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WHY BUY GOLD COINS?
If you are reading this, you're already thinking about buying gold coins. Here are some good reasons why you should:
- Gold is a great 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. The many famous hacks of cryptocurrency exchanges (which have no depositor insurance) illustrates the dangers of investing in digital assets. Digital wallets, where you store your cryptocurrency yourself, are another danger. If you forget your password or the wallet 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 still have your gold. You won't be able to sell your stocks or bonds for emergency cash.
- 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. If needed, you can easily carry many thousands of dollars of gold in your pocket or a backpack if you need to evacuate your home for some reason.
- Gold is also financial "disaster insurance." Gold prices climb in times of economic or political crisis, offsetting your losses in a stock market crash, for instance. The time to buy gold is when things are calm, so that you get the maximum 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.
American Gold Eagles are the favorite gold investment coin in the U.S., naturally, but the Austrian Gold Philharmonic enjoys huge popularity in Europe. The decision of which gold coin to buy extends 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 gold coin sales have to be over a certain dollar limit in some states in order to qualify for tax exemption. U.S. legal tender bullion coins are tax-free in any amount in some states. Check with your state Department of Revenue to better understand your options.
A third factor in choosing which gold coin to buy might be its eligibility for inclusion in a self-directed gold IRA. Precious metals IRAs have different rules than regular gold purchases. You can learn about them by scrolling down on our Precious Metals IRA page.
Popular Modern Gold Coins
The American Gold Eagle is the world's most popular gold bullion coin. The 22k (22-karat) Gold Eagle was introduced as the official gold bullion coin of the United States in 1986, alongside its counterpart, the American Silver Eagle. The U.S. Mint uses a 91.7% gold, 5.3% copper, and 3% silver 22k alloy to make the Gold Eagle, giving it a brighter, more yellow appearance than older 22k gold coins like the Krugerrand and British Sovereign, which only use copper to mix into their gold.
Do 22k 1 oz Gold Coins Have An 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 silver, or silver and copper alloy. This also means that 22k 1 oz gold coins are slightly larger than a .999 fine gold coin.
This is something to keep in mind when buying hard plastic capsules for individual coins, or tubes to safely store multiple coins.
The Canadian Gold Maple Leaf debuted in 1979 as the world's first alternative to the Krugerrand. It was also the first 24k (.999 fine) gold investment coin -- a purity that was permanently 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 is due to its unmatched anti-counterfeiting measures. The Royal Canadian Mint is a world leader in anti-counterfeiting technology, employing three separate security measures for its investment coins.
The era of the modern gold bullion coin began in 1967, with the advent of the South African Krugerrand. The first (and for a dozen years, the only) gold bullion coin, the Krugerrand was the first gold coin to contain exactly one troy ounce of gold. Krugerrand exports were sharply curtailed in the 1980s due to economic sanctions against the aparthied government of South Africa. New gold bullion coins such as the American Gold Eagle and Canadian Gold Maple Leaf quickly filled the void created by the Krugerrand's absence. Sanctions on South Africa were lifted with the advent of majority rule in 1994. However, the Krugerrand has been unable to recapture its former market share.
Popular Historical Gold Coins
Of course, long before there were special gold investment coins, people would save gold coins plucked from circulation. In the U.S., these formerly circulating 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). As a large coin that didn't see much day-to-day use, millions of double eagles were caught in bank vaults and melted down by the government when President Franklin Roosevelt outlawed private ownership of gold in 1933. However, since the double eagle was the coin most used by American companies to buy foreign goods, 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 50 Peso "Centenario" Mexican gold coin (1.2057 oz gold content) is unknown to the general public in the U.S., but is popular among American 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) is perhaps the best-known gold coin of the 18th and 19th centuries. This was a time when the British Empire stretched across the globe, and Britain was the world's industrial powerhouse. This 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 government of Austria began making restrikes in the 1970s to compete with the Krugerrand as a modern gold investment coin, using a fictitious 1915 mintage date.
Long before there was a European Monetary Union, many nations in Europe made 20 franc gold coins using the French 20 franc coin (0.1867 oz gold content) as a template. Much like the euro would do 130 years later, this common standard for gold coins smoothed trade throughout Europe. The beautiful designs of these small coins, especially the French 20 franc ones, make these a very attractive alternative to modern fractional gold coins.
Math vs Liquidity
Do the math when comparing the premiums on historical gold investment coins and modern ones. Sometimes you can trade a little liquidity for more gold for your dollar, and have 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, deep pockets, and a long term strategy 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 known. These coins can cost tens of thousands to millions of dollars each. The rare coins that a regular person can buy aren't really that rare. Their prices are influenced more by the price of gold than any market condition, and thus see little appreciation.
The best thing to remember about investing in rare coins is this: If someone cold calls you, trying to get you to buy 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, if you want, but many people looking to increase their holdings of tangible assets 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 do not have a few thousand dollars to spare for precious metals every month should not be stigmatized if they don’t regularly purchase gold. That said, there are millionaires who prefer purchasing (massive amounts of) silver, and working-class Joes that would rather save and pick up a 1oz American Gold Eagle every now and then, instead of buying silver.
Sometimes the choice between gold and silver depends on your investing strategy. Perhaps the strategy with the most influence on your personal precious metals acquisitions is dollar-cost averaging.
Investing a fixed dollar amount in precious metals on a regular schedule, called “dollar-cost averaging,” allows you to budget your purchases and develop a habit of diversifying your assets. Some people will make purchases every payday, while others may plan on monthly purchases.
The key is to pick a dollar amount and a schedule, and stick with it. Investing and diversifying our assets are not subjects most of us think about on a daily basis. With dollar-cost averaging, you know that payday means stopping by the coin shop on the way home from work and picking up $100 of silver, or the 15th of the month means it’s time to order $3,000 of gold online.
Dollar-cost averaging takes the emotional stress out of investing, removing the worry of trying to predict when to buy, or trying to time the market. 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 being turned into a coin is actually not that important when looking at what it takes to make that coin. A 1/20 oz Gold Maple Leaf bullion coin and a 1 oz Gold Maple Leaf go through the same processes to be made. Only the size is different. The labor in engraving the coin dies, punching coin blanks out of gold bar stock, the actual striking of the coins, and the post-production packaging take the same amount of effort, no matter whether the coin is 1 ounce or 1/20 of an ounce.
BUYING GOLD COINS - THE CHOICE IS YOURS
There are many different ways to invest in gold coins. Many modern bullion coins come in fractional sizes that may be a better fit for investment strategy. Check for sales of "scruffy" gold coins in the secondary market online. If you disregard eye appeal, you can occasionally 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 takes a little math to track your total gold value, but provides many artistically attractive options. There's nothing that says you can't mix some old Gold Standard gold coins with your modern bullion holdings, as long as you're not trying to play the numismatic market as a beginner.
Do what you want to do, and remember -- it isn't hard to increase your hard assets!