| -- End Ad Box ---> | | | | Pros and Cons of gold bullion coins and numismatic |
| Investing in gold coins through gold coin dealers is | | | | coins |
| a way to invest in small amounts of gold. As you | | | | Many investors adn gold coin dealers, particularly |
| will see later, some rare coins can end up being a | | | | ones who are in the rare and scarce coins |
| sizable investment. Dealers often buy and sell all | | | | business, point out that rare and scarce coins do |
| kinds of gold coins. Your first lesson in gold coin | | | | far better than bullion coins as investments. They |
| investing is that there are two main types of | | | | often recommend that novices buy pre-1931 $20 |
| coins: Bullion Coins and Numismatic (Collectors') | | | | gold coins which offer a relatively low |
| Coins. When you are buying or selling a coin, you | | | | collector’s premium, but outperform bullion |
| need to know the difference between these two | | | | coins as investments. The counter to this |
| types of gold coins. | | | | argument is that this enhanced performance may |
| Buying tips | | | | be true as long as the collector’s market |
| New investors can get confused, mainly because | | | | behaves itself. If you hold a rare coin that is |
| they don't understand the difference between | | | | supposed to be worth $X, but when you go to |
| and numismatic coin and an bullion coin, and also | | | | sell it no one wants to pay the collector’s |
| because they may not understand the value of | | | | premium for it, then the coin is worth its weight in |
| each type of coin. Let's take a closer look at the | | | | gold and not a penny more. |
| two types of coins. | | | | Confusing bullion coins with collector’s coins |
| For a simple gold play: modern gold bullion coins | | | | As an example as to how this can become |
| Gold bullion coins are the most popular coins, | | | | confusing, The US Mint produces American Eagle |
| probably because they are the simplest to value | | | | Bullion Coins and American Eagle Proof Coins and |
| and buy, and also because there are so many | | | | Coin Sets. The bullion coins have no |
| more of them (they are mass produced.) These | | | | collector’s value, and the proof sets are |
| coins are generally sold just above the spot price | | | | made in smaller quantities and with a higher quality |
| of gold (usually to account for minting cost and | | | | mint process and finish. The proof coins are |
| dealer commission.) Also, these coins are minted | | | | minted in hopes their collector’s value will |
| with a lower quality finish called a "bullion finish" | | | | grow as the coin ages. |
| which pretty much guarantees it will not turn into | | | | By contrast, investors who buy gold bullion coins |
| a collectors' item. Friendly gold coin dealers can | | | | never expect the value of the coin to rise above |
| show you different types of bullion coins, and | | | | the spot price of gold. It is important to know this |
| pictures of them are readily available online. | | | | when you buy a bullion coin. You should pay very |
| For the collector: Rare, scarce or "numismatic" | | | | close to the spot price for gold, which will |
| coins | | | | determine the value of your coin. If you want to |
| These coins can be worth far more than their | | | | invest in coins that will grow in value because they |
| intrinsic value (the value of the gold contained in | | | | are rare or scarce, then you want to buy |
| the coin.) An example would be a rare one ounce | | | | certified rare coins or at least proof sets. Proof |
| coin minted in 1861 which sold at auction in 2008 | | | | sets are a little less appealing, as they have not |
| for $2.5 milllion! It was very rare indeedthere | | | | yet had a track record of holding value. |
| are only 2 known coins still in existence, even | | | | Gold coins are not very liquid, because they are |
| though 3 million of them were minted in 1861. This | | | | not always easy to sell, and you may not be able |
| coin, and other numismatic coins, carry a | | | | to get full price for them. This is the biggest |
| "collectors' premium" which can greatly escalate | | | | argument against holding physical gold in the form |
| the value of a coin. Before paying gold coin | | | | of coins. If you do buy gold from a gold coin |
| dealers a premium to buy a rare coin, you need | | | | dealer, make sure you ask the dealer if he/she |
| to do your homework to make sure you know | | | | will buy the coin back from you at a later date, |
| what you are buying, and how much it is truly | | | | and at what price (% of spot.) Ask for it in |
| worth. | | | | writing. |