Many investors are interested in gold coins due to the consistent increase in value throughout history. The majority of coin dealers are reputable and sell gold coins at a fair price.
Prior to making an investment, we recommend conducting research. Your best option is to understand the value of the coins you are interested in purchasing to ensure you make a well-informed decision.
There are three critical factors you should be aware of before making a purchase. These are:
You should be aware the spot price of gold bullion coins is slightly lower than the trading price since dealers will charge you a small premium. This is partially due to the small fabrication fee charged by the sovereign governments minting the coins.
The basis of the spot price for gold is .999 fineness for 100 ounces and above. The premium percentage for gold bullion coins between 1/10 and one troy ounce is between three and 15 percent.
This is dependent on the specific coin, the quantity you purchase and the size. The majority of dealers selling gold bullion generally sell one troy ounce gold American Eagle coins at roughly four to five percent above the current value.
When customers sell their coins, dealers usually offer two to five percent below the current value. Since the value increases over time, the seller can still make a good profit. The most popular gold bullion coins include:
Collector vs. Bullion Coins
The value of gold bullion coins generally fluctuates and depends on the current value of gold. Rare gold coins often have a significant value based on demand and historical supply.
Certain United States gold coins can be easily purchased in circulated condition. You will pay a small premium above the bullion content. If you have a coin in exceptional condition, the value is generally significantly higher.
The melt value of your coins can be several thousand lower than the numismatic value. There has always been a strong demand for high-quality, accurately graded rare coins.
In most circumstances, you should receive your coins within 10 to 14 days after purchase. There can be a delay if there is an issue with delivery from the mint. You should be informed of this prior to making a purchase.
We do not recommend storing your gold coins with the dealer. Most investors use an authorized and verified storage facility with high security. If you have purchased a large number of gold bullion coins, secure storage is incredibly important.
If you receive your coins at the time of purchase, we recommend caution for transport. Place them somewhere secure such as in a briefcase. If you hold them in your hands they can be seen and you are risking theft.
Take note of your surroundings when you leave the building. If you see anything suspicious, go back to the inside of the building. If necessary, the coin dealer can provide an escort to your vehicle.
Collectible Gold Coins
Investing in gold coins often results in a high-profit margin. Many investors collect these coins for retirement or to protect their wealth. By the last quarter of 2019, the value of gold coins increased by approximately 175 percent over the last decade.
Part of the value of collectible gold coins is numismatic. The materials used to mint the coins, the beauty and rarity are all important. Collectors are fascinated by the stories behind gold collector coins.
A good example is a coin struck in error like the 2008 20p coins minted without a year. Other coins relate to a specific period in history including the Flowing Hair dollar.
In 1794, the newly independent United States minted this coin. In 2013, one of these coins was purchased for $10 million. The 1933 $20 Double Eagle is the most expensive coin ever sold at an auction.
In 2002, the Flowing Hair dollar sold for $7.6 million. Many collectors invest in gold coins as protection from stock market drops and inflation.
Bullion Gold Coins
When stocks are bearish, the price of gold generally increases. Gold bullion coin investors also consider the design impressed on the coins. The most important aspects regarding value are the gold purity and weight of the coin.
The minimum classification for gold coins is 99.90 percent purity. This means for every 1,000 parts, 990 are gold. A higher purity is more valuable and you can find 99.95 percent pure gold bullion coins.
Britannia bullion coins are popular and minted at the Royal Mint with 99.99 percent purity. There is no purer form of gold coins. To be considered investment gold, the coins must be minted no earlier than 1800.
The exception is gold coins placed on a list of foreign acceptable gold coins. The face value of the Britannia in Britain is £100 with a weight of one troy ounce. Since this coin is legal tender, you do not have to pay capital gains tax.
When you purchase gold coins as opposed to bars, the premium charged is higher than the spot price for gold. This is the price you pay to have your coins delivered immediately. Your price includes the cost of minting and distribution.
The premium for coins with a weight below one troy ounce is higher due to the cost of manufacturing the coin. The manufacturing cost is dependent on the amount of gold in the coin and the value.
New investors can become confused because the weight of gold coins is in troy ounces. One troy ounce is roughly 10 percent heavier than a standard ounce. When you consider making an investment, both bullion and collectible coins have advantages.
The best option is dependent on your specific needs and goals as an investor. If you are interested in something with a reliable and safe value with the potential to appreciate over time, we recommend gold bullion coins.
