In this article, we will focus on helping those who are about to start their gold savings.
We’re going to address some of the very first questions people ask when looking to buy physical gold:
Should I buy gold bars or coins?
Should I buy cast bars or minted bars?
Is it a good idea to buy secondary market gold coins?
What should be the purity of my investment gold?
Let’s see the answers!
Should I buy gold bars or coins?
When buying gold, the first thing you will probably think about is whether you should buy coins or bars.
It is true that both can give certain benefits to investors with different investment strategies:
Benefit #1: Coins are generally easier to sell
The first thing you should keep in mind is that gold coins are usually smaller in weight than gold bars.
This is why, if you’re planning to sell some of your gold, it may be easier to own one hundred 1 oz gold coins rather than a single 100 oz bar.
Because, when owning a bar, you only have one chance to sell your gold, which means you’ll probably feel more pressure when choosing the right moment.
When it comes to coins, you can take advantage of higher metal prices by selling them at different prices and potentially increasing your profits.
Also, some coins have a collectible value and can go up in price depending on their rarity and interest from collectors, which makes them even easier to sell.
Benefit #2: Bars have lower production costs, which results in lower per-gram prices
A gold bar's primary advantage over coins is its lower cost per gram.
Larger gold cast bars offer a good opportunity to buy more gold at a cheaper price per gram, simply because cast bars are cheaper to produce and design than coins.
So if you’re looking for more flexibility when reselling, gold coins may be a better option. On the contrary, if you want to get lower prices per gram and are ok with a little bit less flexibility, you could choose gold bars.
Alternatively, if you want to increase your exposure to physical gold while also diversifying your portfolio, you could invest in both coins and bars.
Should I buy cast bars or minted bars?
If you decide to buy gold bars, you should first understand the distinction between cast and minted bars.
Apart from differences in their manufacturing processes, cast bars, and minted bars have different advantages and disadvantages to offer.
What are cast gold bars?
Cast bars have a more "natural" appearance than other types of manufactured gold bars. They usually only have a simple engraving of the gold bar's serial number and its manufacturer's details.
Cast bars come in a variety of weights, including 50 g, 100 g, 250 g, 500 g, and 1 kg.
Did you know?
Cast bars are sometimes referred to as "poured” or "molded" bars.
The traditional method is to cast (i.e. pour) gold, which has been melted in a crucible, into a mold with appropriate dimensions.
Individual cast bars have unique irregularities, ruggedness, and blemishes due to the casting process. They're also a little worn around the edges. There are no two bars alike.
What are minted gold bars?
Minted bars are generally produced to precise dimensions (like coins). They are typically stamped with the refiner's official stamp, the gross weight or fine gold content, and the gold purity (usually 999.9).
Minted bars are cut from a long strip of processed gold, removing the possibility of any marks or blemishes, and come in different shapes and weights, including 1 g, 5 g, 10 g, 20 g, and 50 g.
Did you know?
The Lady Fortuna range, produced by MKS PAMP, is one of the world's most famous minted gold bars.
This now-legendary bullion design, created in 1979, was the first ever to decorate a precious metal bar.
Quick tip: Keep your minted bars in their original packaging
Minted gold bars come in a secure package, which often accounts for a significant portion of their value.
You should know that opening the packaging may reduce the value of your minted bars! Cast bars, however, can be touched with your hands although we advise you to always wear protective gloves to avoid any scratches or marks.
Now, let’s look at the benefits minted and cast bars can give you as a beginner precious metals investor.
Benefit #1: Cast bars usually have lower premiums
Cast bars, as opposed to minted bars, have simpler designs, which tends to reduce their manufacturing costs and eventually results in lower premiums.
Minted gold bars, on the other hand, are usually more expensive because of their complex and costly manufacturing process.
Benefit #2: Minted bars can be easier to sell
As we’ve mentioned before, minted bars come with a certificate integrated into protective sealed packaging, which can make them easier to sell.
Due to their sophisticated design, minted bars have an artistic and sometimes collectible value, which can potentially make them easier to sell at a higher price to collectors.
So if you want to own a gold bar with a beautiful artistic design, you can get yourself a Lady Fortuna minted bar, for example. Gold is a precious metal, after all! 💎
Should I buy brand new or second-hand gold?
Most beginner investors buying gold bars from their local precious metals reseller might not be aware that they might end up getting second-hand gold.
The second-hand gold market, or secondary market, is the market for pre-owned gold bars and coins which are then sold to some professional precious metals resellers.
However, the secondary gold market might not always be the best option for those looking for gold products in the best condition possible. Second-hand gold products will almost always have scratches and marks on them.
Moreover, inexperienced gold buyers may be vulnerable to scams in the secondary gold market as they can encounter dishonest traders who sell counterfeit products or products of lower purity than indicated because of scratches or tempering.
So if you buy second-hand gold, always make sure you buy from a trusted seller and ask for a purity check before buying your products.
If you buy coins or bars from an official mint or trusted gold dealer, you’ll get a certificate of authenticity proving that the products you own are real, pure, and brand new!
What should be the purity of my investment gold?
Investment gold comes in different purity levels, which may ultimately impact its price.
Investment-grade gold bars must be at least 99.5% pure but if you’re buying gold as an investment or a form of savings, you should probably go for 99.9%.
Why?
Because 99.9% pure gold bars usually have a higher intrinsic value than 99.5% pure gold bars, which means you will make more money from their sale and have the purest gold you can get!
What are the different measures of gold purity?
Carats
The purest gold is 24 carats. It means that no other metal has been mixed with the gold. As gold caratage declines, it indicates the presence of other metals, most commonly copper and silver, mixed with gold. For example, 18-carat gold contains 75% gold (18/24) and 25% other metals.
Fineness
Fineness represents the pure gold in the gold alloy in parts per thousand. A fineness of 99.5% or .995 indicates 995 parts of gold and five parts of another metal. A fineness of 99.9% or 999.99 (sometimes called five nines fine), is the highest quality of fine gold you can get.
What’s the bottom line
Buying gold for the first time might not be an easy task, especially when you don’t know where to start and what to look out for.
That’s why we’ve crafted this simple checklist for beginner investors who are looking for the right gold product.
✔️Gold bars vs. coins: coins may be a better option if you are looking for more flexibility when reselling. Alternatively, if you want to diversify your portfolio while increasing your exposure to physical gold, you could invest in gold bars as well.
✔️Minted bars vs. cast bars: cast bars usually have lower premiums, while minted bars can be easier to sell to a collector at a higher price due to their artistic value.
✔️Brand new vs. secondary market coins: when buying gold on the second-hand market, make sure you choose a trusted seller and ask for a purity test before buying your products.
✔️Gold purity: there are two measures of gold purity - carats and fineness. 999.99, or 24ct, is the highest quality of fine gold you can get.
