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If you believe those late-night infomercials, radio-talk-show hosts or even those stunning sales figures for Gold Eagles, buying gold coins is a slam-dunk strategy for lasting wealth.
Just last month, for instance, U.S. Mint buyers ordered 107,000 ounces of bullion Gold Eagles - the third-best May in the series' 25-year history.
And this soaring interest in yellow-metal coinage isn't limited to the U.S. market. Take India, where the State Bank of Travancore announced in late April that a program to sell gold coins through five of its branches would be expanded to 60 branches in a single months' time. In fact, as one bullion-dealer executive said in reference to India's fifth-largest city: "In Chennai, even the poor buy [some] gold."
So does this mean you should run out and stock up on gold coins?
Not necessarily.
In fact, I'm going to let you in on a secret: If you're looking at gold coins as a true "investment," there's only one kind to consider.
The rest are a waste of your time.
But here's a rule of thumb that will make things simple: If you're an investor looking to bolster your portfolio with a modest helping of "hard assets," there's really only one category of gold coins to consider.
I'm talking about bullion-based gold coins.
Just last month, for instance, U.S. Mint buyers ordered 107,000 ounces of bullion Gold Eagles - the third-best May in the series' 25-year history.
And this soaring interest in yellow-metal coinage isn't limited to the U.S. market. Take India, where the State Bank of Travancore announced in late April that a program to sell gold coins through five of its branches would be expanded to 60 branches in a single months' time. In fact, as one bullion-dealer executive said in reference to India's fifth-largest city: "In Chennai, even the poor buy [some] gold."
So does this mean you should run out and stock up on gold coins?
Not necessarily.
In fact, I'm going to let you in on a secret: If you're looking at gold coins as a true "investment," there's only one kind to consider.
The rest are a waste of your time.
The Only Gold Coins Investors Should Buy
With gold having doubled in price over the last four years - not to mention a U.S. dollar that continues to weaken - it's no surprise at all that the world coin markets are attracting buyers like moths to a flame. First timers often arrive and are confused by all that's available - including rare and antique coins, and a numbing array of "collector" and "commemorative" coins.But here's a rule of thumb that will make things simple: If you're an investor looking to bolster your portfolio with a modest helping of "hard assets," there's really only one category of gold coins to consider.
I'm talking about bullion-based gold coins.
Other than that, you can generally find better places for your investment dollars.
The reason is simple: Due to the costs of minting and marketing, even the most basic of bullion coins carry a markup - a premium over the price of gold itself.
With bullion-based coins, this markup is generally fairly modest - from 3% to 6% above the "spot price" for physical gold (though during periods of heated demand, coin premiums can approach - and sometimes even exceed - 25% or even 30%).
But you move away from bullion-based coins - and into the realm of rare or collectible coins - the markups become even more pronounced.
Once that happens, gold-coin values become almost entirely divorced from the price of gold itself. Instead, they're determined by subjective measures like scarcity, design, condition, and quality. That last valuation variable is especially subjective, since grading standards vary widely and appraisals can differ depending on which "expert" is evaluating a given coin.
Then there's the "liquidity" issue: Gold coins can also be more difficult to sell than physical gold - particularly when it comes to very rare coins. And with some "collector" coins, investors are often chagrined to discover that there's virtually no secondary demand at all - making it almost impossible to sell them, let alone recouping one's investment.
Given these insights, if you still want to buy gold coins, you need to understand two things:
Are you looking to buy them strictly as an investment - a hard-asset addition to a portfolio that's otherwise composed of stocks, bonds, funds and other such "intangible" assets? Or are you more likely to become a collector?
There's no wrong decision, but you do need to know - because that decision should determine just what kind of coins you are willing to buy.
If you think the coin designs are beautiful, enjoy knowing about their designers and the history of the images depicted, and love how it feels to hold and look at them, then you're probably more of a collector than an investor. That means you'll want to bone up on minting standards, grading, rarity, the completion of coin "sets," and display methods before you begin purchasing.
