Image by: pulguita
By Steven Morrison II
Gold coins are the way to go for many precious metal investors, and not just because they are pretty to look at. First, their purity is guaranteed by the minting government. Second, they are much easier to carry, store and ship than gold bars.
Third, with all of the scams that are out there, good old fashioned coins are even safer than bars or junk gold, even in deals where you can touch the merchandise. But more on that later.
Worth Their Weight In Gold
Gold coins usually sell for between 4.9% to as much as 20% above the current market price, depending on the year, make and place of purchase. The most popular gold coin in the world is the South African Krugerrand, but it generally sells for a premium due to its exotic reputation. Your best bet stateside is to buy American.
In the U.S., the 22-karat American Eagle is king of the gold-coin scene. The American Buffalo is the Eagle’s 24-karat counterpart, but most buyers have their eye on the Eagle. The Eagle 1-ounce variety is considered the best investment in American gold coins due to the pricing structure. Canadian Maple Leafs are also popular.
Deal Of The Century?
American Eagles in America. Safe. Got it. But there has to be a place where you can buy gold coins cheaper, right? Some place where you can really take advantage? We hear that Asia is nice this time of year, especially Hong Kong.
The Sovereign Man global investor blog pointed to a recent deal on gold coins in Hong Kong. At Hang Seng Bank, a business partner based in Asia reportedly purchased pure 24-karat gold Canadian 1-ounce Maple Leaf coins for only 0.5% above the going rate for gold, provided that it was a cash purchase.
At the Bank of China, beautiful gold Pandas were selling for 4.9% on top of spot – not that great of a price, but the coins are fabulous.
If you are considering buying a large amount of gold coins, it may be worth exploring and the price of a plane ticket to Asia.
Image by: jessebezz
Safety & Storage
Again, if safety is a big concern – stick with the American stuff and buy from the folks companies listed on the U.S. Mint’s site who passed the application process to sell them (the Mint doesn’t sell direct). Expect to pay at least 4.9% over the spot price. And by buying American, your shipping will be at its lowest possible, plus you have more legal recourse here in the states if something does go horribly wrong.
There are companies that will buy and store your precious metal purchases for you, insured and for a fee of course. There’s one problem with that approach – trust. The whole point of getting gold is so that you can feel it, touch it or bury it in the back yard if you want to (not recommended, BTW). What is recommended, however, is a bank safety deposit box or well-anchored home safe.
With gold prices through the roof, there is reason to believe that there is a scammer around every corner, crawling under every rock, and most likely sitting behind a laptop in a cafe somewhere. Just ask those poor souls who ponied up for 5 tons of shiny, worthless bricks gathering dust in Dubai customs via Africa. Ouch.
NOBODY will sell you gold below market value, and if they try, it is either stolen or fake. Warning websites exist online, complete with the names and email addresses of gold scammers, so do your homework before you pull that trigger on some Ghana gold deal.
BEWARE, there are scams out there.
Here’s a good rule of thumb that some of you may remember from high school: Know your dealer.
Tips when buying gold coins:
- Keep tabs on gold prices via Kitco.com or Monex.com
- Always deal with sellers who have a good reputation
- You most likely will not be able to purchase gold coins with a credit card
- If the deal seems too good, it probably is, especially in the precious metals market
- It is recommended by some that you keep gold coins for a minimum of three years
- Avoid dealers that offer sweeteners like free storage