Next to bars, gold coins are arguably the most popular form of physical gold investment. Gold bullion coins are minted by governments all over the world including the United States, Canada, Australia, the UK, Austria and many other countries. Gold coins enable investors to gain exposure to physical gold inexpensively and are also considered legal tender in the country from which they originate which helps to add to their overall appeal.
When buying gold coins online, you will often see the same types of coins pop up from dealer to dealer. These coins include the Gold Eagle, Gold Maple Leaf, Gold Philharmonic, Gold Britannia, Gold Krugerrand and Gold Kangaroo just to name a few. Aside from bullion coins, investors can also purchase pre-1933 US gold coins, though these types of gold are usually more expensive and have a higher collector appeal.
Though you might think that investing in gold requires a large amount of capital, many bullion coins are made in weights of as small as 1/10 oz. This means you can gain exposure to gold with a small initial investment of less than $200. On this page we’re going to take a look at the most common types of gold coins offered today by dealers both online and locally. Below are links to each coin’s page at BuyGoldBarsOnline.com, where we thoroughly go over all of the information regarding each coin.
Gold Coin Index
- American Gold Eagles
- Austrian Gold Philharmonics
- British Gold Britannias
- Canadian Gold Maple Leafs
- Chinese Gold Pandas
- South African Gold Krugerrands
- Pre-1933 U.S. Gold Coins
Investing in Gold Coins
Though gold coins have been used as currency in trade for many centuries now, it is not until more recently that they have become a popular investment tool. Gold bullion coin investments have skyrocketed in popularity for many reasons, but primarily because of the rise in gold spot prices. Around 10 years ago, gold was trading at around $200-$300 per ounce. During the height of the U.S. recession, it peaked at around $1,900. This helped bring major attention to the physical gold market, and consequently gold coin sales increased dramatically.
Gold Coins vs Bars & Bullion
One of the biggest draws that sway investors towards gold coins over bars and other types of bullion is the artwork they contain. Each government issued gold bullion coin has appealing artwork on both their front (obverse) and back (reverse) face. Most of this imagery is drawn up by the manufacturing country’s top designers, metallurgists or artists and feature patriotic images. Another major appeal to gold coins is their over-spot premiums. Many modern gold bullion coins are comparable in price to gold bars, which attracts investors.
Gold Coin Face Value
Though each gold bullion coin is traded based on its metal content, demand and mintage, they also have a legal tender monetary value. This is often called the “face value” of the coin. Though it is more often than not much lower than the actual value of the gold content contained within the coin, it is still a major draw to investors. This means that the coin is fully backed by the government that made it, and considered legal tender with a value equal to that listed on its face.
Gold Coin Melt Value
The melt value of a gold coin is merely the monetary value of the coin if it were melted for its precious metal content. Physically melting many coins is considered illegal by most governments today (including the United States) since they are legal tender, so the melt value is more or less a formula used to calculate the true dollar price of the coin. It can be calculated by the following formula:
- Melt Value = (troy ounce weight x purity) x spot price
Many coins command a premium above their melt value based on collector demand, investor demand, supply, mintage and condition. This premium can be calculated by taking the price someone is charging for a coin and subtracting the melt value (as we listed above). This will give you the premium on the gold coin.
To better understand what gold coins are and why they are such a popular investment tool, we have outlined three of the most popular gold bullion coins below. These include the US Mint’s American Gold Eagle, the Royal Canadian Mint’s Gold Maple Leaf and the South African Mint’s Gold Krugerrand. You can find the full coin bio including specs, pricing and other information via the links located earlier in the article.
Buying American Gold Eagles
The US Mint’s American Gold Eagle Coin was first thought up in 1985 when the Gold Bullion Coin Act of 1985 was passed by congress. The act stated that these new coins would have to be minted with gold mined from domestic sources. It wasn’t until a year later, in 1986, when the first American Gold Eagle Coin was struck by the United States Mint. These coins featured the past artwork of Augustus Saint-Gaudens who had designed the $20 Saint-Gaudens Gold Double Eagle Coin several decades prior.
The American Gold Eagle Coins are minted in 22k gold, or 91.67% pure gold. This was the same as other coins of the time like the Gold Krugerrand. The slightly lower purity than other modern coins like the Maple Leaf means it is less apt to scratch, ding or be scuffed. The coins have been minted each year since the original 1986 issue, and have quickly become one of the most popular gold bullion coins in the world.
