Gold Bars or Gold Coins
Bars are cheaper metal; coins are divisible and, if UK legal tender, free of Capital Gains Tax. Which wins, and when.
The honest answer is that it depends on how much you are buying and whether you are a UK taxpayer. For most private buyers in Britain the answer is coins, and the reason is tax rather than metal.
What you actually pay for
Gold trades at a spot price. Above that sits a premium covering refining, minting, distribution and the dealer's margin. Premium is where the difference between bars and coins lives.
Bars carry the lower premium, and it falls as they get bigger: a one kilo bar is the keenest metal in any dealer's range, a one gram bar the dearest per gram by a wide margin. Coins cost more to strike and carry more premium, but they buy you two things a bar cannot.
What coins buy you
Divisibility. Twenty Sovereigns can be sold five at a time as you need the money. A one kilo bar is a single decision — you sell all of it or none of it.
Tax standing. This is the big one. UK legal tender coins — every size of Sovereign and Britannia — are exempt from Capital Gains Tax for UK residents, whatever the gain. Bars are not legal tender and never qualify. Both are free of VAT.
On a holding of any size held for any length of time, that exemption tends to dwarf the premium you saved on a bar.
When bars make sense
If you are not a UK taxpayer, the CGT argument disappears and bars are simply cheaper gold. If you are buying a large sum and expect to sell it as one block, a kilo bar is the efficient way to do it. And if you already hold enough legal tender coins to use up any realistic gain, adding bars is reasonable.
A practical middle
Many holdings end up mixed: legal tender coins for the bulk of the position, a large bar for the cheapest metal at the margin. There is no rule that says you must choose one.
General information, not tax or investment advice.