But if you're trying to establish a hard-asset reserve against the next financial Armageddon - or want to be able to sell at a profit next month or next year - then you are playing in our ballpark and are definitely an investor.
And means you should target the basic bullion coins.
You have to understand the difference between coin's "price" and its "value."
The "price" of a coin is the amount it would cost you to buy it on the open market - once again based on such subjective elements as type, grade, rarity and dealer mark-up. Although prices can vary from dealer to dealer, a good guide to these "retail" coin prices is the "Red Book" (more properly known as "A Guide Book of United States Coins.")You should probably get a copy (or give it a look at your local library) if you plan to do much trading in U.S. coins.
The "value" of a coin is the amount you can sell it for. That's typically less than the price you actually paid for it and is probably even less than what it would cost you to replace it.
In fact, this difference between "value" and "price" is often well in excess of the original mark-up. Dealers usually offer 75% to 85% of the current "price" for bullion coins, and sometimes as little as half of the price of certain collectible coins. These "wholesale" coin values are reported in what's known as the "Blue Book," and you should probably review a copy of it before you start selling your coins.
Remember, however, that "Red Book" and "Blue Book" quotes can become quite quickly become out of date, since both retail and wholesale coin prices may change rapidly in periods of severe metals-market volatility - like those we've seen already this year.
It's extremely important to be fully aware of the difference between coin prices and values so you can accurately judge the worth of your holdings. When you buy coins, this differential means you start out with an immediate loss - one that could require a sizable price move in spot gold prices just to get you even. Don't mislead yourself by over-valuing your holdings based on what you paid for them.
But remember: Always insure your holdings based on their price, since that's what it would cost you to replace them.
Furthermore, always take delivery of the coins you buy - and then store them in a safe place, such as a bank deposit box - rather than letting the dealer or mint hold them for you in a vault. Otherwise, you could wind up with nothing but a worthless deposit receipt if the company goes out of business, or is the victim of foul play.
If, after all of these considerations, you decide to avoid the complexities of the gold-coin markets (but still want the hard-asset benefits of gold), two leading dealers that specialize in the one-ounce bullion bars are:
News and Related Story Links:
The reason is simple: Due to the costs of minting and marketing, even the most basic of bullion coins carry a markup - a premium over the price of gold itself.
With bullion-based coins, this markup is generally fairly modest - from 3% to 6% above the "spot price" for physical gold (though during periods of heated demand, coin premiums can approach - and sometimes even exceed - 25% or even 30%).
But you move away from bullion-based coins - and into the realm of rare or collectible coins - the markups become even more pronounced.
Once that happens, gold-coin values become almost entirely divorced from the price of gold itself. Instead, they're determined by subjective measures like scarcity, design, condition, and quality. That last valuation variable is especially subjective, since grading standards vary widely and appraisals can differ depending on which "expert" is evaluating a given coin.
Then there's the "liquidity" issue: Gold coins can also be more difficult to sell than physical gold - particularly when it comes to very rare coins. And with some "collector" coins, investors are often chagrined to discover that there's virtually no secondary demand at all - making it almost impossible to sell them, let alone recouping one's investment.
Given these insights, if you still want to buy gold coins, you need to understand two things:
- Are you an "investor" or a "collector?"
- And do you understand the difference between "price" and "value?"
Before You Buy
The most important step that you need to take is to determine just why, exactly, you wish to buy the gold coins in the first place.Are you looking to buy them strictly as an investment - a hard-asset addition to a portfolio that's otherwise composed of stocks, bonds, funds and other such "intangible" assets? Or are you more likely to become a collector?
There's no wrong decision, but you do need to know - because that decision should determine just what kind of coins you are willing to buy.
If you think the coin designs are beautiful, enjoy knowing about their designers and the history of the images depicted, and love how it feels to hold and look at them, then you're probably more of a collector than an investor. That means you'll want to bone up on minting standards, grading, rarity, the completion of coin "sets," and display methods before you begin purchasing.
