Thinking about selling or buying gold coins? People who invest in precious metals like gold and the kind of people who want to spend money on something that is tangible. Being able to see your investment in its physical form can be comforting and reassuring. There are three factors that you have to keep in mind when it comes to owning physical gold: cost, security and liquidity.
You have a variety of buying options when it comes to buying physical gold. There are different kinds of gold buyers you can choose from and an array of bullion products. In some countries you may even be able to buy gold from a vending machine. Some people invest in what is known as paper gold or EFTs however, you cannot see or touch EFTs and so, they may not offer the same level of comfort or inspiration as physical gold bullion.
When choosing to buy bullion many people either buy gold bars or gold bullion coins. Bullions coins seem more practical to buy, they may cost more but they are easier to store and to liquidate than gold bars. Coins are also easier to sell because they have a numismatic value. You will find it easier to sell gold bullion if you have gold coins because there is a large community of people who buy coins not just for their gold content but their collectability.
Not all gold coins are bullion coins. Whilst there may be multiple categories of gold coins and bullion coins one thing is always true, gold bullion coins contain 95-99% gold. Gold bullion coins are he really regarded as investment coins while most of the other gold coins are more appropriate for numismatics.
Most gold bullion coins are produced by specific government mints for instance, Krugerrands are minster by the South African mint, Canadian Maple leaf coins are minted by the Royal Canadian mint, the American gold eagle coins are minted by the U.S Mint, etc
Bullion coins typically contain an ounce of gold. Their weight varies slightly depending on the amount of copper alloyed in the coins. These are often mass produced in such large quantities that they tend to lose the numismatic value quickly.
Gold investors need to consider the availability of buyers in case they need to sell the coins. This is why they are advised to buy from dealers with a buy-back policy so it is easier to sell gold bullion when the time comes.
When you buy gold bullion coins you should be ready to accept a mark-up of up to $40/ounce. This can be noticeable even for a purchase of $1000. On the flip side, you should also expect a markdown on the price of the gold coins even if you sell them from the same dealer you bought them from. A gold dealer has to make a profit and also ensure his inventory against theft or fraud. These are factored into the price he puts on the gold coins you have to sell. There are other risks a buyer has to mitigate like the sudden shift of the market in the wrong direction at the wrong time. So gold buyer will add or subtract 5% of the gold price.
If you own gold coins, you also face risks beyond discounts and mark-ups. If you have a large amount of gold you may want have some of it stored outside your country. History is filled with people who invested in gold as a safe haven because they feared trouble in their own country but made the mistake of not storing it overseas. Examples of the biggest political upheavals in modern history include Zimbabwe, Venezuela, Argentina in 2000-2001, Cambodia and Vietnam in the 70s and more. In those countries and during those times, people needed their gold but they could not fully realise its real value because it was considered as contraband.
The bottom line is that: it is great to invest some of your money in gold coins but you need to know your coins and understand the coin market to make the most of your investment. Gold might be a long term investment but timing is important if you want to get the most in times of trouble.