to consider
  • Tips for where to hide your silver
  • Using bank safe deposit boxes
  • The pros and cons of third-party professional storage

Everyone should keep some silver (and gold) in a place that is easily and immediately accessible. One advantage bullion offers is its high liquidity in a period of crisis—no worries about bank closures, lack of access to funds, or internet problems.

So, if you have some bullion close by, you have the ability to fight through a crisis. On the other hand, if your silver is two days away or time-consuming to get to, its use as an emergency asset has diminished.

1. Keeping Silver Close By

Everyone should keep some silver (and gold) in a place that is easily and immediately accessible. One advantage bullion offers is its high liquidity in a period of crisis — no worries about bank closures, lack of access to funds or internet problems. So, if you have some bullion close by, you have the ability to fight through a crisis. On the other hand, if your silver is two days away or is time-consuming to get to, its use as an emergency asset has diminished, and its intrinsic value has, too.

As Mike Maloney pointed out in his book, Guide to Investing in Gold and Silver, “I believe everyone should have gold and silver in his or her own private possession, where you can lay your hands on it, because they are one of the few financial assets that can be completely private and not part of the financial system.”

2. Storing Silver Bullion at Home

Note that this doesn’t necessarily mean you should keep it inside your house. It means you want some of it readily accessible in an emergency, whether that emergency is a personal one or on a national scale. If you do decide to store some silver at home, there are some important things to think about first. Considering the most important factors before you begin will help you keep your bullion secure.

Space and Weight Requirements

In a dollar-for-dollar comparison, you can generally expect to get roughly 50-70 times more ounces of silver than gold for the same amount. On top of that, silver is a lot less dense than gold. In fact, pure silver is 84 percent larger in volume than pure gold. Add those two facts together and it means that silver takes up as much as 128 times more space than gold for the same dollar value!

Here are a couple practical examples of the difference: A 1-ounce American Gold Eagle coin is about the same size as a U.S. 50-cent piece and can fit in your pants pocket along with your other change, keys and cell phone. But a 1-ounce American Silver Eagle coin is significantly larger. And to get the same value, your pants pocket would have to hold up to 70 of them, which would weigh almost five pounds.

The same is true with larger amounts. You can hold $50,000 worth of gold in one hand — but it would take 10 large shoe boxes to hold the same dollar amount of silver. The difference in weight is also significant: at current prices, $50,000 worth of gold weighs about 2.6 pounds, but the same value of silver would weigh almost 200 pounds!

In other words, whether you’re dealing with coins or bars, you’ll need a lot more space to store silver bullion. It’s also more difficult, expensive, and cumbersome to transport.

The most popular form of silver is the 1-ounce American Silver Eagle coins we mentioned earlier. And the most popular order size is what’s called a monster box — a case of 500 1-ounce coins, separated into 25 tubes of 20 coins each. A monster box measures 15” x 8.5” x 4.5”. Here’s how big that is when compared to the average human:

A monster box of Canadian Silver Maple Leaf coins varies slightly. Instead of 25 tubes of 20 coins, it contains 20 tubes of 25 coins, and measures 10” x 8” x 5”.

If you’re stacking bars, the most popular size is the 100-ounce silver bar. The dimensions are roughly the same for most bars — a bar from the Royal Canadian Mint measures 7.2” x 3.2” x 0.8”. It’s roughly the size of three or four large Hershey bars stacked on top of each other.

3. Personal Comfort Level With Silver Storage

Simply put, how much silver bullion are you comfortable keeping in your home?

Your two biggest risks are theft and natural disaster. Here’s a checklist of questions to ask yourself about storing bullion at home and assess those risks:

  • Does more than one person know you own precious metals? If so, who might they tell, even if it’s innocent? Do your kids know? Depending on their age and maturity, could they talk?
  • Is your income or assets high enough to make you a natural target? Do you work in the public eye? Have you talked positively about gold and silver, including on social media?
  • Do you have an alarm system? This may not prevent a theft but would ideally give you an immediate police response.
  • Are your hiding spots clever enough? To answer this, “think like a thief”; how long before a persistent and desperate burglar finds your bullion?
  • If you use a safe, is it fireproof? What level of protection does your safe have against other natural disasters?
  • Is your safe small enough that a thief could walk out with it? If it’s secured to the floor in some way, how would you respond if a thief found it and demanded you open it?
  • Do you have some decoy bullion or valuables?
  • Is your bullion hidden so well that you couldn’t find it if you forgot where it was? Or would your heirs have a hard time finding it?

Also keep in mind that insuring your home-stored bullion is costly, and most home insurance plans may not cover the full value if silver rises a lot in price. Further, it breaks the golden rule of telling too many people what you have—insurance agents, office staff, corporate offices, appraisers and their staff—and don’t forget that they might tell someone! Insuring your home-stored bullion is a personal decision, but we prefer the privacy.

Indoor storage is practical for small quantities. You can probably think of dozens of places in your home where no one would think to look.

The trick is to hide your bullion in such a way that it isn’t too complicated for you or your heirs to find, but is very hard for a thief to find.