But if you're trying to establish a hard-asset reserve against the next financial Armageddon - or want to be able to sell at a profit next month or next year - then you are playing in our ballpark and are definitely an investor.
And means you should target the basic bullion coins.
Buying Gold Coins: Separating "Value" From "Price"
Now that you understand your objective, you need to do one more thing before you can actually go coin shopping.You have to understand the difference between coin's "price" and its "value."
The "price" of a coin is the amount it would cost you to buy it on the open market - once again based on such subjective elements as type, grade, rarity and dealer mark-up. Although prices can vary from dealer to dealer, a good guide to these "retail" coin prices is the "Red Book" (more properly known as "A Guide Book of United States Coins.")You should probably get a copy (or give it a look at your local library) if you plan to do much trading in U.S. coins.
The "value" of a coin is the amount you can sell it for. That's typically less than the price you actually paid for it and is probably even less than what it would cost you to replace it.
In fact, this difference between "value" and "price" is often well in excess of the original mark-up. Dealers usually offer 75% to 85% of the current "price" for bullion coins, and sometimes as little as half of the price of certain collectible coins. These "wholesale" coin values are reported in what's known as the "Blue Book," and you should probably review a copy of it before you start selling your coins.
Remember, however, that "Red Book" and "Blue Book" quotes can become quite quickly become out of date, since both retail and wholesale coin prices may change rapidly in periods of severe metals-market volatility - like those we've seen already this year.
It's extremely important to be fully aware of the difference between coin prices and values so you can accurately judge the worth of your holdings. When you buy coins, this differential means you start out with an immediate loss - one that could require a sizable price move in spot gold prices just to get you even. Don't mislead yourself by over-valuing your holdings based on what you paid for them.
But remember: Always insure your holdings based on their price, since that's what it would cost you to replace them.
Furthermore, always take delivery of the coins you buy - and then store them in a safe place, such as a bank deposit box - rather than letting the dealer or mint hold them for you in a vault. Otherwise, you could wind up with nothing but a worthless deposit receipt if the company goes out of business, or is the victim of foul play.
Where to Buy Gold Coins
The best way to make sure that you get fair prices when buying or selling is to stick with established, reputable coin and metals dealers. Money Morning Contributing Editor Peter Krauth listed several in his special report "How to Buy Gold." They include, but aren't limited to:- Kitco Inc. (Kitco.com) - With offices in both New York and Montreal, Kitco offers fair premiums and their selection is usually quite good.
- Asset Strategies International Inc. (assetstrategies.com) - Located in Rockville, MD, ASI also offers gold storage options outside U.S. borders.
- Camino Coins Inc. (caminocompany.com) - Based in Burlingame, CA, Camino has been in business for more than a century.
- American Precious Metals Exchange (apmex.com) - Based in Oklahoma City, OK, APMEX carries a wide range of pre-1933 classic U.S. gold coins.
- The Tulving Co. (tulving.com) - Located in Newport Beach, CA, Tulving has been in business since 1990 and carries a full line of both bullion and collectible coins.
If, after all of these considerations, you decide to avoid the complexities of the gold-coin markets (but still want the hard-asset benefits of gold), two leading dealers that specialize in the one-ounce bullion bars are:
- Credit Suisse Group AG (NYSE ADR: CS) (creditsuisse.com) - Known primarily as an international private banking firm, Credit Suisse also operates a mint that produces one-ounce gold bars of 99.99% purity. They're sold directly by Credit Suisse at a minimal premium, as well as by most other major metals dealers, including those listed above.
- Johnson Matthey PLC (PINK ADR: JMPLY) (matthey.com) - This company operates a mint for gold and silver bullion bars of maximum purity. Most major coin and metals dealers handle its products.
