Types of Gold Investments

Aside from bullion bars, gold is available in many other forms. When talking about physical gold that you can purchase and take possession of, gold coins and rounds exist as well. Apart from the physical types of gold, the metal is also available in other forms such as ETF’s and certificates. Each of these types of gold are wildly different from one another and we will attempt to outline these differences below first starting with gold coins.

Gold Coins

One of the most popular types of physical gold is the gold coin. There are three major types of gold coins which includes: modern bullion coins, pre-1933 US gold coins and commemorative coins. Probably the most popular form for investment purposes, however, are the modern bullion coins. This includes current year coin issues from the various sovereign or government mints throughout the world. Some popular coin issues include:

Modern day gold bullion coins have been around since 1967 when the 1 oz South African Gold Krugerrand coin was first introduced to the market. Soon after the Royal Canadian Mint, United States Mint, Perth Mint and many others followed suit and started minting their own gold bullion coins.

Throughout history, mostly during the time period of the gold standard (1863–1933), governments issued circulating coins in gold. This included countries like the US which produced a $1, $2.50, $3, $5, $10 and $20 gold coin throughout the 1800s up until 1933. These coins contained 90% gold and are more of collectors items, though some people invest in these coins.

Today, gold bullion coins are a very feasible option for investors looking to gain exposure to physical gold assets. They typically are minted in 22k to 24k purity (.9167 or 91.67% to .9999 or 99.99%) making them one of the purest types of gold you can buy. You can find bullion coins in sizes as small as 1/20 oz to 1 kilogram, but typically you will see 1/10, 1/4, 1/2 and 1 oz weights.

Compared to gold bars, you can expect to pay anywhere from $30-$200 over spot per ounce for a gold coin. This is a little bit larger of a premium than bullion bars but you are getting a government issued and backed coin with intricate artwork. Because the coins are government issued, they also are assigned legal tender values in the country that issues them (with the exception of the Krugerrand).

Prices for pre-1933 gold US coins can vary much more significantly than modern bullion coins. This is because there is more of a collector premium involved as opposed to a premium based solely on spot price. You can expect to may well over the spot price for these types of coins, especially if they are graded or in above average condition.

Gold Certificate Investments

Besides buying gold in bullion or coin form which involves the investor taking physical ownership of the metals once purchased, paper investments like gold certificates never actually require one to take ownership of any metal. Instead, a paper certificate is issued to the owner which merely states the amount of metal and other details. This was used in the US from 1863 to 1933 which meant that paper money could be exchanged at the bank for physical gold.

Since the end of the gold standard in 1933, gold certificates have become less common and are only available in certain markets.

Gold ETF Investments

Investing in gold by purchasing a gold ETF (Exchange Traded Fund) is a newer way in which individuals can invest in gold. A Gold ETF is set up so that its price mimics the current price of gold. In most cases, the Gold ETF is backed by stored or vaulted gold bullion that is allocated. Because the gold is stored securely in a vault, this type of investment often involves annual storage fees and brokerage charges.