Guide to gold

Should you buy gold coins?

The most trusted gold in the world is also the cheapest to buy and own, and the safest. It's generally thought the easiest way to buy gold, and it’s certainly the easiest gold to sell.  But it’s not gold coins.

Gold coins are bought through traditional coin dealers with around 7 to 10 percent ‘spread’.  That’s the difference between the dealers’ selling price and their buy-back price.  7 to 10 percent is what you lose when you buy gold as gold coins, and it’s a very high transaction cost for a modern investment.

On this page we’ll look carefully at why gold coins are so expensive to deal, and we’ll explain why for most people (not quite all) buying them is also a tactical mistake.

If you’re looking to invest efficiently in gold it doesn’t have to be through gold coins.  You could go straight to the wholesale markets and buy more reliable, safer and cheaper Good Delivery bullion which you will quickly find is also much easier to store, insure, and later sell.

Your maximum round trip dealing costs for Good Delivery bullion at BullionVault would be 1.2%, which is about one sixth of the typical 7 to 10 percent cost of dealing gold coins.

What’s wrong with buying gold coins?

Gold coins and small bars are neither the cheapest nor the safest way to buy gold.  If you choose them you may well: 

Under the microscope: the high costs of buying gold coins

The following table illustrates just how expensive gold coins and small bar products are. 

The supporting research examined trading costs by looking at coin merchant’s prices and comparing them to the BullionVault price for Good Delivery bullion

Who Product Note Value lost to trading costs.  The bid/ask 'spread'  plus any commission
Dealer 1 1 new Sovereign   -13.2%
Dealer 1 25 new Sovereigns Bulk rate -9.2%
Dealer 2 Used Sovereign   -9.4%
Dealer 3 High circulation 1oz coin   -5.8%
Dealer 4 10 used Sovereigns Bulk rate -9.9%
Dealer 4 100g bar Cheapest trading of any coin or bar from any supplier -6.7%
BullionVault Good Delivery bullion Any quantity from 1 gram upwards. Recommended minimum of $2,000 because of $4 per month storage and insurance fee -1.2%

The additional costs and complexities of storing and insuring gold coins were not considered in this comparison.

  • All of these products are considered bullion.  i.e. they have no numismatic (collector) element to their value, which therefore rests only on their gold content. 
  • Only the Good Delivery product can be used to settle a main market bullion trade.  That’s the reason it’s so much cheaper.
  • Gold sovereigns are smaller than 1oz gold coins and materially more expensive to deal.
  • Small gold bars are usually cheaper than gold coins, but not much cheaper.
  • Of the four Dealers only Dealer 4 was actively posting buy-back (bid) prices, which were 2% below the spot price.  The other dealers were contacted and after negotiation agreed to a bid price 2% below spot under prevailing market conditions. 

Good Delivery bullion buy back prices are visible 24/7 on the BullionVault website.  For instant dealing they are invariably within 0.1% of the spot price, making a 0.2% spread.  In addition there is 0.5% commission at purchase and 0.5% commission at sale.

The costs and difficulties of buying gold coins are all easily avoided

At BullionVault we have already assisted 95,000 users on the journey you are taking. 

Many of them began by looking at how they should buy gold coins, and then changed their mind and bought Good Delivery bullion instead.  They chose BullionVault because it avoids so many of the costs and problems associated with gold coin investment.

As a result they feel genuinely safer, they spent a lot less time getting things done, and they spent a lot less money.  They also know they can sell more easily for a higher price – whenever they want.

BullionVault looks after more gold than any other online bullion provider - in fact the total currently stands at more than 11% of Britain's official gold reserves.  Our solutions to the problems of buying gold are widely recognised as the best, and we offer the lowest prices - guaranteed.

Gold coins for delivery

As explained above, owning wholesale bullion in a market-accredited vault is the safer, cheaper and easier way to own gold, silver and platinum. That said, we recognize that some people also like to keep a little bullion at home, and so we now enable UK users to buy gold coins.

Please Note: This analysis is published to inform your thinking, not lead it. Previous price trends are no guarantee of future performance. Before investing in any asset, you should seek financial advice if unsure about its suitability to your personal circumstances.

Contact us

Email

Phone

  • UK and International: +44 (0)20 8600 0130
  • US and Canada toll-free: 1-888-908-2858
  • Opening Hours: 9am to 8:30pm (UK), Monday to Friday

Address

Galmarley Ltd T/A BullionVault
3 Shortlands (7th Floor)
Hammersmith
London   W6 8DA
United Kingdom