News and Related Story Links:
- Money Morning:
Hedging Strategies: At a Time of Record Gold Prices, This Simple Option Play Will Protect Your Profits - Money Morning Archives:
Ten Ways to Invest in Gold ... and Four That Make Sense - Money Morning Defensive Investing Series:
Defensive Investing Series Stories - Money Morning Options Strategies Story:
Three Ways to Play the Silver Rally - While Limiting Your Risk with Options - MSN Money:
More investors shift to hard assets - About.com:
What Is the U.S. Coins Red Book? - About.com:
What Is the U.S. Coins Blue Book? - Amazon.com:
A Guide Book of United States Coins. - LearnGoldCoins.com:
Learn All About Gold Coins and Investing in Gold - The Economic Times:
High Gold Demand Pushes Up Coin Sales.
Tags: buying gold coins
Is there any problem buying gold or sliver from Monex, Merit, Goldling?
I have been purchasing gold and silver bullion coins as well as ingots from Monex for the past several years. I have found their sales representatives to be informative and helpful. Personally, I opt to receive my purchases and store myself, and their handling charges are very reasonable. Money left in an account with Monex also earns 2% which is better then my bank. If you are looking for a quick turnover I would suggest leaving your purchases with Monex for their local storage at a minimal fee. This way, in the event you want to sell back to Monex, you do not have to contend with shipping back to them and the time involved before they actually receive it.
You have not mentioned Kruger Rands and I wondered if there is any particular reason?
Regards
David Price.
Hi ,
Why was David Hall Coins left off the reccomended list ? I have dealt with Van Simmons for years and he has always been upfront with me . Is there something I should know ?
Thanks,
Palmer
Right now, I just want to subscribe to your Monday morning newsletter. I am trying to learn as much as I can about gold as an investment and an inflation hedge. I plan to buy some gold, but I am not ready to take the plunge yet. My funds are locked in an IRA, so to buy gold I would need to establish an new IRA to hold the gold, preferably offshore. Then the question becomes, can I still keep the gold in my possession or must it be held by the IRA sponsor? I invite your reply. Thank you.
I have a considerable amount of silver I would like to sell. Would you suggest to send it to a reputable company for them to study and t;hem offer a price, and would they return all if a deal could not be reached? Thank you.
This article was very informative. But is there any reason why you wouldn't buy gold directly from the US Treasury ?
Ok, so I have some gold and silver 1oz coins which total around 200oz. If I were to move to another country from Canada, how do I go about transporting this weight? Also I have been told that Ecuador will charge a tariff of 35% on silver and 45% on gold. I do not know why they would do this. Ecuador's currency is the US dollar which is going to crash soon !
How difficult is it to transport physical metals to another country?
Enjoy your website,
Roger.
Can I share your well written article with my investment clients?
Dude,
Monex? Do yourself a favor and just do a little checking re: their customer satisfaction…or lack thereof…on the web. Lots of complaints with the BBB.
Don't know Merit. Just seen the name.
Goldline has been accused of attracting people to buy bullion coins and then upselling them to numismatics. Nothing illegal about this…just sleazy. Buyer beware. Understand…they didn't invent this scam. It's been going on with a lot of dealers for a long time, so they are far from alone.
Spears is right. If you want gold, buy gold bullion coins and nothing else. The only possible exceptions are that you might currently consider a few U.S. St. Gaudens $20 gold pieces. These are "semi-numismatic" and quite beautiful. The only reason I mention them is that the premia over gold spot are quite low right now…from an honest dealer. Also, quarter ounce British sovereigns carry a higher premium, but they're smaller and are the most recognizable coin in the world and you'll get that premium back when you sell. But otherwise, go with strictly bullion coins and don't pay more than a few % over spot.
I use libertycoinservice.com. Good, honest folks who've been around forever, but there are plenty of other good folks out there. I'd just stay away from those who advertise on cable. Those ad budgets have to financed and salesmen paid somehow. They do it using bait and switch tactics where they funnel you to rare coins and by charging more on bullion coins and semis.
The upsell to rare coins is a real racket.
SIR, TELL ME THE COMPANY WITH THE BEST PRICE ABOVE SPOT FOR 10 – 1OZ CAN.MAPLE LEAFS…
THANKS PAT BOHN
I look for two main things: Reputation and price. Here's a place to get competitive pricing, remembering that pricing is subject to change: http://www.goldprice.org/ I've found Gainesville Coins in FLA has consistently been in the top 3 (low premium).
