Gold is one of the few investments you can hold in your hands. But, if you decide to buy the real thing, what exactly are you supposed to hold?

Gold bars may be the image that comes to mind, complete with visions of a vault somewhere. Yet, plenty of investors buy gold coins, instead. Both of them are physical gold, but there are some practical differences between the two. 

The price you pay, how you store it, and how easily you can sell part of your investment depend on which form you choose.

First, We're Talking About Bullion

Before you start raiding Grandpa's coin collection, there's an important distinction to make here.

Bullion coins are primarily valued for the precious metal they contain. The U.S. Mint says that bullion coins are valued by the weight and fineness of their metal, unlike collectible coins, which can derive additional value from their rarity, age, or condition.

Gold bars are also bullion, generally stamped with information such as their weight and purity. So, when you’re comparing gold coins with gold bars as investments, you’re generally comparing two different packages for the same shiny ingredient.

Gold Bars May Give Us More Gold for Our Money

Here's where bars have an advantage. When you buy physical gold, you’re generally paying more than the current market value of the metal. That extra amount is known as the premium.

Coins tend to cost more to manufacture than bars, so that premium may be higher. The World Gold Council says a gold coin generally costs more per ounce than a small bar containing the same amount of gold.

Size matters, too. Larger bars generally have lower premiums per ounce than smaller bars. So, if you’re interested in acquiring a larger amount of physical gold, you may decide that bars are more cost-efficient.

Gold Coins Have Their Own Advantages, Too

Coins may cost a little more, but there's a reason investors still buy them. Government-issued bullion coins are standardized products with recognizable weights and specifications. 

American Eagle Gold Bullion Coins, for example, come in four different sizes, ranging from one-tenth of an ounce to one ounce. That will give you more flexibility.

If you own several smaller coins and eventually want to sell only part of your gold, you can do that. One large bar isn't quite so cooperative. Coins may also be more familiar to potential buyers, although exactly how easy either form is to sell depends on the product, dealer, and market.

Don't Forget Where You’ll Store the Gold

Physical gold has one wonderfully obvious characteristic: it's physical. But, once you buy it, somebody has to keep it safe.

The World Gold Council says people buying physical bars and coins need to consider:

• Delivery

• Storage

• Insurance

A small collection may be relatively easy to store securely at home. While larger holdings could benefit from professional storage, that introduces another expense. There's also the question of who you’re buying from.

The CFTC recommends:

• Checking the current market price

• Understanding premiums and fees

• Knowing the dealer before buying physical precious metals

A suspiciously spectacular gold bargain should light up your spidey senses.

So, Coins or Bars?

There isn't one form of physical gold that makes sense for everyone. Bars may appeal to you if you’d like to buy more gold while keeping the premium per ounce lower. Meanwhile, coins can make smaller purchases and partial sales more practical, although you may pay more for that flexibility.

Either way, the price tag involves more than the gold itself. Before buying, it's worth looking at the premium, storage costs, insurance, and how you’d eventually sell your gold.

Those details may matter just as much as whether that gold comes in the form of a coin or a bar.

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