Investing in gold and silver coins can be done by focusing on the precious metal content or the numismatic value. Bullion coins are guaranteed by the government and are marked with the amount of precious metal, while collectible coins derive their value from rarity and condition. Investing in coins should only be pursued after other investment objectives have been achieved.
There are two ways to invest in gold and silver coins. The first focuses on the value of the precious metal content of the coin itself, and is promoted as a hedge against inflation. These coins are available directly from government mints in some countries, but in the United States they must be purchased from a dealer. Collecting gold and silver coins for their numismatic, or collector’s value, is another way to invest in gold and silver coins. This approach is considered much riskier because coins derive most of their value from variables such as their age, quality, and rarity.
Some nations, such as the United States, Canada, South Africa, and others, produce investment-grade gold and silver coins, often called bullion coins. These are most often struck in one ounce (28.35 g) sizes, with some nations also striking other sizes, both larger and smaller. Bullion coins are clearly marked with the actual amount of precious metal in the coin, which is guaranteed by the issuing government. A premium is added to the cost of precious metal in modern coins under one ounce (28.35 gm), making these smaller sizes more expensive per ounce and lowering their investment value.
The gold in bullion coins is usually alloyed with a small percentage of another metal such as copper to make the coin harder. These coins are generally 22 or 23 carat gold. Gold that is 100% pure has a 24-karat grade, but it is also very malleable and scratches easily. Some investors avoid buying 24-karat gold coins, such as the Canada Maple and Austrian Philharmonic, because they are easily damaged, which could reduce their value on resale.
Some governments sell their bullion coins directly, while others, like the United States, distribute them to dealers who sell them to the general public. In addition to bullion coins, many investors buy common date gold coins, gold coins minted before 1935 for general circulation, that are common enough that there is no significant increase due to their rarity. For example, from 1907 to 1933, the US minted a beautiful 20 United States Dollar (USD) gold coin designed by Augustus St. Gaudens. Many of these coins, often called Double Eagles, are valuable numismatic specimens, but those struck by the Philadelphia Mint in 1924, 1927, and 1928 are common-dated gold coins frequently purchased for their mint value alone. precious metals. Additionally, investors interested in coins under one ounce (28.35 gm) but want to avoid the premium of fractional bullion coins can purchase older European gold coins, such as British, French, or Swiss 20 franc sovereigns, or Dutch (Netherlands) 10 guilders.
Investing in gold and silver coins for their numismatic value can be risky. These are government-issued coins for general circulation, although some are specially packaged for collectors. Their production is limited to the year they are minted, and production figures are published to help collectors determine their rarity. The growth in value of these coins is often very slow, and individual coins may lose value if they become damaged or if more private collections or other sources come onto the market.
From a collector’s perspective, a coin’s rarity and condition are the most important considerations in determining its value, although it will never fall below the value of precious metal content. Collectors’ coins should not be confused with so-called “collectible coins”, which are novelty items minted by governments and private mints and sold at a premium price. The value of these coins rarely appreciates enough to be considered a good investment.
As a general rule, investing in gold and silver coins is something that should be pursued only after other investment objectives have been achieved. Establishing a six to 12-month emergency fund for expenses in an easily accessible form, such as a money market fund, is a goal agreed upon by most experts. Another is to open a retirement savings program, whose contributions will not be affected by the purchase of gold and silver coins by the investor.
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