Throughout time, gold has been shown to maintain its worth when stock market prices take a sharp turn for the worse and inflation, which makes it a popular choice among investors looking to safeguard their investment savings against such risks.
Or some investors choose to get gold and then pass it down as a family heirloom for its long-standing value.
When investing in such asset, you typically have two options for purchasing it, which include gold coins or bars. They both retain their value during financial crises; however, people tend to invest in each for different reasons, which we will now go over.
What are Gold Bars?
Gold bars are simply chunks of precious metal that have been shaped into six-sided cubes, resulting in stunning, lustrous-yellow pieces. Hence, they are often most valued for their inherent beauty and intrinsic worth.
They are also manufactured in various weights and purity levels, which can be clearly identified via the imprinted descriptions on the bar's surface.
What are Gold Coins?
Gold coins, on the other hand, are produced in small, round-shaped pieces similar to legal tender coins. In fact, they were first minted as a form of legal tender before quickly being phased out as such after the 1930s.
Hence, they are more esteemed by investors for their historical value.
Gold Coin Types
There are two main types of coins: gold bullion coins and gold rare coins.
Gold bullion coins were once minted for monetary use. However, since they are no longer in circulation, they are much sought-after for their limited supply, which makes them more valuable than gold bars.
Rare gold coins, also known as numismatic coins, are not produced as currency.
Instead, they are valued more by collectors for their limited years of production, beauty, and coin type, which makes them worth more for their uniqueness rather than their face value and metal content like gold bullion coins.
However, in many cases, they are worth much more than their metal content to serious collectors; hence, quite often, they are known to sell for more than gold bullion coins.
Some bullion coins are also collected for their rarity, such as commemorative coins that are produced to celebrate milestone years or events, which also gives them a high resale value, especially if they are in good condition.
Like Bars, Gold Coins Also Come in Various Sizes and Weights
Gold coins vary in size, like bars, and they also come in both full ounces and lower 1/10, 1/4, and 1/4 ounces.
Full-ounce coins generally dictate lower manufacturing and packaging costs; therefore, they are usually more affordable than gold coins in lower ounces.
However, lower-ounce-weight coins are more convenient to transport and store. Not to mention, they are also easier to exchange for other items if necessary. Hence, they also make great investment tools.
You may even receive a higher amount for them than what you originally paid when trading them with some dealers.
How the Value of Gold Coins is Determined
Gold is much desired for its scarcity. Therefore, its worth is mainly determined by supply and demand.
Throughout history, its demand has continued to outweigh its supply due to its use in various applications, from jewelry to electronics production. Hence, it has consistently been able to hold its value, even during the worst economic times, which has currently also made it much sought after as an investment vehicle.
Gold's increasing demand over other precious metals is also why it is more expensive.
Determining the Value of Gold Bullion Coins
Gold bullion coins tend to be more expensive than bars since they aren't in circulation anymore. However, they also contain metal, thus also making them prized for their melt value, which is determined by the amount of gold in the coin.
Therefore, the value of gold bullion coins is based on the current market price of gold, which is calculated by their troy ounce.
Determining the Value of Rare Coins
Rare coins, including commemorative gold coins, are mainly created for special remembrance. Therefore, their worth is mostly determined by collectors as opposed to the gold market.
This is also true for gold coins created before 1933, which are considered classics. However, since they also contain metal, they also have a melt value.
Collectors' demand for rare coins is generally quite high, so they also often have a higher premium or resale value than bullion coins.
There are some U.S. gold coins in circulation, though, that have a higher resale value over bullion, especially if they are in excellent condition.
But in all, the value of rare coins is determined by their rarity, which inevitably increases over time as it becomes more challenging for investors to find coins they need to complete their collection, such as coins minted during earlier eras or those that were produced each year as part of a series.
Hence, they are usually willing to pay above the average value for them.
How to Know if Acquiring Gold Coins is for You
To know if investing in gold coins is right for you, you need to consider your personal financial objectives and situation.
Next, consider all you've learned from this quick guide regarding the investment rewards of different gold coins and how some can sell for significantly higher resale values.
This way, you are more than equipped to choose the coins that provide the type of returns you are looking for and with investment risks you can tolerate for a more confident acquisition.
What Are the Best Gold Coins for Investors to Buy?
Investing in Gold Coins as a Seasoned Investor
As a seasoned investor, your goal should be to increase the ROI for your portfolio, which purchasing a substantial amount of gold coins may help you do.
British gold coins, in particular, offer the best value for investors looking to profit from coins that are worth more than what they are currently selling for because collectors will get them for a higher premium.
It is also advised that you avoid acquiring only gold coins with the same year, and instead, get coins with random years because they will be available at a lower amount.
Investing in Gold Coins With Limited Market Knowledge or Funds
Gold coins make practical investment choices for those just entering the market or that have a limited amount to invest because you can get them in smaller increments.
The cheapest gold coins to get for your first holding are British sovereign coins. However, some South African coins also make a great budget-friendly investment choice due to their low market premiums.
Some Common Coins Investors are Buying
The gold Krugerrand is one of the most popular investor coins worldwide, excluding America, despite its simple design compared to other more decorated gold coins. However, it is the earliest bullion coin to be produced and one of the least costly gold coins available, which may explain its high demand.
In fact, its popularity has remained strong since it was introduced to investors just over a half-century ago, eventually becoming the highest-sold 1-ounce gold coin on the market
The South African-derived coin has a distinct color that makes it stand out from all other gold coins thanks to its metal composition of .9167 pure gold and 8.33% copper. It also features a springbok antelope on one side, which also makes it recognizable.
