One of the most common dilemmas is how to invest money. People especially often asks this question new to investing. The answer to this question is not universal and will depend on many factors. The most important is the amount of money you want to invest and the risk appetite.

Inexperienced investors can be confused by the rather diverse offer of investment vehicles. It means that they can combine different assets and design their portfolios. There are many choices, but one thing is for sure - having a portion of your money in precious metals is always a promising idea.

Most investors have dilemma about gold coins vs gold bars, as these are common and sought-after assets. They are both IRA-allowed, making them an excellent option for those looking to build retirement funds. But both have distinct advantages and disadvantages. Sure, you are free to have them all in your portfolio. But if in doubt which one will match your financial plans, it is good to know more about their differences.

Size and Weight

The biggest and the most apparent differences between gold coins and bars are their dimensions, shapes, and weight. Most bullions are rectangular, while coins are round. The first ones usually have simple designs, while the latter can have different motifs and engravements on their faces and backs.

Both products come in various sizes, but there are some limitations. For example, bullion usually weighs between 1 and 1000 grams. But sometimes, mints can issue bars heavier than a few kilos for special occasions. The largest IRA-eligible coins have about an inch in diameter (the largest one is the Austrian Philharmonic coin with a diameter of 37 mm). Also, they usually weigh no more than 1 oz.

Purity

Both gold products are typically weighed in troy ounces. These are units that date back to the Middle Ages. But sellers also commonly use percentages to describe the amount of pure gold in bars. That is a caratage of a particular bar or coin.

To become a part of your precious metal IRA, bars must meet the standard of 99.99% fineness, while coins can have lower purity (but no less than 99.5%). The exception is the American Eagle coin, with 91.67% of gold. But it is an IRS-approved and quite desirable item.

Price

 Every investor strives to buy precious metals at the best possible price. But they must be aware of one unwritten rule in the market - a gram of pure gold in smaller products costs more than the same amount in bulkier items. Simply put, a one-kilo bar will have a lower price per gram of gold than 10-gram bullion. Likewise, buying a single troy ounce coin will cost you less than four 1/4 oz coins.

This fact might seem unbelievable, but it makes sense. Larger units have lower production costs than smaller units. Smaller bars and coins need more detailed and more refined processing and attention to detail. The explanation of minting process finds here.

Economic and Historical Value

Coins were the original form of holding gold. They were a common means of payment back in the day and a symbol of wealth. As anyone could afford them one way or another, that led to the development of gold bars. Renowned refiners and mints made these as purest gold form intended for investors.

Bars usually have no historical significance or preservation process. Nowadays, they are easily accessible to a wide variety of buyers. Besides, bullion is expensive due to its high percentage of pure gold. In other words, bars have higher economic value than coins.

But some coins might have higher prices due to their historical value. It is higher than their denomination and even their intrinsic value. For example, they can be several decades or even centuries old. But these are usually collectible items, which are not allowed in gold IRA.

Storage

Due to the higher percentage of 'impurities,' i.e., admixtures, coins are more convenient to store and carry than bars. They can be held in original packages, shelves, and specialized albums for collectible items. But the best place for them is a certified depository.

Bars tend to be softer, more fragile, and prone to breaking. So, you should not expose them to general temperature, humidity changes, and elements. They should also be kept away from other metals like silver and platinum due to oxidation. Also, you should hold bars within your self-directed IRA in IRS-approved depositories.

Reasons to Invest in Bars and Coins

Many prefer yellow metal as a safe-haven investment due to its proven historical value and importance. Many countries have experienced a gold rush, and people started investing their savings in different forms of this precious metal. Besides, this asset is more stable than equities, making it an excellent choice for anyone looking for long-term investment options.

As the value of paper currencies declines, the value of precious metals does not. Besides, the reserves of this precious metal continue to decline, and fewer mining projects are being built. It means that the current supply cannot meet the demand. And that will not likely happen in the future, either. So, owning gold may be better than having some side money doing nothing.

If you are worried about the future value of money, investing in physical gold is a smart way to protect your wealth and leave it to your family. But you can also be without worry - if you ever need extra cash, you can liquidate your assets in no time. Selling an IRA-approved gold bar or coin usually takes three business days for the transaction to settle. In contrast, selling a collectible can take several months and earn a high commission and tax.

Gold in any form is a kind of insurance of personal property against unexpected risks. It makes almost no distinction whether you have bars, coins, or something else in your investment portfolio. Still, it is good to know about some minor differences between these products that impact your decision about what to invest your money in.