If you are thinking of adding some gold coins to your investment portfolio, there are a few important things you should consider. Of all the different forms of gold, coins are the most popular, with American Eagle and Canadian Maple Leaf Coins being the most popular. For some investors, buying their gold in coin form adds something to the investment. Over time, a considerable collection of rare coins would be appreciated more than if the metal was in bullion or jewelry form. Like any other investment, it is not recommended to acquire precious coins without at least some basic knowledge of the commodity in question.
Understand the Types of Gold Coins
Not all gold coins are equal. There are two major classes of gold coins to consider:
- Bullion Coins value: It depends upon the current gold price in the market. They tend to be bought for investment reasons. Popular examples include the American Gold Eagle and the Canadian Maple Leaf. Bullion coins normally have a small premium over the spot price of gold.
- Numismatic coins: These are mainly considered collectors items. They derive their value from factors other than gold content, such as rarity, age, and historical value. Numismatic coins can be much more costly than bullion coins.
If you are interested in gold solely for investment purposes, bullion coins will always be preferable. Collectors who like numismatics, or those who would rather take risks to get better rewards, will always prefer bullion coins.
Check the Purity and Weight
In addition, gold coins are also available in different purities, typically stated in karats. The two most common investment-grade gold coins traded in the USA are 22-karat and 24-karat. To further illustrate:
- 24-karat coins (99.99% pure gold): Some coins, such as the Canadian Maple Leaf, are well-renowned for their purity.
- 22-karat coins (91.67% pure gold): One of the more popular options is the American Gold Eagle, which is combined with copper and silver to add strength.
Always be sure of the weight and fineness of any coin one is buying. Coin weights are usually in troy ounces, and one troy ounce is heavier than the ordinary ounce. Ensure that the weight and purity of the coins are verified and documented.
Be Aware of the Premium Over Spot Price
The spot price of gold reflects the current market price for which one ounce of pure gold can sell. Gold coins are always sold at a premium over the spot price because additional costs surround minting, distribution, and dealer markups. The amount one will pay in premium will depend on the rarity of the coin, among other factors, and the particular dealer one is using.
- Shop Around: Compare premiums with several dealers to ensure that a fair price is being paid.
- Less Expensive Premium Options: If you wish to cut costs as much as possible, consider buying coins with lower premiums.
Buy from a Reputable Dealer
The gold market is composed of numerous honest and credible dealers. Nevertheless, scams also abound. In order not to get victimized by fraudulent activities, it is always advisable to purchase from a reputable dealer. You can check the credibility of a dealer through the following:
- Customer Reviews: Go through customer reviews from previous customers.
- Certifications: The dealer should be a member of a reputable organization, such as the American Numismatic Association or the Professional Numismatists Guild.
- Policies: Check that the dealer has policies in place for returns, buybacks, and shipping. While online dealers may offer conveniences, you may want to inspect a coin personally prior to buying it.
Consider Storage and Security
- Home Storage: Home storage is convenient, but you will be at risk of theft. If you go this way, get a good, safe home security system.
- Bank Safe Deposit Boxes: Safe deposit boxes are better for security reasons. Though they are not free, you will need to incur some annual charges, and access might be limited during emergencies.
- Professional Vault Storage: Some companies are in the business of storing precious metals in high-security vaults.
These ultra-secure options come with associated service fees. Always make sure your gold is insured, especially if you decide to store it at home.
Know the Tax Implications
Because the IRS classifies gold coins as collectibles, then for tax purposes in the USA, gold coins are subject to a maximum long-term capital gain tax rate of 28 percent versus the normal rate of gain for most other investments. Of course, you should consult with a tax professional regarding how buying and selling gold coins might affect your taxes.
Keep Your Ear to the Ground
The prices of gold vary based on the state of the economy, interest rates, and other factors that ripple around the globe. Before anyone buys a single coin, it is wise to study these tendencies and know at what time a particular purchase is more appropriate. Remember that gold is an investment with great perspectives for long-term periods; being so, one needs to be ready to take the flood in price oscillations.
Stick To Recognised Formats
American Eagle Gold Coins come in four denominations – one ounce, a half ounce, one-quarter ounce, and one-tenth of an ounce. The one-ounce coins are the most popular, and they can be bought or sold easily by any recognized gold coin dealer. There is cash for gold Melbourne investors gain from Gold Buyers Melbourne, who have premises in the CBD and are the best place to start your collection. They actually refine gold and offer competitive prices on all types of gold purchases, including coins. The Canadian Maple Leaf Gold Coin is also globally recognized, and if you choose either (or both) of the above, you can be sure of its purity.
Physical Possession
While it is possible to purchase gold coins without possessing them, this is not advised, as any certificate or promise could end up worthless. If you have the gold coins in your possession, you can be sure that they are actually yours. If you visit any reputable gold dealer’s premises, you can walk away with the actual coins, which leaves nothing to chance.
Set Your Investment Budget
Decide how much you are willing to invest in gold coins prior to contacting a dealer. Of course, it is only wise to keep some of your eggs in one basket. You are likely looking for a long-term investment. However, keep your eyes on the spot price, which will alert you of any serious price fluctuation.
Gold has always been a sound investment, and provided you buy from a reputable gold coin dealer, there is no reason why your investment should not be profitable. If you would like to contact a local gold coin dealer, all it takes is an online search, and they would be happy to help you acquire any amount you desire.
Conclusion
Investing in gold coins can be a prudent investment, but it pays to do your homework. By understanding the different types of coins available, the importance of purity and weight, selecting a reputable dealer to purchase from, considering storage options, and understanding the tax implications, you will be well prepared to make informed choices. Gold coins are a worthy addition to any investment portfolio, and the better prepared you are, the more assured you are to protect your investment and maximize your returns.