Choosing gold as an investment is popular among many. Always seen as attractive for its price compared to other assets, gold is preferred by many. It might also be a change from all the other assets you already have and provide a much needed diversification. There is a range of gold products to choose from. But it may leave you confused. Also there are a lot of buying options, and you can always buy gold bars online.
Bullions are preferred over collectibles, because of its liquidity and more reasonable price. The bid-ask price of collectibles may rise to about 30% at times. This means that the price of the gold has to rise over 30%. They are also not easily liquidated. The 1oz. gold coins and the 1 oz. gold bars are the most common amongst bullion products.
Difference between bars and coins
Clients often ask the difference between the two both in terms of type and prospects. To buy gold bars online you must go through these points. The three aspects that are to be considered while buying both are summed up as follows:
Investors who have not invested in gold before wonder how products of gold sometimes sell at a higher price than the spot price. Spot price is the current price of gold per ounce as traded in community markets globally. Fabrication, distribution and minting prices are excluded from it.
About 95%-98% of the bullion’s overall price is the spot price. The 2%-5% that remains is attributed to the distribution, selling and production costs. The purchasing price of a minted, refined gold bar or coin on spot is around 2.3% – 4.5%. You can expect a similar range even when you buy gold bars online.
Prices vary also according to demand, supply and market dynamics. However they are not supposed to include a delivery fee.
U.S. mint will charge 3% on spot per gold Eagle inscribed coin. For 1oz. bar is usually pretty close to a 1 oz. eagle coin. But the 1 oz. coin can also be sold at a higher premium rates compared to a gold bar of 1 oz.
However knowing the purchase price solves the equation only partially. The bidding price also must be looked at. So keep these in mind when you decide to buy gold bars online.
But this investment can be sold differently. A 1 oz. gold bar of around $1324, and a 1 oz. Eagle coin priced $1361, will create a round-trip cost of the bar to about 4.6% and the coin price is lowered to 3.20%. If you buy gold bars be sure to remember this example.
A good understanding of both the ask price and the bid price is important for buying gold bullions.
Purity is an important aspect. Gold bars offer more in terms of amount compared to coins. So if amount is a concern then buy bars.
In terms of liquidity both bars and coins will be easy to sell. As bullions are for a long term investment, selling them is always in the minds of investors. So, proper information is necessary.
However in terms of transparency gold coins are easier to sell compared to bars.
So, keeping these in mind when you buy gold bars online will help you understand your investment better. If reselling is your biggest concern then opt for coins. And if you are looking getting the most amount of gold, choose a bar. The choice is hence, yours.