Anyway at the goldprice website scroll down a little and you'll see where you can get prices from various dealers, for various coins from Krugerrands to Eagles. Note that broker fees, payment, shipping and insurance policies vary widely and each has an effect on the total price. I've found that a "cheap" is higher than others after factoring in those variables.
In my experience I've called places just to get info and the salesman that instantly try to upsell into collectables, I can't blame them because that's where the best commissions are. As with virtually anything, this old saying applies: Buyer beware; but better yet, there is no substitute for thorough homework. Hope this helps, RC
Numismatic gold has the smallest premium to gold in the last 100 years — you can buy pre-1930 $20 St. Gauden's coins (they contain just under 1 ounce of gold) for around $1,650 in uncirculated (MS-63) condition. They're very collectible and easy to resell, so I'm not sure where you get your research from… bullion isn't the only way to go.
I must take issue with one piece of advice, which is to "take physical delivery and store them in a safe place such as a bank deposit box." If the President declares a national state of emergency, the Dept. of Homeland Security has the authority to confiscate all gold and silver in bank safe deposit boxes. And, they do not even have to notify the owner of that box. It seems to me that a safer way would be to store bullion or coin or whatever, in a private storage facility. Better still would be an offshore facility.
I have been buying small bullion gold coins from Coast Coins (MD) for years (www.coastcoins.com). The mark-up is one of the lowest in the industry
and they have a great track record. I would recommend them to your readers too!
I particularly like the foreign gold coins for their value and variety. And shipping is only $5,
regardless of the size of your order…….This might sound like a commercial, but it's just a satisfied
investor talking……
Sorry….the name is the company is actually Coast to Coast Coins and the web is http://www.coastcoin.com. I must be getting old!
This price to value aspect is missing in almost all investor steering going on in the markets. Congrats for bringing up the realities of holdings valuation.
I buy from http://www.inexpensivegold.com/ they have always been there when I need them.
Do you mean "Goldling" or "Goldline?"
How do you sell back at the least dealer markup/markdown whenyou want to sell? i've got some silver bags and a green box with 500 silver eagles.
so am i understanding you believe that an investor only, should buy gold or silver bars rather than bullion based coins?
What you've indicated has been on my mind for a good while, that coins are marked up excessively, and a return on investment could be significantly less than the investment itself. To that extent, I've purchased bullion metal bars and rounds with as high a purity value as possible, so feel happily vindicated in my choices by what you've stated.
Now, the big question. How, where, and to whom does one sell these metals in order to turn them into usable funds when you need to, or you've achieved your goals?
silver bars 100 once are the best thing you can buy-for under 4000 usd per bar-when silver hits 500-1000 per once you will wish you had more bars.i have only 3 100 once bars.stick with a name brand its just like cash you can sell anywhere -besides africa-you should pay no more than 2 percent over spot from this if you live in the usa.everhard is what i have-get ready for inflation coming soon
Another way of purchasing gold is from the dealers in Bangkok's Chinatown. The gold is sold in necklace form in half or one ounce lengths and is about 23kt. Whether you buy or sell, their margin above the spot price is very low.
The Thais have been buying and selling their gold like this for years, and has the added advantage, where if one is short of money, you can just cut the required amount from the necklace.
What is you feeling about the values of uncirculated, in cases, Australian Koalas ?
you may want to eliminate kitco as they are being investigated for fraud and tax evasion..just saying
Hi have £1000 to invest in gold. What should i buy?
Very informative information on gold investments. What everyone should also know is that precious metals investing is allowed within a retirement plan if the plan is held with a company that allows for these kinds of investments. Not all coins are an allowable investment. See our web site or contact our office for more information on how to invest in precious metals within a retirement plan.
O.K., some say buy bars others say buy bullion based cions . I`m thinking about spending 25 to 30 grand this summer . What are my BEST options. Gold bars, gold coins, Silver bars, silver coins or something all together diffrent . I can mix them up and buy both , I just want some one to help guide me. Thanks
Thanks for the great article on Gold investing.