The American Gold Eagle is produced by the US Mint in tenth ounce, quarter ounce, half ounce and one ounce weights. Each size features the same design and has a face value of $5, $10, $25 and $50 respectively. This means that they can legally be used to purchase goods in the United States and have a monetary value equal to that listed on the face of the coin. However, when buying and selling these coins on the market, their gold content is usually the measure of value.
Gold Eagles can be purchased rather inexpensively, usually for around $50-$100 over spot price per ounce of metal. You can find gold eagles for sale on pretty much any gold dealer’s website as well as in local markets.
Buying Canadian Gold Maple Leafs
The next coin we’ll talk about is the Canadian Gold Maple Leaf. This coin was first issued by the Royal Canadian Mint in 1979. At that time, the only other gold investment coin was the Krugerrand from South Africa. Due to the economic boycotts placed on South African imports, Krugerrand coins were hard to come by in the 1970s so the Royal Canadian Mint saw an opportunity and designed the Gold Maple Leaf Coin.
Each year since 1979 the Canadian Gold Maple Leaf has been minted by Canada and offered in different sizes. Though some years show a slightly altered design, the coins always have the same theme. This displays a maple leaf on the reverse with a portrait of Queen Elizabeth II on the obverse. The coins are among the purest available to investors and are minted in .9999 fine gold or 99.99%.
Gold Maple Leaf coins can be purchased online from most dealer websites and are available for anywhere from $25-$50 over spot price. Their low premium over spot and high purity have made them popular in the investment community.
Buying South African Gold Krugerrands
As mentioned above, the gold South African Krugerrand coin was minted starting in 1967 and was the first true “modern bullion coin” available to gold investors. These coins have been minted each year since in sizes of 1/10 oz, 1/4 oz, 1/2 oz and 1 oz however the 1 oz size is probably the most common. Like the Gold Eagle, Krugerrand coins are minted with 91.67% pure gold or 22k. This means its total weight is about 1.09 troy ounces so the coin still has a total pure gold weight of 1 troy ounce.
The South African Krugerrand gold coin commemorates Paul Kruger with his portrait on the obverse. The reverse side shows a springbok antelope, a species of antelope native to Southwestern Africa. The Krugerrand is different from other coins because it has no legal tender value assigned to it. Rather, it is worth its weight in gold.
Krugerrand coins are usually available for $30-$75 over spot price per ounce. More often than not, these coins are sold by dealers from backdate years in varying states of condition so its important to read the product description before making a purchase.
Words of Caution Before Buying Gold Coins
While the internet has become a great resource for buying gold coins, you should always be extremely weary of companies who try to up-sell you on collectible coins over the phone. If you’re a collector and know what you’re looking for, great, but if not don’t let anyone pressure you into a coin sale. This tactic has been used many times in the past by some unsavory characters who often advertise via radio, television and even cold-calling.
These types of schemes often heavily promote a few of the same things: how gold prices have went up over the past few years and coins are a sure thing, how the government confiscation gold in the 1930s and/or offering a deal that sounds too good to be true. While some of these advertising ploys are not a guarantee that a company is a scam, they should certainly raise some red flags.
Certified Gold Coins
If you are unaware, certified gold coins are those which have been examined by a professional coin grading company such as the NGC or PCGS. For the sake of this article, these are not much different from your regular uncirculated gold coin, other than the fact that their condition has been guaranteed by a third party company. Graded coins can be a good purchase in many circumstances, but usually only to those who know exactly what they are looking at. For most new gold investors, it is not the best initial choice. You should do your own research before making any coin purchase, however, and can even consult with a certified financial advisor.
Coin Dealer Up-Selling Schemes
An example of a common up-selling scheme goes something like this: you listen to the radio and hear an ad for a company selling American Gold Eagles for a low price. You call their 1-800 number and get someone on the line. They tell you the deal you heard about is available, but they have an even better deal on graded PCGS or NGC coins that are sure to go up in value but are priced higher than the coin you called about.
This is but one example of a company using high-pressure sales tactics to up-sell unknowing investors. These types of dealers should be avoided in my opinion. Always be sure to do your research and don’t let anyone else tell you what you should buy. Also remember that like all investments, gold does involve risk and there is never a guarantee that you’ll see a return on your investment. I should also say that I am in no way a financial advisor, and the aim of this article is to merely try to better educate others on the physical process of buying gold coins.