EDU Articles

Learn about investing, trading, retirement, banking, personal finance and more.

Ad is loading...
Help CenterFind Your WayBuy/Sell Daily ProductsIntraday ProductsFAQ
Expert's OpinionsWeekly ReportsBest StocksInvestingCryptoAI Trading BotsArtificial Intelligence
IntroductionMarket AbbreviationsStock Market StatisticsThinking about Your Financial FutureSearch for AdvisorsFinancial CalculatorsFinancial MediaFederal Agencies and Programs
Investment PortfoliosModern Portfolio TheoriesInvestment StrategyPractical Portfolio Management InfoDiversificationRatingsActivities AbroadTrading Markets
Investment Terminology and InstrumentsBasicsInvestment TerminologyTrading 1 on 1BondsMutual FundsExchange Traded Funds (ETF)StocksAnnuities
Technical Analysis and TradingAnalysis BasicsTechnical IndicatorsTrading ModelsPatternsTrading OptionsTrading ForexTrading CommoditiesSpeculative Investments
Cryptocurrencies and BlockchainBlockchainBitcoinEthereumLitecoinRippleTaxes and Regulation
RetirementSocial Security BenefitsLong-Term Care InsuranceGeneral Retirement InfoHealth InsuranceMedicare and MedicaidLife InsuranceWills and Trusts
Retirement Accounts401(k) and 403(b) PlansIndividual Retirement Accounts (IRA)SEP and SIMPLE IRAsKeogh PlansMoney Purchase/Profit Sharing PlansSelf-Employed 401(k)s and 457sPension Plan RulesCash-Balance PlansThrift Savings Plans and 529 Plans and ESA
Personal FinancePersonal BankingPersonal DebtHome RelatedTax FormsSmall BusinessIncomeInvestmentsIRS Rules and PublicationsPersonal LifeMortgage
Corporate BasicsBasicsCorporate StructureCorporate FundamentalsCorporate DebtRisksEconomicsCorporate AccountingDividendsEarnings

Should I buy gold coins?

The Lure of Gold: Bullion vs. Numismatic Coins

When we discuss investing in gold, it's essential to understand the two key types of gold coins: gold bullion coins and numismatic, or collector's, coins. Gold bullion coins, prized for their precious metal content, are primarily purchased as an investment. Their value is more or less tied directly to the gold spot price, making them a tangible asset that holds its value against economic fluctuations.

On the other hand, numismatic gold coins are collector’s items. Their value is a blend of their gold content and their rarity, age, condition, and historical significance. Although they may hold an allure for hobbyists and history buffs, the numismatic value can be highly subjective and difficult to predict.

It's crucial to understand this distinction if you're considering adding gold coins to your investment portfolio. By prioritizing bullion coins, you can ensure your investment is tied directly to the value of gold, rather than relying on the whims of the collectibles market.

The Dealer's Dilemma: Price vs. Profit

Navigating the gold coin market can be tricky, especially for novices. Dealers, who often work on commission, may pressure customers to buy numismatic coins over bullion. This isn't necessarily deceptive; numismatic coins can indeed have a higher overall value due to their rarity or historic value. However, the value of such coins can be volatile, making them a riskier investment.

With numismatic coins, the return on your investment may not be as predictable as with bullion coins. Therefore, buying gold bullion coins is often the safer bet for the average investor. It is a straightforward way to invest in precious metal, offering the financial stability that gold is famous for without the unpredictability of the collector's market.

The Golden IRA: Rules and Regulations

Another factor to consider is that only certain types of gold bullion can be held inside an Individual Retirement Account (IRA). Collector's coins are generally excluded from this investment option due to the difficulty in accurately assessing their value. Thus, if you're interested in diversifying your retirement portfolio with gold, you will need to focus on IRA-eligible gold bullion coins.

Choosing Your Coin: Popular Picks

For those still keen on investing in gold coins, several popular options exist on the market. The South African Krugerrand is one of the most commonly traded gold coins worldwide, with about 1.5 million kilograms of these coins in circulation. Other common choices include the American Gold Eagle, British Sovereign, Canadian Gold Maple Leaf, and Chinese Gold Panda. These coins are all recognized for their gold content and are popular with both investors and collectors.

Investing in gold coins can be a sound financial decision, provided you understand what you're buying. Focus on bullion coins if you're interested in the stability and value of gold itself, and approach numismatic coins with caution unless you're well-versed in the collectibles market. With these guidelines, you'll be well-equipped to navigate the glittering world of gold coin investment.

Summary:
Gold bullion are an asset that will hold value due to their gold content; gold coins which are more numismatic, that is, collector’s items, may not retain the same value.

The value of gold coins is twofold: the price of the gold in the coin and the numismatic value of the coin. There is an important distinction to be made, because some gold coins will have a lot of one, and not the other, and, if you want to make sure your investment is an investment in precious metal and not just a collector’s item, you should make sure you’re getting a coin that qualifies as bullion.

Quite often the numismatic value is higher than the value of the gold, and coin dealers will often pressure you to take these coins over the others in an effort to earn a higher commission. This can make it a little more complicated to keep up with the value of your gold portfolio, however, and you may not see the same rate of return on this portion of it as the others.

It may be higher or lower. Also, it is possible to hold certain kinds of gold bullion as part of an IRA, but you must adhere to the guidelines. Note that the collector’s gold coins are excluded from being held inside of an IRA.

Particularly with regards to collector’s coins, you have to be an expert to know what the “right price” is. The most popular gold coin is the “South African Krugerrand,” with about 1.5 million kilograms of these coins in circulation.

Other gold coins include “American Gold Eagle,” “British Sovereign,” “Canadian Gold Maple Leaf,” and “Chinese Gold Panda.”

 Disclaimers and Limitations

Ad is loading...