The coin's high liquidity factor makes it a suitable choice for both new and seasoned investors. You will be able to find it online quite easily, we know Noble Gold, which is one dealer we recommend, has it on its site.
Gold Canadian Maple Leaf
The Canadian Maple Leaf gold coin is recognized throughout nations for its alluring maple leaf design; hence it also provides the potential for fast sales.
It also has security elements incorporated into it, which investors also love.
Investors can also obtain coins in 1/4 ounce, 1/2 ounce, 1/10 ounce, and other partial ounce sizes, which provides a great to get started investing in gold coins.
And because the coin has a .9999 pure gold content, it also provides a great value.
Gold American Eagle
The Gold American Eagle coin features an illustration of Lady Liberty with the sun in the background on one side. Then, when you turn it over, it has an image of American bald eagles in their nest.
Both depictions were selected to celebrate the spirit of America, as first seen in the famous design by American sculptor Augustus Saint-Gaudens.
The American Eagle gold coin is one of the most reputable coins across the globe, so it is often preferred by investors for its easy recognition, which increases the possibility of a hassle-free transaction.
It is also available in smaller ounce sizes for a more budget-friendly investment.
American Gold Buffalo
The American Gold Buffalo is adorned with a stunning version of the famed 1913 Buffalo Nickel by James Earle Fraser.
On the back, it features a depiction of Central Park's Zoo's legendary Black Diamond buffalo, while the front is embellished with a striking illustration of a Native American chief, which many collectors find moving.
It also has a .9999 gold purity, which investors also appreciate.
Britannia gold coins also boast high liquidity potential due to their wide recognition in investment markets worldwide.
These coins are produced by the Royal Mint and feature an image of Britannia on one side, which makes them respected collectors' items among avid hobbyists and the like.
They also have a .999 gold fineness, provided they were minted from 2013 and on, which makes them a great investment for the cost.
Owning Coins in a Gold IRA
Retirement investors will be glad to know that it is also possible to own gold coins as part of an IRA.
A Gold IRA is simply a self-directed individual retirement account that gives you more control over the assets you hold in your investment portfolio.
This way, you're not limited solely to traditional stocks, bonds, and other holdings for more diversity and inflation protection when you retire.
It also provides you with the same tax advantages as a traditional IRA, provided you do not withdraw the assets until you reach retirement age. However, as part of IRS rules, it must meet certain guidelines to qualify. See why you should consider opening a self-directed IRA on this page.
How it Works
Find a Reputable Gold IRA Company
Gold IRA companies run far and wide, each offering their own services, products, fees, and advantages that may make one better suited for you over another. Therefore, be sure to research different companies to find the best one for you.
When researching Gold IRA companies, some things to look for to ensure it's reputable include experience, BBB accreditation, and verified investor testimonies. Go to this page to see our list of recommended gold IRA companies. We also strongly suggest you download their guide to learn more about them.
Open An Account
Once you have settled on the best gold IRA company for you, next, contact the company and open an account.
Their knowledgeable, friendly team members will even help walk you through the process to ensure it is done quickly and effectively.
You can also take this time to help clear up any questions or concerns you may have before moving forward.
Or some companies also provide an account form on their website for you to sign up online if you'd like.
Fund Your Account
With your Gold IRA account successfully opened, funding it will enable you to begin making acquisitions for your account.
You will typically have various options to do it, including cash, wire transfer, or check. Or you may even be eligible to roll over some or all the funds from your IRA or another retirement account.
Should you choose to go this route, again, the gold IRA company's representatives will help walk you through the process to help ensure it is done correctly.
Get Your Gold Coins
After you fund your Gold IRA account, you will need to explore the company's gold coins catalog and make your purchases.
However, as per IRS rules, you will need to enlist the aid of your appointed custodian to make them on your behalf.
Hence, once you have determined which gold coins you want to add to your account, simply let your custodian know, and they will complete the transaction for you.
Some IRA-Approved Gold Coins
- Gold U.S. Buffalo bullion coins
- Gold Chinese Panda coins
- Gold Canadian Maple Leaf coins
- Gold British Britannia coins
- Gold Austrian Philharmonic bullion coins
- Gold Australian Lunar Series coins
- Gold American Eagle bullion and proof coins
- Gold Australian Kangaroo/Nugget bullion coins
Choose a Depository or Precious Metals Storage Facility
As per IRS rules for a gold IRA, you will also need to choose a depository, or secure storage facility, to store your coins until you retire.
Or you may contact your custodian to have your coins safely packaged and delivered to your home anytime you want. However, if you have not yet reached retirement age when doing so, you will be penalized with early withdrawal fees.
Like gold IRA companies, depositories also vary by services, including storage options, costs, and insurance. They also differ in location, which is important if you would ever like to check on your gold coins in person.
So be sure to also research precious metals depositories to determine which best suits your needs. Your precious metals company may have a list of preferred depositories along with a list of preferred custodians they work with to help make your search easier.
Track Your Coins Performance Online
Once your gold coins have safely reached the depository, some custodians will even provide you with an online account to keep track of them until you retire.
Therefore, be sure to inquire if your chosen custodian provides this feature if it is important to you.
Withdrawing or Selling Your Coins
When you reach age 59 1/2, you are able to take possession of your gold coins without taxes and penalties.
To do so, simply contact your custodian, and they will have them shipped securely to your door. Or you may opt to receive the cash equivalence of your gold coins.
Some Gold IRA companies like Goldco (click here to see what we think of this firm) or Birch Gold also provide a buyback program that will allow you to sell your coins back to them for the current market value to avoid having to find a broker when you are ready to sell.
There are a few companies that will also enable you to do so without additional costs, so you get more money back.
Therefore, again, it is important to thoroughly research gold IRA companies to find one that offers the services you prefer.