Gold coin investing can be extremely profitable, as long as certain pitfalls are avoided. Investing in gold coins allows you to own something that is both beautiful and rare. Also, a run-up in gold prices has led many people to melt down their gold coins. This practice is likely to continue if the price of gold continues to rise. As a result, gold coin investing may become even more profitable as the supply of collectible gold coins diminishes.
Avoid privately owned mints that sell collectible gold coins. These coins are designed and stamped by private companies, not by official governments. For this reason, coin collectors have little interest in them. On the other hand, coins produced by the U.S. Mint trade very well between collectors.
Get immediate possession of your coins. Don’t allow them to be held by a coin or investment company. If the company is not honest, or if they go out of business, your gold coin investment could be lost.
Avoid ratings fraud. False or misleading ratings of quality and condition are prevalent, especially at online auction sites. Consider using a Professional Numismatists Guild (PNG) coin dealer to purchase your coins, especially if their value is greatly affected by the PCGS (quality and condition) rating.
Narrow the spread between buy and sell prices. Determine what the spread is on any gold coins you consider for purchase. Find a dealer that has the lowest markup and the best-established credibility. South African Krugerrands tend to have the lowest premium compared to the price of gold bullion. American Eagles also have a low premium. Classic gold coins like the Saint-Gaudens Double Eagles typically trade 8 to 10 percent higher than the bullion price due to their rarity and collectability. One ounce coins usually have less of a markup than gold coins of a lesser weight.
Buy low and sell high. Whether you’re a beginner or a pro at gold coin investing, you must decide which way the prices are headed, how much to invest and how long to hold your investment. Keep a sharp eye on the price of gold and jump in if it drops precipitously.
Tips & Warnings
All investments involve risk.
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