If you have a fascination for exceptional, rare and beautiful pieces, we recommend collectible coins. Keep in mind many collectors consider collectible coins a hobby as opposed to an actual investment.
Gold Coins vs. Traditional Investments
You must be patient to earn a profit with the majority of traditional investments such as stocks and bonds. Time is necessary for your investment to develop and build. Unfortunately, you can lose your principal investment with mutual funds.
This can happen if the price of the company stocks fall or crash. Gold is a completely different type of investment for several reasons. First, the price of gold generally moves in the opposite direction of the stock market.
Second, gold investments generally offer a hefty return. The price of gold rarely decreases so you have peace of mind in knowing your investment will most likely never decrease in value.
Lastly, gold coins are an excellent means to diversify your portfolio. You can purchase gold coins from different sources such as precious metals dealers and jewelers.
We do not recommend purchasing from a jeweler since you will pay substantially more than the current market rate. Precious metals dealers charge a minimal fee when a customer purchases gold coins.
The variety and types of gold coins available are more extensive. A good example is if you are making a purchase for a Gold IRA account. A dealer is aware of which coins have received IRS approval and which ones have not.
The Purity of Gold Coins
The units used to determine the purity of gold generally include fineness and karat. When a coin is market 24 karat or KT, it is the purest gold available. If a coin is marked 22 karat gold, it consists of 22 parts gold and other metals.
The most common metals used for this purpose include silver, zinc and copper. The reason these metals are mixed in with gold is to increase both durability and strength.
If gold jewelry is cast using 24 karat gold, it is weak enough to break easily. Impurities can also be found in 24 karat gold. To determine gold fineness, the impurities from the casting process and the weight of the gold are calculated.
The main difference between gold coins and jewelry is coins are thicker than most jewelry so weakness is not a factor. Although 24 karat gold coins are not as common, they will not break if cared for properly.
Gold Coin Hallmarking
In addition to fineness and karats, another method is used to determine the grade and quality of the gold. In India, gold is hallmarked. The Bureau of Standards governing body in India marks not only gold coins but gold bars and jewelry as well.
The hallmark ensures the gold is authentic and prevents investors from being cheated when purchasing gold. a hallmark is simply a stamp embossed on the surface of the gold. This stamp certifies the purity level or percentage of the gold.
Specific components have been added during the last few years to hallmark gold coins including the BIS logo. The logo is essentially a mark detailing the purity of the gold in regards to fineness and karat.
Other additions include the Assaying and Hallmarking center logo and the mark and identification number of the mint or jeweler. In the past, the hallmarking system also included another component.
The year the hallmarking took place was also included. You will only find hallmarking for specific gold karats. If you are a serious investor, you can check the BIS to determine gold purity and any other metals included in the coin as well.
Denominations of Gold Coins
The most common denominations for the production of gold coins include:
Gold bars are purchased differently than coins and are available in:
You can also purchase gold bars in 1,000-gram denominations. Roughly two-thirds of the demand for gold each year is for small gold coins and bars. During the past 10 years, one-quarter of the worldwide demand for gold has been coins and bars.
Since the beginning of the 2000s, the demand for gold coins and bars has quadrupled worldwide. The most recent gold trends encompass both the West and the East. China is one of the more recent new markets to become established.
There has also been a reemergence of gold in the old European markets. If you decide to make an investment in gold coins, you should be aware there are other expenses in addition to your purchase price.
You will need to cover the expense of both storage and insurance. If you are purchasing gold coins as a personal investment, you can store them in a home safe. If purchased for a Gold or Precious Metals IRA, this is not an option.
All gold purchased for a Precious Metals IRA must be stored in a facility approved by the IRS. Prior to making a purchase, we recommend doing your due diligence. Make certain you verify the authenticity of your gold coins.
Although the majority of gold dealers are reputable, we recommend using caution since there are a few rouge dealers.
Numismatic Dealers and Gold Coins
There are similarities between art and numismatic coins. Some collectors consider numismatic gold coins as art with a portion of the value derived from the gold content.
There are two basic categories of new numismatic coins manufactured by mints all over the world, annual collectors coins and antique coins with a verifiable historic value. A couple of good examples of historic coins are:
You need to be certain you know what you are purchasing and conduct business with only reputable dealers because there are unscrupulous individuals selling forgeries. Most reputable dealers belong to a professional association for protection.
The two most common associations are the American Numismatic Association and the Professional Numismatic Guild.
Benefits of Purchasing Gold Coins
There are several reasons gold coins are considered by many to be an important part of investment portfolios including: