How to Buy Gold Coins

When most people think of gold, they think of large gold bars stored in vaults deep below the surface of the earth. In fact, gold bars come in many different shapes and sizes in order to meet the needs of different investors. Gold bullion bars are sold by the troy ounce and are sold in common sizes of one troy ounce, 10 troy ounces, 100 troy ounces or larger sized gold bars. Most gold dealers will sell these bars for a percentage over the spot price of gold. The smaller the bar the larger the percentage (or premium) you will pay. This form of gold is usually purchased by people or corporations looking to make large investments in gold.

Countries and private entities also produce gold bullion in a round shape that resembles a coin. Some of them look like coins, but they are not coins since they do not carry a monetary value. Others are considered coins, but derive their value from their precious metal content and are not intended for common circulation with in a country's economy. Gold bullion coins come in sizes starting as small as 1/25 troy ounce, 1/10 troy ounce, one quarter troy ounce, half a troy ounce, one troy ounce and as large as five troy ounce sizes. Some gigantic novelty gold coins have been made that weigh up to one troy ton of gold.

For the small investor that is not looking to purchase gold that has numismatic value, gold bullion coins issued by a predominant country or respected private entity would be the ideal choice. These include: U.S. Gold Eagles, U.S. Gold Buffaloes, South African Krugerrands, Canadian Gold Maple Leafs and Austrian Philharmonic gold bullion coins. There are variety of sizes that can be purchased for a reasonable premium over the spot price of gold.

Another way to invest in gold is to buy United States gold coins that were minted in 1933 or before. Up until 1933, gold coins circulated freely in the U.S. economy until President Franklin D. Roosevelt recalled all gold coins except those with numismatic value. Fortunately, many people did not turn in their gold coins and they are available today to collectors for not much more money than their gold content.

For example, an 1879 $20 Liberty gold coin minted in Philadelphia has 0.9675 Troy ounces of pure gold or AGW. If gold is $1,800 per troy ounce than there is $1,741.50 worth of pure gold and it. As of this writing, an average circulated example is currently selling for approximately $1,865. This is a premium of $123.50 (or approximately 6.6%) over the spot price of gold. You can buy common U.S. gold coins that have a face value of $1, $2.50, $3.00, $5.00, $10.00 and $20.00.

In 1982 the U.S. mint resumed its commemorative coin program. In 1984 a gold coin that commemorated the Games of the XXIII Olympiad in Los Angeles was minted. This was first U.S. gold coin minted in the United States since 1933. Unlike the common U.S. gold coins described above, these are not intended for circulation and carry a high numismatic premium. In other words, expect to pay a high premium over the spot price of gold that is contained within the coin. The United States mint continues to make commemorative gold coins and you can purchase them directly from The United States Mint.

Knowing how to buy gold coins can also turn up some unexpected values. There are many gold coins that also circulated in foreign countries over the years. Depending upon the gold content of the coin, available supply and collector demand, prices can vary dramatically. Examples of these coins include: Mexico 2 Pesos, Mexico 50 Pesos, Switzerland 20 Francs, Britain 5 Pound and Austria 100 Corona. Before you buy these coins consult a book on foreign coins to determine the gold content and current market values.

If you are unsure of how to buy gold coins, this is one area where you do not want to begin. Quite a few U.S. gold coins have very low mintages and high collector demand. This leads to very high numismatic premiums over and above the intrinsic value of gold contained within the coin. For example, the same 1879 $20 liberty gold coin (mentioned above) minted in New Orleans (1879-O) has a market value of over $23,000 in average circulated condition. And has the same 0.9675 troy ounces of gold as the one minted in Philadelphia.

If you have decided to buy gold coins you now need to choose a coin dealer to purchase your coins from. Finding an honest coin dealer is as simple as looking for five key traits: experience, size, reputation, ethics and guaranty. Also, ask about any restrictions such as minimum amounts, accepted forms of payment (cash, bank wire transfer, cashier's checks, personal check, company check, credit card, etc.) and when you will take possession of your gold coins.

Quick Links:

• Three Things You Should Know Before You Buy Gold Coins
• Finding An Honest Coin Dealer