Gold coins are a great option for investors and collectors, but there’s a fairly steep learning curve to using gold coins as an investment.
The appeal of gold coins is that they’re a universally recognized object of value, meaning that they’re worth something anytime, anywhere. Gold’s value becomes particularly evident in economic crises, much like the one we’re facing now when property and stock values are tanking. Gold has historically performed well in economic recessions and depressions, thanks to its long association with wealth.
Gold coins make a good investment tool because they’re easy to obtain, easy to exchange and are accepted globe-over. For collectors, gold coins are a great item because of the many factors that go into appraising their value, and the history involved with the coins. Because of the many factors weighing into the value of gold and gold coins, buying gold coins is a great hobby for folks who want an intellectual challenge.
Picking a type of gold to investment depends largely on your investment goals. If you want to make money on price movement, gold bullion is a pretty good pick. If you’re more interested in the long-term preservation and growth of your wealth while avoiding some onerous governmental paperwork, you may want to toss in pre-1933 American and European gold coins. The U.S. government treats these coins as historical items, and are less subject to government oversight than other forms of gold.
When buying gold coins you want to know as much as you can about the coins you’re buying. How pure is the gold used in minting the coin? Where were the coins minted? What condition are the coins in? All of these factors can weigh in toward the value of your investment.
Condition doesn’t matter that much when dealing with gold bullion coins, but with historical coins, it’s a big factor because their value isn’t determined by the underlying value of the gold alone. Many additional factors go into determining the value of gold coins, such as their luster, condition, place of origin and age.
When buying gold coins, premium is another key concern. Premium is an amount over the value of the coins charged by the seller. High premiums can eat into the investment return a gold coin buyer is expecting.
Because getting accurate information is so important, dealing with a reputable gold vendor is key. When you’re dealing with an official government mint, you can rest assured of the veracity of the information you’re getting. Other dealers may not be as knowledgeable or as honest, however. Make sure you carefully research who you’re doing business with before making a trade.
Before taking the plunge into the gold investment market, the best thing to do is to do your homework. Talk to friends who invest in gold, consult with a broker and visit your public library and check out a few books on gold and gold coins. For the informed investor, collecting gold coins is fun and profitable.
