Gold Bars or Coins: Which Suits Your Gold Purchase Better
Gold bars or coins – this question comes up with almost every gold purchase. Both contain physical gold and, with sufficient fineness, are VAT-exempt as investment gold in Germany. They differ in premium, denominations and resale.
What is the difference between bars and coins?
Gold bars are cast or minted blocks produced by a refinery. They show the manufacturer, weight, fineness and often a serial number. Gold coins are issued by state mints and have a face value. This makes them legal tender in the issuing country, even though their gold value is far above the face value.
For both, value is determined mainly by the fine gold content. The price you pay is made up of the gold value plus a premium. This premium is the most important difference between the two forms.
Premium: why small units cost more
Production, testing, packaging and distribution cost almost as much for a 1-gram bar as for a 100-gram bar. The smaller the unit, the higher the premium per gram of gold. Large bars usually have the lowest premium.
Coins are more complex to mint and usually carry a slightly higher premium than bars with the same gold content. The difference is particularly large for small coins such as tenth-ounce coins. The exact premium depends on the dealer, the product and market conditions. In times of high demand, it often rises noticeably.
Denominations and flexibility
A large bar is cheap to buy but can only be sold as a whole. If you may want to sell part of your gold later, several smaller units give you more flexibility. Many buyers therefore combine larger bars with some coins or smaller bars.
In the wholesale market, gold is traded in Good Delivery bars of the London Bullion Market Association. Such a bar contains between 350 and 430 troy ounces of gold, usually around 400 ounces. These bars are unusual for private buyers. Common sizes range from 1 g to 1 kg, plus 1-ounce coins and fractional coins.
Resale
Well-known bullion coins such as the Krugerrand, Maple Leaf or Vienna Philharmonic are recognised by dealers worldwide. They can usually be sold without elaborate testing. The same applies to bars from well-known manufacturers on the LBMA Good Delivery List.
Bars of unknown origin, damaged packaging or missing certificates can make selling harder. Some dealers test such pieces additionally or pay less. So keep invoices and certificates. They also help to prove the holding period to the German tax office.
Tax: what applies to both
In Germany, gold bars of 995 parts per thousand or more and gold coins that meet the conditions of § 25c UStG (German VAT Act) are exempt from VAT. For coins, this includes the requirement that their usual price exceeds the gold value by no more than 80%. Collector coins with a high premium may therefore not qualify.
When selling from private assets, German income tax law treats bars and coins the same. After a holding period of more than one year, the gain is tax-free.
Minted or cast bars?
Smaller bars are usually punched from a gold strip and then minted. They have smooth surfaces and sharp edges and are often supplied in a sealed plastic card with a certificate. Larger bars are often cast. Their surface is more irregular, but this does not change the gold content.
For resale, it matters that the manufacturer, weight, fineness and, where applicable, serial number are clearly legible. Do not open sealed packaging without good reason. Some dealers pay a better price for bars in undamaged original packaging or skip an additional test.
