Investing in and Buying Gold Coins

Investing in and Buying Gold CoinsWith the world’s economic markets on shaky ground and national currencies at their most volatile in recent memory, more and more investors around the globe are turning to gold and are looking to buy gold coins to protect the purchasing value of their money.

If you’ve paid any attention whatsoever to the gold market in recent years, you know that gold is riding a crest of high valuation. Even with minor drop-offs in the last year or two, gold is still trading at historically high prices.

It’s made a lot of investors a lot of money, causing new, potential investors to sit up and take notice.

Before jumping into the gold market, though, it’s wise to arm yourself with some basic knowledge of what investment products are out there.

It’s also a good idea to familiarise yourself with the pros and cons of different gold investing strategies and think about purchasing options. Here are some things to consider.

About Gold Coins

While there are lots of gold investment products available, such as pure bullion bars, gold certificates, and gold-backed funds, many investors prefer the reliability and ease of gold coins.

These are actual, physical coins that are minted by the issuing nation’s government.

The most popular of these, coins like the Krugerrand, the Sovereign, Canadian Maple, or American Eagle are recognised worldwide as a trustworthy investment, among informed buyers and sellers there is never any question as to purity or authenticity.

A significant advantage of buying gold coins over other gold investments is that you can be in complete control over it. While storage and security is undoubtedly a concern, many gold coin investors like knowing that no one else is making decisions concerning their money.

With certificates, you don’t actually have possession of your investment, and with gold-backed funds, you are at the mercy of a fund manager’s decisions. Coins are completely — and quite literally — in your hands.

Many investors also prefer to have their gold investment in smaller units that can be sold slowly over time, than in one big solid lump in the form of a gold bar for example.

One slight perceived disadvantage of buying coins instead of regular bullion is that there is often a small premium charged over the price of the actual gold on coins.

This is a fabrication fee charged to cover the cost of production, and buyers can expect to pay four or five percent over the current gold value. Many gold coin investors believe that this charge is offset by all of the advantages of owning gold coins and therefore worth it.

Before you buy gold coins, it’s important to shop around to find the smallest upcharge.

Types and Sizes

While there are many different gold coins on the market, several are recognized globally as established investments of high purity and value.

Some of the most popular gold coins are the South African Krugerrand, the American Gold Eagle, and the Canadian Maple Leaf. Others include the American Buffalo, the Chinese Panda, the Australian Kangaroo, the Austrian Philharmonic, the British gold sovereign, and the surprisingly well-circulated Turkish Republic gold coin.

It is important to note that not all gold coins are created equally.

They are available in various weights and purities, so before you make your purchase, you will want to investigate exactly what it is that you are buying.

Some investors prefer to buy coins only in one-ounce weights, which many of the popular coins are sold as, since gold is priced per ounce. However, many half-ounce, quarter-ounce, one-tenth ounce, and other fractional weight coins are available for purchase.

It is worth noting that the popular Turkish Republic coin in particular has the somewhat unusual weight of 6.6 grams of gold. Coins also vary in gold purity, with most either 22k or 24k, and this will affect its purchase and resale price.

Where to Buy Gold Coins

When purchasing your gold coin investment, you want to make sure that you are buying from a reliable, reputable source. There are a lot of internet dealers and online auction resellers, but these may not always get you the fairest price. You have a few choices.

1) The first is to buy directly from the issuing government.

When you do this, you know that you are paying a fair price and buying from an honest source. In the US, for example, you can buy coins directly from the US Mint. The drawback to buying this way is that you can typically buy only the current year’s coins, and they have a higher surcharge over the value of the gold alone.

2) Buy from coin dealers

If you are interested in buying coins from earlier years, you’ll need to consult with a coin dealer. A safe, reputable coin dealer should not be too difficult to find, but it may take a bit of research on your part.

Look for a dealer that is well-established and known for repeat business from loyal customers rather than one who has just set up shop.

With online gold coin dealers, you want to seek out the same characteristics: years in business and positive reviews from satisfied buyers.

It’s also a good idea to get a general idea of the current market value of what you’re looking to buy; if a dealer quotes you a price that is significantly above that number without any reasonable explanation, you may be better off buying from a different source.

Of course you do have to bear in mind though that some coins – rare years, from scarce mints, etc, can have a higher price than simply the gold content, since they have an appeal to coin collectors and this extra demand can increase the price.

When buying as an investment you want the common coins that are valued purely on the gold content.

You might seek some guidance from the PNG, or the Professional Numismatists Guild, this is an organization of the world’s best coin, metal, and currency dealers.

They have a code of ethics that all members must follow, and they are committed to upholding the integrity of coin sales around the globe. To find a PNG member gold coin dealer, visit their website at www.pngdealers.org.

3) Online auctions

Another alternative is to buy from online auction sites, but here you don’t know who you are dealing with, or whether they will send you the coins you believe you have bought.

Another downside to online auctions is that while it may be possible to sometimes get a great deal on rare and collectable coins, for investment coins where you are buying the value of the gold alone you will rarely get a “bargain” (if such a thing exists when buying gold!).

This is because first of all you are competing against other investors, and secondly the big sites like eBay charge a 10% final value fee.

As you can imagine on a 1oz gold coin worth $1500+ that adds up to a lot of money, and in the gold coins market where typically you would pay no more than a 5% surcharge on the value of the gold in the coin, it makes auctions a less than appealing place to buy from.

Physical auctions (i.e. at an auction house) is even worse with most charging a 20% sellers premium AND a 20% buyers premium on goods sold, which means that both the seller and the buyer get a raw deal, with the auctioneer getting by far the best deal of everyone.

I hope this gives you some food for thought on buying and investing in gold coins, and the safest places to buy from and get the best deal.