Gold Bullion Coins Guide
Gold bullion coins are the most collectible form of investment gold as well as being a guaranteed bet against inflation. Some of them are sold directly by national mints while others, especially older coins are only available on the secondary market. Gold bullion coins come in a number of different styles and designs depending on where the coin was minted. Although bullion coins always bear a face value, and, in many countries, could theoretically be used as legal tender, they are actually worth far more than their face value and are generally bought as pieces for a coin collection, for investment purposes or as a store of value in times of economic upheaval.
The South African Krugerrand is a stunning gold bullion coin minted by the South African government. This coin is only available as a gold piece, although many fake silver alternatives are often sold on secondary seller sites such as eBay and Craiglist. Authentic gold Krugerrands are highly desirable and always fetch well over spot when sold.
Investing Money In Gold Bullion Coins
The advantage to precious metals is that their value is both high and stable; even if runaway inflation were to occur in paper money, your gold and silver bullion coins would retain their absolute value. For example, if you saved $20,000 in paper money, you could buy a car with it – but if 1000% inflation were to occur, your paper money would suddenly only be worth 1/10 of a car.
However, if you accumulate enough gold to buy a car, assuming you converted the gold into paper money first, your gold would always be worth 1 car, regardless of how paper money’s value rose or fell, because, in the case of the 1000% inflation mentioned above, your car’s worth of gold would appreciate to be worth $200,000 of the new, inflation-devalued money.
Strategies for Gold Bullion Coin Buying – What Is Your Objective?
When you begin buying gold bullion coins, you should form a clear idea of what your intention is for buying these items. The plan you pursue in acquiring them will be based partly on what your purpose is in buying gold. If you do not form a clear idea, then you could end up spending a lot of money and not reaching your goals.
You can buy gold bullion coins as an investment – meaning that you are hoping their value will increase within the next few months or years, and you can resell them at a profit. In this case, you want gold bullion coins which are possibly costly now, but probably even more costly in the future. In short, rare, collectible gold bullion coins, such as proofs, special commemoratives, and the like are the kind you want to buy if you are building an investment portfolio.
If you are looking for a store of value as a hedge against inflation, however, then you want gold bullion coins that are priced as close above spot as possible, without regard to how collectible they are. The lower the premium over spot, the better, since you are buying these gold coins purely for their intrinsic worth as a certain quantity of pure gold. This usually means that you must avoid commemorative coins, rare coins, and the like, and buy straightforward bullion coins such as American Gold Eagles.
The third option, if you have enough resources, is to have a mixed portfolio, with both ordinary bullion coins for value storage, and collectible types for investment and resale. You should keep careful track of which is which to ensure that your portfolio is diversified in the manner you want.
Types of Gold Bullion Coins
Gold bullion coins can be minted in one of two ways – as 24 carat gold, or as a lesser carat amount with some silver or copper alloyed into the coin. 24 carat gold is the gold equivalent of 99.9% silver (or silver of .999 fineness, to use the millesimal grading system). Neither type of coin is worth inherently more or less than the other, as long as the total weight of gold in the coin is the same.
To illustrate this, consider the case of the South African Gold Krugerrand, one of the more popular bullion coins in the world today. It was originally meant to be used as legal tender, and so was alloyed with copper to produce a hard, tough, durable coin with a deep orange sheen. The Krugerrand is 91.67% gold, or 22 carat, but each Krugerrand still contains precisely one troy ounce of pure gold – because the coin weighs 1.0909 troy ounces in total, including its copper.
Many nations produce gold bullion coins today, and which to purchase depends on which are most collectible (for collectors or investors), or on which are most readily available and closest to gold’s spot price (for those looking for a store of value). Some of the more common coins which are still in production today include the American Gold Eagle, the Russian Saint George the Victorious, the Canadian Gold Maple Leaf, the Austrian Philharmonic Gold, the Mexican Gold Libertad, the English Gold Brittania, and a number of others.
Some gold bullion coins were struck very briefly, or have been discontinued. For example, the Mexican Onza was supplanted by the Libertad, while the Australian Lunar Series I ended in 2007. Other nations have only very recently begun to mint and sell gold bullion coins, such as Israel’s Gold Jerusalems, a new bullion coin series that shows sites around the city. The first year, 2010, witnessed the Tower of David on the Gold Jerusalem of that year, while the Western Wall be shown on the second year’s coin in 2011.
Different Sizes of Gold Bullion Coins
Gold bullion coins are issued in different sizes, ranging usually from 1/20 ounce to 1 troy ounce in weight. The smaller sizes, 1/20 ounce and 1/10 ounce, are designed to make gold available to purchasers who do not have the money to buy a full ounce at $1,600 or more, but can work at building up their gold reserves how and when they are able. Canada has outdone itself by producing the largest bullion coin in the world – a monstrosity weighing in at 100 kilograms, of which no less than five have been sold so far.