Should You Buy Bullion Bars or Coins?

While stock markets have survived the test of time, many people will have heard of the infamous Wall Street Crash of 1929. Among its other devastating consequences, the unprecedented event decimated the automotive and construction industries, almost halving the country’s gross national product in just a couple of months. Between 2007 and 2008, a global financial crisis also took its toll on share prices. In 2020, the coronavirus precipitated another stock market crash. However, those who chose to buy Bullion as a hedge managed to gain through their investment. 

While, against all the odds, the stock market appears to be rebounding, many investors will be forced to hold on much longer before they can hope to see a profit. In the meantime, Gold continues its upward journey, despite some minor dips, and is fast becoming an investment option of choice for the more cautious investor. The Precious Metal may be purchased either in the form of bars or as Gold coins, including the iconic Kruggerand. The one-ounce Gold coin has become the preferred choice of many who buy Bullion today.

There are several valid reasons why investors favour this commemorative South African coin. Firstly, it has upstaged more established competitors, such as the United States Golden Eagle and the Canadian Maple Leaf. Despite economic sanctions against the Republic that restricted sales to local buyers, it has since become the world’s most widely-traded coin. The spot price for an ounce of this Precious Metal is set twice daily and applies regardless of whether it is in the form of coinage or bars. So, which of these is the best form in which to buy Bullion and why?

Firstly, although the price of Gold is fixed, this is not the figure you will pay when purchasing Gold bars or coins. Brokers are not investors. They buy and sell Precious Metals in one form or another, and their daily income derives mainly from a premium applied to each sale. These will add to the price of both coins and bars. However, since the charge levied on bar sales is significantly higher, this could be a good reason to stick with the Krugerrand if you plan to buy Bullion.

Furthermore, one of the many reasons the coin has gained popularity as an investment vehicle is that its sales are exempt from value-added tax (VAT). Though, this is not equally true of the Silver Krugerrand issued in 2017 to mark the fiftieth anniversary of its Gold predecessor, as VAT is included in its sale price. Given the lower spot price of Silver, this coin could offer a more affordable entrée to the Precious Metals market for buyers with limited disposable income. That said, fractional Gold coins such as the half-ounce and quarter-ounce Kruggerands also offer a cheaper way to buy Bullion.

For the long-term investor with more cash to spend, minted Gold bars can be a more convenient option, despite the higher purchase price due to VAT and the higher premium charge. What remains important is the assurance that your purchase contains a verifiable weight of fine Gold and comes from a trustworthy source. These assurances have positioned Mr K as a market leader among those discerning investors seeking to buy Gold or Silver Bullion bars or coins, whether in-store or online.

Disclaimer: The information above was derived from reliable sources and deemed accurate at the time of writing. However, changes following publication may have affected its accuracy. Such changes may occur without notice and Mr K cannot be held liable for inaccuracies in this article’s content or how a reader may choose to interpret it.