4. Where to Hide Your Silver

Once you’ve decided to store silver at home, the biggest question is where to put it. Here are a few tips on hiding locations (please note that some of these come from customer input and are not necessarily what we would recommend):

  • Nothing Obvious: No fake cookie jars, rocks or carved-out books. They’re too common. If you’ve seen your hiding spot in a movie, find another one. Also, think of places where a plumber, electrician, gardener or maid won’t stumble across it.
  • Three Layers Deep: Since most burglars look for things they can grab and go, a good rule of thumb is to store your silver three layers deep. For example, a floor safe covered by floorboards with carpet and a china cabinet over it.
  • Midnight Gardening: The term “midnight gardening” comes from people who bury their precious metals at night so the digging won’t be noticed. Here are a couple pointers if you choose to bury your silver.
    • Try a container that is airtight, waterproof, and won’t rust.
    • Consider how easy or difficult it is to find. If it’s too easy, a thief could find it. But it it’s too difficult your heirs may have a hard time locating it. Find a place, on a property you own, that you’ll always remember but isn’t obvious if someone learns you’ve buried something valuable. It’s probably not a good idea to leave complicated instructions; if you use a “treasure map,” consider giving part of the instructions to one person you trust and the other part to a different confidant.
    • Also, be aware that metal detectors can detect up to a depth of about 4 feet.
    • A related option might be to install a safe in the floor of a storage shed. The advantage here is that you can access your bullion without being seen, day or night.
  • Diversify: Use more than one hiding spot. But don’t use so many that you forget where they all are!

5. Silver Coin Safes

A safe is certainly much better than behind some books, but keep in mind that no safe is 100 percent secure. A safe buys you time — nothing more. If you use a key safe, hide the key separately from the safe. If you use a combination lock, don’t assume you’re immune from a robbery — a friend of my father’s once told him the story of robbers pointing a gun to his wife’s head while they asked him for the combination to his safe.

Another consideration is the weight of the safe. One that weighs 100 pounds or less could be stolen by a single burglar with some basic tools like a dolly or straps. A 300-400 pound safe removes the risk of theft by a single person. Heavier than 500 pounds and you’re immune from most home burglaries unless there’s a group of them with a heavy-duty vehicle and equipment. Don’t forget that the contents of the safe increase the weight, especially if you’ve got silver in it. Of course, the heavier the safe the more likely you’ll need it delivered and installed, which then tips your hand to the installation company that you’ve likely got a lot of valuables in the house. The best safe for silver is typically one that is heavy enough to deter common burglars, but light enough that you and your confidant can install it on your own.

There are a few other things to consider when using a safe or otherwise storing large amounts of silver:

  • Home Security Systems: The more metal you have at home, the more you need to consider a security system that offers both video recording and monitoring. You might want to consider a nanny cam if you’re on a budget. There is also an abundance of hidden camera video recorder systems disguised as alarm clocks, wall clocks, smoke detectors, clothing hooks and even light bulbs. These record many hours of surveillance video and allow you to monitor it live, over the Internet, from anywhere in the world on your cell phone or computer. If you go this route, be sure to get a system with plenty of memory.
  • Firearms: If you store metals at home and have a safe, and if you feel comfortable having a gun in the house, a firearm might be a way to defend yourself in the event of a break-in while you’re home. We don’t necessarily recommend purchasing a firearm, however, as there a number of considerations to keeping a weapon in the house.
  • Decoys: Consider keeping two safes, one of which is cheap with just a few items in it so the thief thinks he got your stash, and then the real one well-hidden in a different part of the house with your real silver and other valuables.

Should We Use a Bank Safe Deposit Box?

The advantages to using a safe deposit box at your local bank are that they’re easy, simple and relatively inexpensive. But consider the drawbacks:

  • Your access is restricted. You can only get to the bullion during regular banking hours —no evening, weekend or holiday access. In fact, during 9/11, some banks were closed for an extended period of time.
  • No insurance against robbery or natural disasters. Think about the customers whose safe deposit boxes were washed away with the tsunami in Japan in 2020.
  • Lack of privacy. If the government or an aggressive attorney comes after you, they’ll thank you for the generous clue you provided them of where some of your assets are stored.
  • Silver takes up so much space that you’d likely be forced to pay for a larger box. And it might not be an option at all — a monster box of silver is too big for most bank safe deposit boxes.

Remember, one reason we own physical bullion is to protect against the banking system. If you go this route, be aware of the risks and only place a small portion of your metal there.

6. What About a Professional, Third-Party Vaulting Service?

Once your stash starts to grow, I recommend you consider professional storage. Your risk grows as you accumulate more metal. You don’t want to be wiped out if something happened to your stash at home.

The keys to professional storage are that your metals:

  1. Is outside the banking system.
  2. Is fully segregated or allocated in your name.
  3. Is fully insured.
  4. Has easy online access.

I’m proud to say that GoldSilver’s program meets all these criteria and more. These are the same vaulting services Mike and I use. They are highly liquid, 100 percent insured and can be done online instantaneously. It’s your most secure option once you have a reasonable amount of bullion stored at or near home.

7. The Ideal Solution for Home Storage

The message here is that no storage location is 100 percent secure (though professional storage is 100% insured). Therefore, the best solution for storing silver is to diversify your locations. The more you accumulate, the more you should utilize several methods for storing silver.

Don’t put yourself in a position where you’re left silver-less if something happens to your stash. Silver bullion is a tangible asset that serves as inexpensive insurance against all types of crisis. We’re convinced you’re making a wise decision by owning it. But review your storage methods to determine the best ways to hold on to your silver.

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