With the price of gold on the rise over the last few years many people are asking  how do I buy gold coins.   There are many factors you should consider before you start buying gold coins, let’s have a look a few.

Many ‘financial experts’ are hopping on the precious metal bandwagon and according to their statistics gold coins and bullion should make up 10 to 20% of an investors total portfolio.  I agree that people should invest in precious metals but I personally believe that should make up a higher percentage, as with all investments you need to conduct your own due diligence before making any purchases from any firm or individual and do your own research on what is the best way for your to store your investment.

Factors And Risks Involved For Collectors And Investors Alike:


Difference In Gold Coins

When you are looking for information on how to buy a gold coin you need to realize that within the world of gold coins there several different choices.   First you have gold bullion coins such as the Canadian Maple Leaf and American Gold Eagles, the second group are Semi-numismatic coins and finally Numismatic coins.

In a nutshell gold bullion coins are coins are usually at least .999 or fine gold or  .916 or 22 karat gold, the value of these coins is largely determined by the current spot price of gold, their value increases and decreases as the price of gold fluctuates.

The second type of gold coin you could consider are semi-numismatic gold coins, some of the more popular coins falling into this group include but are limited to British Sovereigns, Swiss Francs and French Roosters, many of these were minted centuries ago. If you want to buy one of these you will pay more than the bullion price, their value is based on the current price of precious metals plus a little for their collectibility.

The third group of coins are Numismatic coins, the value from these coins comes more from their aesthetic or historic value as opposed to their worth from precious metals. Numismatic collectible coins will be graded by a professional service which will help establish their value

Collectible Gold Coins

Left: 20 Swiss Franc Right: Gold British Sovereign



How To Buy Gold Bullion Coins

In my opinion gold bullion coins represent an easier way for anyone to get into investing in gold, unlike collectable coins you won’t be paying for any perceived value in it’s scarcity or demand.  Bullion coins come in a variety of sizes and you can get in the marketplace by purchasing as little as a 1/10th of ounce bullion coin.

Again when you are buying and selling your coin you can easily get and idea of it’s current value by looking up the spot price of gold on any given day. Remember that when you are buying a bullion coin you will pay slightly more than the spot price, this is commonly referred to as a bar charge, conversely when you sell your coin you will get slightly less than spot price, this is the profit margin that goes to the buyer.  For your reference we pay 95% of spot price when we purchase bullion coins, bars or wafers.


Gold Bullion Coins

Left: Canadian 1 Ounce Maple Leaf Right: American 1 Ounce Gold Eagle

How Long Do I Need To Hold On To My Gold Coins

Like most investments the profits from buying gold coins or bullion should be considered a mid to long term period.  Although gold has been rising steadily over the last few years I believe you should realistically expect to hang on to your investment for at least 2-4 years, if I had a crystal ball I could be more precise but I am of the opinion that gold will continue to rise for the next few years.

Personally I have mine for the longer time and intend on hanging on to them until I am ready to retire and beyond.  Having said that you never know, gold could prove me wrong and skyrocket in the next year or two.


Liquidity Of Gold Coins

Another advantage of gold coins is their liquidity, whether you choose to purchase bullion coins or numismatic coins you will always be able to find a buyer these days.  The demand is high and you will be able to sell small demoniations as well as larger quantities, in my opinion bullion coins are again a safer bet if liquidity is a concern for you, their value is easily established.

With collectable coins you may not recuperate it’s perceived intrinsic value if you are in a hurry to sell, it can take longer for you to get you price you want with numismatic coins.


Taking Possession Of Your Gold Coins

If you are buying gold coins online be it from Ebay or an established refinery and intend on taking physical possession you will need to factor delivery into your investment cost, shopping around for rates is always advisable.  Personally I have used Kitco and have found them to be reliable when ordering but like other dealers their shipping and delivery costs can add up.

One day to bypass delivery costs is to purchase your coins in person, if you live in or near a major city you will be able to find dealers and smaller refineries that will sell gold coins, this also allows you to inspect the coins before purchasing.  Others clients have told me that that have purchased items directly from individuals, this is a way you can possibly avoid a ‘bar or coin charge’ from a dealer but remember you may be taking some risks when buying this way.


Buying And Storing Your Coins

There are many larger companies that offer client storage for coins and bullion, Kitco and Goldline are two well known companies that come to mind, some banking institutions also facilitate this here in Canada, Laurentian bank is one that I am currently looking into using for bullion coins.  Storage charges will vary with each company, do your homework.

For one quick example, I’ve had a look at the prices Goldline is currently charging for a 1/2 ounce Maple Leaf, it was over $1,400.00! You can go to Kitco and buy the same coins for $934.24, does it pay to shop around? I’d say the answer is a big yes! I don’t know how Goldline can justify their pricing but I assume advertising and a strong sales team factors into it.

Storing your coins at home is another option but a bad one in my opinion, what if you were to have a break in and have your items stolen, that would be heartbreaking to say the least.   Using a safety deposit box is your best bet in my opinion if you are taking physical possession of them, the cost is minimal (around $50 per year) and from what I have been told it is perfectly legal to do so in Canada, again do your own due diligence.

In the United States there are many individuals that are nervous about confiscation of gold coins and bullion, I am not an expert on this matter but it is a fact that on May 1st, 1933 the U.S. Government issued an execute order to confiscate gold coins, bullion and certificates.  Could this happen again? I don’t know but I suppose it would concern me if I was a U.S. Citizen, this is why some people in the States don’t want to keep their coins in a bank safety deposit box.


Risks Involved In Buying Gold Coins

As with any investment gold coins are no different, precious metals and gold coins are considered speculative and are essentially unregulated. When you want to learn how to buy gold coins you need to understand that the prices can at times be volatile, for example just yesterday (February 29th, 2012) gold fell over 5% and today has recovered 1.37% so far.  No one will be able to give you the exact best time to make your purchase, I recommend following and/or researching the price of gold and all precious metals for that matter for a period of time until you get the feel for what’s going on.


In Conclusion

The value of gold was rising well before the crisis but it began to advance in leaps and bounds after the fall of 2008. Prior to that gold rose naturally because of the limited amount in the world and its usefulness in jewelry and certain other applications. However, since the beginning of the crisis an increasing number of investors have begun to see it as a money-making investment as well as a good refuge for their money during troubled times.

Many people with no investment experience have also become interested in buying gold. They see it as a safe place for their earnings when inflation is slowly eroding the value of their savings and their pensions.  They know that gold will act as a hedge against inflation in the future.

If you are interested in gold investments, there are a few ways that you can take advantage of the rising price of this precious metal. You can either buy stocks in companies that mine gold, you can buy gold commodities and you can buy quantities of the metal. Actual gold can be purchased in the form of metal bars, as jewelry or as coins. Most independent investors prefer to purchase coins because these items can be easily resold when they want to liquidate some of their assets in exchange for cash.

Best in luck in your future purchases!

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