Since I get my daily subscription of Money Morning,I learned a lot.Your advise on investment matters and forecasts of blue chips are really invaluable.Your very interesting projections on gold and silver prices should be taken seriously.
A great article. But I don't agree that liquidity is an issue. I have owned Gold (and Silver) coins for 8 years, over which time I have bought and sold some 3 times, and have never had an issue with being able to sell them. Bullion dealers have always bought from me, and sold to me, very near to spot.
Online auctions also provide a large and very liquid market place for Gold and Silver coins. Ebay trades about 1/2 Billion Dollars a year in bullion. Premiums can fluctuate wildly, but using tools like http://BullionSupermarket.com buyers can easily see the full picture. This is why we started our website to help buyers in these market places compare prices and premiums on Gold and Silver coins.
In 2008 for example around the Lehmans crisis, some 1 oz Bullion Krugerrands changed hands at over 70% premium.
More recently, a shortage of minted Silver products has seen premiums on 1 ounce Silver climb as high as 85% on well known brands of bar.
Plan to buy some gold bullion coins but no little about what's out there or what to buy.
Feel I would get ripped off if I went to one of the TV companies.
What is your opinion about USAGOLD in general and their premium on bullion
gold coins in particular?
I bought Vienna Philharmonic 1 Oz gold as could not but krugerrands in the USA at the time, is MONEX O..K. you did not mention them.
Also have 100 0z silver bars from the OLD now disappeared James Sinclair, wonderinh how I 'd sell them, I subscribe too "Monday Morning" terrific!
HOW ABOUT SILVER? BEST COINS TO BUY? FROM WHOM? PREMIUMS? HOW MUCH CAN BE TRANSPORTED INTERNATIONALLY WITHOUT QUESTION? THANKS. GH
I have exactly the same questions like Mike (June 16 )
What about the new Utah gold and silver coins? Do they exist yet? They are currency. Does this mean the government can never take them from anybody?
What about importing Gold bars from Europe into the US, any limits? I live in both places, no green card.
Thank you for your report and for your help with the above questions.
I note with interest that you do not include Kruger Rands in your recommendation – why is that? they are an excellent quality coin!
What about buying and storing pooled gold with an online company like Bullion Vault? I already have an account with them but at the moment do not have any gold or silver bullion. what do other reader's think of this method and why is it never mentioned? It makes me suspicious and worried!
Picking a reputable company will always come down to price. Check for monthly specials at all of them. APEX runs one all June any given day for 24 hrs. They drop spot price to .99 on certain silver rounds and so on. But another thing to consider that is not talked about here is shipping. If you buy 10lbs of silver and ship it across country it can add substantially to your bottom line. My recommendation is buy out of your own state to avoid the sales tax, and pick a reputable dealer that has a special with free shipping to take advantage of or pick one that is close to your state.
check out silvergoldbull.com company from canada i like getting from them or gatewestcoin in canada i have also bought from they have fairl low premiums
Hi folks:
Great comments; I've been reading them carefully and see that there are several follow-up stories that we need to do. Rest assured that we're looking at that right now and hope to have them in the works quite soon.
One thing that I learned from our foray into this topic area was how little that's actually available in terms of OBJECTIVE, "how-to" and "primer-type" stories on gold-coin investing. So many of the stories and reports out there are thinly disguised sales pitches — meaning that they aren't providing unbiased information like our article did.
If there are any specific stories that you would like to see pursued — not about specific coins, mind you, but on broader topic areas related to coin, metals or buillion investing — please feel free to drop us a line at mailbag@moneymappress.com. We'll look forward to hearing from you.
Thanks!
William Patalon III
Executive Editor
Money Morning
The info on buying gold is helpful. Where are the best places to SELL or trade one's coins, to get the best value in doing so?
Many thanks!
I'm looking to buy few oz of gold bullion bars main reason for investment This is myfirst time doing this just wanna know it is smart choice planing on setting them back for while