If you read the (BFI Bullion Quarterly) Digger regularly, you know that we try to focus on and address what we are hearing about from you: our clients, partners, and other friends. While the first half of the year has been nothing short of wild, we continue to hear the same recurring questions in our conversations: one is no surprise, while the other is a classic.

“BFI Bullion’s Most-asked Questions of 2024” was taken from BFI Bullion’s quarterly newsletter, the Digger, which was published on August 16, 2024. To read the 3rd quarter Digger in its entirety, click here.

Time flies when you are having fun, which is exactly what has happened so far in 2024. Several months have gone in a snap, while gold spot prices have hit their highest high. In taking that step up, gold spot has found a “new normal” in its price averages.  As we were finishing up this Digger, the highest gold spot we have seen up to now came in July, as it went over $2480/oz. It came on quite fast, starting 2024 at roughly $2,050/oz and shooting up to $2,450 by the second half of May, before hovering over the past 2 months within the $2300-2400 range. These highest of the high gold spot prices have raised a question we continue to get: it is not “when” or even “if” I should buy gold, but “why should I buy gold now?”. In other words, with spot prices at record highs, is it too expensive to buy gold?

We all try to buy low and sell high, but when it comes to physical gold, even experts agree that it’s nearly impossible to execute this perfectly in practice. Every time spot prices are high, there is a sense of “FOMO,” or the “fear of missing out,” creeping in, even for the most disciplined of metals’ investors. What if it keeps going up and I miss out? It surely has to turn (doesn’t it?) and then I’ll buy!

My short, and perhaps expected answer to the question of if gold is too expensive is “it’s always a good time to buy gold.” I mean it! Gold is being projected across the board to go higher by the end of the year and into the next. Do you believe much is going to change that will have a negative impact on gold prices? Clear risks and pressure points like inflation, the Fed and interest rates, geopolitical unrest with the wars in Ukraine and Gaza, seem like miles away from subsiding. Even though China supposedly stopped buying gold the past two months like it had been, spot prices have only gotten stronger. And Western investors have been late to the party, selling way more than they have been buying. Once they dive back in, it will surely push demand (and premiums) even higher.

So, yes, if you have the liquidity to do it, then it is time to invest in gold. I’ve been semi-regularly buying gold since 2007, and I can’t tell you what the spot price was at any of those purchases.

The classic: gold bars or coins?

The other question we’ve heard a lot since the start of the year has been the classic: should I buy gold bars or coins? It’s been asked many times before, and it will be asked many times again. I haven’t written about it in 4 years (already!), so it was about time.

Before I dive in, I’m going to focus on gold here, but bear in mind this could apply to silver as well. I just don’t want to jump around too much and focus on the key points. I also don’t want to tell you which is better: this is for you to decide. Just use these points in your decision-making process the next time you buy.

Price

If you are a value shopper like I am, then you like getting the most “bang for your buck” as we say in the US. The premiums above spot you pay on coins will always be higher on a per ounce basis than on a bar because gold bars are less costly to produce than coins. The classic example is to compare is a 1oz gold bar vs any 1oz gold coin. The 1oz gold bar, under normal market conditions, nearly always comes with a lower premium over spot than 1oz gold coins do. And the larger the bar, the lower the per-ounce price you’ll pay. You can argue that you might get some premium back on coins when selling them vs. what you’ll get on bars, but in the current conditions, that isn’t even the case.

Storage Space

I’m mainly referring to the investor wanting to keep metals at home here. Practically speaking, you would think that the more you buy in ounces of any metals, the more space it’s going to take up. But if you consider a single, 1kg gold bar, about the size of your mobile phone vs. 32, 1ozt gold coins (a 1kg gold bar is 32+ ounces), the bar actually takes up less space.

On the other hand, bars are bulkier when looking at them by piece vs. coins, so it might be easier and more discreet to hold some coins “here”, and some more coins “there”, instead of a single, larger bar Whatever you do, if you do store at home, make sure you do so in a safe; don’t just keep them in your underwear drawer!

Long-term goals

Most of our clients buy their metals for the long term, knowing they will store them outside of their home country for as long as possible. At that point, there is no immediate thought given to the distant future. However, when it comes to the question bars vs. coins, it might be worth thinking down the road.

If you want to buy and hold, with no intention to sell, then bars, and even larger bars, might be the best. But if you think you could take delivery, coins are going to be easier to resell at your local metals dealer. Coins will also allow you to store in a few different locations. Maybe you want to keep some at home, as well as somewhere else to diversify.

Liquidity

I had a client call me once asking me what he should do: he had a 500gr gold bar, but no one would buy it from him over the counter. He was frustrated, as it was clear his only option might be through a bank. When it comes to BFI Bullion clients, we never have a problem selling either your bars or coins back to our network of metals providers. However, if you take delivery or buy metals over the counter, having smaller formats will be easier to sell to a local dealer than larger formats.

Bartering

Some of you might think I’m crazy on this one, but what happens if our fiat currency system suddenly collapses, and you need something to barter with? I am an optimistic person that tends to believe this to be far-fetched (at least in the foreseeable future), yet I still keep a monster box of silver coins for the purpose of trading for goods and services in case the day comes that cash loses its function as a medium of exchange. What would you rather buy a loaf of bread with, a gold bar or gold coin? Obviously having some coins will prepare you better for this ultimate rainy-day scenario.

A word of warning: I’ve heard a lot of precious metals dealers pushing people to buy half-, quarter- and even tenth-of-an-ounce size coins for these purposes. Or the 50-gram, chocolate-like gold bar (made of 50, 1gr bars that can be broken off by the gram). While I don’t disagree with the thinking behind it, these smaller-than-an-ounce options come with really high premiums, premiums you will not get back if selling again someday. This is why I like 1oz silver coins: I can trade a week’s worth of meat with the butcher, or two weeks’ worth of bread with the baker.

Sentimentality

Have you ever had a close look at a 1oz gold Canadian Maple Leaf? Or an Australian Kangaroo? Look at the detail, how it shines in the light, how people recognize right away that you are holding something of value when you put it in their hand. I know more than one person that likes to always travel with a coin or two on them for an emergency. Or they like giving coins as gifts to family for births, communions, or other special occasions. Maybe you are like me and have coins that were passed down from your father.

However, that doesn’t mean that sentimentality is lost on me either when I’m holding that heavier-than-it-looks 1kg gold bar in my hand that is currently worth about USD 79,200, if you know what I mean!

So, bars or coins?

The answer is: a mix! With coins, I personally still come back to price and what the lowest premiums over spot are. I’m still a US person, and I’m a Swiss, but it doesn’t mean I buy only Eagles and Vreneli’s. The Eagles are always priced higher than other coins. For bars, I love the 1ozt and 100g for gold. And when it comes to silver, I prefer coins, completely aware that the premiums can be lower on the 1kg silver bars. But as I said earlier, I think of silver coins as my bartering vehicles if it ever came down to it.

The old saying “different strokes for different folks” applies of course. While you may agree with me on some things here - or not at all - the point is that it's still important to have precious metals as part of your investment portfolio. I think we can all agree that is the most practical advice of all!

>> Read BFI Bullion’s Quarterly Digger here.

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