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Gold coins have served as a critical store of wealth for thousands of years. Although they are no longer used as everyday money, gold coins remain an attractive investment in a tangible asset.
WHY BUY GOLD COINS?
If you are reading this, you're already thinking about buying gold coins. Here are some excellent reasons why you should:
- Gold is a superb asset diversifier. This means that generally when stocks go down, gold goes up.
- Physical gold has no counterparty risk. You aren't exposed to someone not living up to their part of a contract when you own gold. You also aren't exposed to your bank's vulnerabilities. Depositors will be exposed to asset seizure during the next financial crisis.
- Hackers can't delete or steal your gold. Hacks of cryptocurrency exchanges have proven the dangers of investing in digital assets. Over $1.7 billion of cryptocurrency was stolen in 2018 alone. Digital wallets, where you store your cryptocurrency yourself, are another danger. If you forget your password or the wallet app is hacked, there is no way at all to recover your crypto investments.
- Gold is a tangible asset. If the stock markets close in some crisis, you won't be able to sell your stocks or bonds for emergency cash. However, you can still sell your gold.
- Gold is an extremely liquid asset. You can easily sell gold for cash nearly anywhere in the world.
- Gold is private. No one has to know that you have it. In fact, it's better if no one knows you have it.
- Gold is a portable store of value. It's easy to carry thousands of dollars of gold in your pocket if you're forced to evacuate due to a natural disaster, for example.
- Gold is also financial "disaster insurance." Gold prices climb in times of economic or political crisis. This can offset your losses in a stock market crash, for instance. The time to buy gold is when things are calm so that you get the most significant benefit from it when things get bad.
WHICH GOLD COINS SHOULD I BUY?
Deciding which gold coins to buy can depend on a few factors. Which gold coins are popular in your region? International bullion dealers such as Gainesville Coins buy and sell coins worldwide, but your local gold market may vary. The American Gold Eagle is the favorite gold bullion coin in the U.S. Still; many Europeans prefer the Austrian Gold Philharmonic.
The choice of which gold coin to buy applies to historical gold coins as well. You will have trouble finding a buyer for a French 20 franc gold coin in Kansas, or for an American Liberty Head half eagle in Tuscany.
Your local and state sales tax laws can also play a part in your choice of gold investment coins. Since bullion coins have no numismatic (collectible) value, some states exempt them from sales tax. Some states require gold coin sales to be over a specific dollar limit to qualify for tax exemption. Others do not. U.S. legal tender bullion coins are tax-free in any amount in many states. Check with your state Department of Revenue to better understand your options.
Self-directed IRAs are a way to add gold to your retirement portfolio on a tax-deferred basis. Only certain gold coins qualify, and other rules also apply. You can learn more on our Precious Metals IRA page.
Popular Modern Gold Coins
Modern gold bullion coins are generally the best selling gold products.
The American Gold Eagle is the world's most popular gold bullion coin. Introduced in 1986, the 22k (22-karat) Gold Eagle is the official gold bullion coin of the United States. The U.S. Mint uses a 91.7% gold, 5.3% copper, and 3% silver 22k alloy to make the Gold Eagle. This mixture gives it a brighter appearance than 22k gold coins like the Krugerrand, which only uses copper in its alloy.
The Canadian Gold Maple Leaf debuted in 1979 as the world's first alternative to the Krugerrand. The Gold Maple Leaf was also the first 24k (.999 fine) gold investment coin. This purity increased to .9999 "four nines" in late 1982. The Gold Maple Leaf is the second-best selling gold bullion coin in the world. Only the American Gold Eagle sells more.
Part of the Gold Maple Leaf's popularity comes from its unmatched anti-counterfeiting measures. The Royal Canadian Mint is a world leader in anti-counterfeiting technology. It uses three separate security measures on its investment coins.
The Canadian Gold Maple Leaf - World's Most Secure Gold Coin?
- 2013: A micro-engraved security mark is introduced.
- 2014: The "Bullion DNA" security measure is invented: Every bullion coin die is engraved with microscopic security marks. This allows every Gold Maple since 2014 to be authenticated using a small desktop device.
- 2015: Refracting radial lines begin to be cut into Gold Maple dies at extreme tolerances. This gives the Gold Maple Leaf a shimmering background that counterfeiters cannot replicate.
The era of the modern gold bullion coin began in 1967, with the advent of the South African Krugerrand. The Krugerrand was the first, and for a dozen years, the only gold coin to contain exactly one troy ounce of gold. By 1980 the Krugerrand accounted for 90% of global gold coin sales. International sanctions against South Africa's apartheid government in the 1980s devastated Krugerrand exports. Sanctions were lifted in 1994, with the end of apartheid. In the meantime, the Krugerrand had lost its place in the bullion market to the American Gold Eagle and Canadian Gold Maple Leaf.
Today, the Krugerrand is famous as the gold coin left in Salvation Army kettles during the Christmas holidays. Like the Gold Eagle, its purity is 22 karats.
Do 22k 1 oz Gold Coins Have An Ounce of Gold?
Investors who are new to buying gold coins are sometimes concerned whether a 22k 1 troy ounce gold coin actually has a full troy ounce of gold.
The answer is yes! A 22k "1 oz" gold bullion coin has a full 1 troy ounce of gold! 22k gold coins actually weigh 1.09 troy ounces in gross weight, due to the added copper, or silver and copper. This also means that 22k 1 oz gold coins are slightly larger than a .999 fine gold coin.
Popular Historical Gold Coins
Long before there were special gold investment coins, people would save gold coins plucked from circulation. In the U.S., these old circulated gold coins are known as "pre-1933" gold, in reference to the year gold coins were removed from circulation in the U.S.
