If you want to invest in gold, gold coins are a great choice. Coins are easy to transport, have lower fees than gold bars, and are beautiful to collect and look at. However, before you buy any gold coins, you should understand the investing basics so you can make the right decisions for your portfolio.
Bullion gold coins
There are two main categories of gold coins. First, there are bullion gold coins. These coins are currently being minted by the governments of countries. Some common bullion coins include the American Eagle, the Canadian Maple Leaf, and the South African Krugerrand. Every bullion gold coin is standardized to have the exact same purity so know what you are buying. In other words, every American Gold Eagle 1 oz. coin will be exactly the same. Bullion coins also track the value of the spot price of gold. These coins are like a straight investment in gold.
Rare gold coins
Rare gold coins are more like collectibles, like buying artwork. These coins can sell at a higher price than regular bullion coins because they are rare collectibles on top of being gold. However, buying rare gold coins can be more difficult because these coins are not standardized. You really need to do your research to make sure that the rare coin actually delivers what it promises. For example two old coins might have the same name but have different gold purity because standards were less strict hundreds of years ago. Physical problems like dents and scratches can also make rare coins less valuable.
One way to stay safe is to only work with dealers that are part of the Professional Numismatists Guild or the American NumismaticAssociation. These associations review rare gold coin dealers and make sure they deliver quality results to their investors.
Picking your first gold coin
If you are new to buying gold coins, you are best off starting with bullion coins versus rare coins. Bullion coins are safer investments, take less research, and are easier to sell. As you grow your portfolio and get more experience with gold, you can comfortably expand to rare coins.
If you are in the United States, it is also better to stick with North American coins like the American Gold Eagle or the Canadian Maple Leaf. There is more demand for these in the United States so it is easier to buy and sell these coins. Another advantage is that you can store American Gold Eagles and Canadian Maple Leaf coins in an IRA, a tax-advantaged retirement account. Additionally, country coins such as the Austrian Philharmonic and Australian Nugget can further support your investment strategy.
Finally, when you decide on the size of your coins, bigger is usually a better choice because your overall fees will be lower. Dealers charge a per coin fee so you would end up paying more in fees to buy four ounce gold coins rather than one 1 ounce coin.
Finding a dealer
To buy gold coins, you need to buy from a gold dealer. The government does not directly sell to individual investors. When you compare gold dealers, costs are a big concern as each dealer can charge a different fee over the actual price of the coin. Average fees are about 4% to 5% over the spot price of gold. In other words, if the spot price of an ounce of gold is $1,300, the fee for buying a one ounce gold coin should be $52 to $65. A lower fee is better for your investment return.
However, you should consider more than fees for your decision. A dealers reputation is also extremely important because there are some dishonest companies out there that over charge or even defraud investors. You should check to see how long a dealer has been in business and whether they have good customer reviews. Blanchard has helped more than 450,000 investors to date with expert consultation in the acquisition of bullion and American numismatic rarities, and makes a great choice for a first time investor. You should also watch out for dealers that promise free storage or delayed delivery because these are signs of a scam.
Payment and delivery
Many gold dealers only accept payments in cash and advanced payment is required. Typically, you can expect to receive your shipment within 10-14 day, via regular mail. A sudden surge in demand may have an impact on availability, so it is best to keep this possibility in mind. You should ask your dealer about their current inventory and average delivery times before you make a purchase.
Storing your gold coins
You need to keep your gold coins in a safe place where they are protected against theft, fire, or other problems. A bank safety deposit is a solid choice. You could also set up a safe at home, in order to keep your coins adequately protected.
While a gold dealer can store your gold, this is usually not advantageous for gold coins. Dealer storage fees are high and the traditionally small size of coins makes them easy to keep within your financial institution. Wherever you store your coins, you should buy insurance to protect them against theft. The bank does not provide this insurance for you.
Thinking of investing? Have questions? Blanchard has helped more than 450,000 investors to date with expert consultation in the acquisition of bullion and American numismatic rarities, and makes a great choice for a first time investor.