Gold Bullion Types: Gold Bars And Gold Coins
Governments and central banks, for the most part, hold gold bullion.
In understanding how the gold bullion market works from the trader’s perspective, it’s important to understand the difference between gold bars and gold coins.
While gold bars may be a cost-effective way to buy gold for industries like manufacturing, art, or electronics that have a specific use for gold, it is not the best choice for investors. This is because the gold bars are actually expensive to assay and liquidate. Also, it may not be best to trade using gold bars unless there is a specific industrial need.
When you try to sell gold bars, miscellaneous expenses include fees associated with handling, refining, and assays. These additional costs make this type of investment less profitable.
Trying to sell bars on the gold market, especially in large quantities, can take longer and be more difficult to sell than selling the same amount of gold in a form that has a more manageable size, like, for instance, gold coins.
When you try to sell gold bullion bars, the seller would need to find a buyer who is willing to purchase a large quantity of it. Moreover, the bigger the size of each bar, the harder it will be to sell, because the dealer will have to slice it up to sell in smaller amounts.
A common misconception about buying and selling gold coins is that they are more expensive due to limited supply. In fact, many investors merely consider them as collectibles.
The plain truth is that gold coins are simply one-ounce gold bullion pieces, the circular shape of gold ingots.
What's more, these gold coins are backed by Governments rather than authenticated by a refinery that has mass-produced gold bullion bars. Unlike gold bars, coins are cheaper to buy and easier to sell. They are cheaper because many miscellaneous handling and assay fees are eliminated and they are easier to sell because they come in a smaller size.