The most famous American gold coin is the 1907–1933 Saint-Gaudens double eagle (0.7734 oz gold content). The double eagle was a large coin that didn't see much day-to-day use. Millions of them were caught in bank vaults and melted down when Franklin Roosevelt outlawed private ownership of gold in 1933. However, the double eagle was also the coin most used by American companies to buy foreign goods. This meant that millions more double eagles hiding in European bank vaults escaped FDR's melting pot. These coins flowed back into the U.S. when private gold ownership was legalized in 1974.
The large 50 Peso "Centenario" Mexican gold coin (1.2057 oz gold content) is a relatively unknown historical gold coin. It is popular among savvy gold investors for its striking design and low premium over spot. This holds true for other old Mexican gold coins as well.
The British Sovereign (0.2354 oz gold content) was perhaps the best-known gold coin of the 18th and 19th centuries. This was a time when the British Empire was the world's industrial powerhouse. The Sovereign is one historical gold coin that is still minted today.
The Austrian 100 Corona (0.9802 oz gold content) is another gold coin with one foot in the past and the other in the present. The original 1909–1914 coins were minted at the end of the Austro-Hungarian Empire. The Austrian government began making restrikes of the 100 Corona in the 1970s, to compete with the Krugerrand. The restrikes bear a 1915 mintage date to separate them from the original 1909-1914 coins.
Long before there was a European Monetary Union, European nations used a standard 20 franc gold coin (.1867 gold content) as a common currency. Since France had the largest economy in Europe, their 20 franc coin set the standard for the others. Much like the euro would do 130 years later, this common gold coin standard smoothed trade throughout Europe. The beautiful designs of these small coins make them an attractive alternative to modern fractional gold coins.
Math vs Liquidity
Do the math when comparing the premiums between historical gold coins and fractional bullion coins. Sometimes you can trade a little liquidity for more gold, and the added allure of holding actual Gold Standard gold coins in your hands.
ARE RARE COINS A GOOD INVESTMENT?
Many people ask us if buying rare coins is a good investment. If you are someone who has to ask this question, the answer is "NO."
It takes a lifetime of expert knowledge and deep pockets to successfully invest in rare coins. From an investor's standpoint, the only rare coins that make real money are those that are not only truly rare, but are some of the finest samples known. These coins can cost tens of thousands to hundreds of thousands of dollars each. The rare coins that a regular person can buy aren't really that rare. The prices of "mass market" rare gold coins depend more on the price of gold than any market demand. Thus, they see little appreciation over modern bullion coins.
The best thing to remember about investing in rare coins is this:
If someone cold calls you, trying to sell you rare coins, ask yourself, "If these are such great investments, why do they have to call strangers to sell them?"
IS IT BETTER TO BUY SILVER OR BUY GOLD?
Another common question we hear is “Should I buy silver or buy gold?”
You can buy both silver and gold, but many people seem to self-select into one camp or the other.
Silver is sometimes called “Poor Man’s Gold,” and that’s a little harsh. People who don't have thousands of dollars to spend should not be stigmatized for not buying gold. That said, there are millionaires who prefer purchasing (massive amounts of) silver. There are also middle class investors that would rather save and pick up the occasional gold coin over buying silver.
Sometimes the choice between gold and silver depends on your investing strategy. Some people save up until they believe the market is right before buying precious metals. Another strategy is to employ dollar-cost averaging.
"Dollar-cost averaging" is investing a fixed dollar amount on a regular schedule. The key is to pick a dollar amount and a schedule, and stick with it. This allows people to treat purchasing gold the same as any other bill. The idea is to make gold investing a regular habit. Some people may buy a little gold every week, while others may plan on monthly or quarterly purchases.
Dollar-cost averaging also takes the emotion out of gold investing. It's easy to make large impulsive purchases when gold goes on a hot rally. It's also easy to panic and sell into a falling market. Dollar-cost averaging smooths out temporary volatility with a long-term plan. When prices jump, you will buy fewer total ounces with your set dollar amount. But when prices fall, you'll be buying more gold with your budgeted money. Over a long period of time, your cost per ounce will… average out. The key is to put emotions such as fear and greed aside (which can be difficult at times), and stick to your plan.
WHY DOES FRACTIONAL GOLD HAVE HIGHER PREMIUMS?
This is a common question. Why does fractional gold have a higher premium when compared to a single 1oz coin?
The short answer is “labor.” The amount of gold used to make a coin is actually not that important when looking at what it costs to make that coin. A 1/20 oz Gold Maple Leaf bullion coin and a 1 oz Gold Maple Leaf go through the same minting processes. Only the size is different. Engraving the coin dies, making the coin blanks, and striking of the coins takes the same amount of effort, regardless of the coin's size.
BUYING GOLD COINS - THE CHOICE IS YOURS
There are many different ways to invest in gold coins. One troy ounce modern gold bullion coins are the most popular. Modern bullion coins also come in fractional sizes that may be a better fit for a modest investment strategy. Check for sales of "scruffy" gold coins online from trusted sellers. If you disregard eye appeal, you can find some good deals.
Just because you start by purchasing a particular "brand" of gold coin, don't feel tied to that decision. A troy ounce of gold is a troy ounce of gold when it comes to modern gold bullion coins. It doesn't matter whose face is on the front - or if there isn't a face at all!
Purchasing historical gold coins for their gold content provides many artistically attractive options. There's nothing saying you can't mix some old "common date" Gold Standard gold coins with your modern bullion holdings.
Do what you want to do, and remember -- it isn't hard to increase your hard assets!