Most Affordable Gold Coins | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
By Luke Burgess | Monday, January 4, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The tides of investor interest have begun to flow back into the gold market.
According to the U.S. Mint, sales of American Gold Eagles increased 53% last year to over 800,000 ounces.
Meanwhile, the U.S. Mint also posted 2015 sales of American Gold Buffalo bullion coins of over 220,000 ounces — a 24% increase compared to the previous year.
Should you also decide to add physical gold bullion coins to your portfolio, you should be aware of the range in premiums dealers are charging for different coins.
Gold Bullion Coin Premiums
All bullion coins generally carry a premium — an additional value over spot prices. These premiums are generally the end result of a series of price markups to cover costs and realize profits that runs through the distribution chain from mint to retail dealer.
The premium for gold bullion coins has been lower than for silver coins over the past several years, especially right now. The premium for silver bullion coins are among the highest they've been in decades. But when you buy gold bullion coins, you generally get a lot more bullion for your money.
Nevertheless, the range in premiums for different gold bullion coins is significant — ranging from about 5% to 15% (give or take). Here's what you might expect to pay in a premium for different world gold bullion coins:
The amount a dealer charges for bullion premiums usually depends on the purchase volume and method of payment (dealers generally charge a lower premium with a larger purchase and payment with cash, check, or bank wire). Paying for bullion with a credit card or PayPal is generally more expensive.
And, of course, every dealer is going to charge a different range of premiums based on its needs. A brick-and-mortar bullion and coin shop is going to charge a higher premium than a simple online resale operation because the B&M has much higher overhead. The premiums above are simply rounded averages of a few different dealer quotes.
But from what I can tell right now, the most affordable gold bullion coins to look into are the Maple Leaf, Philharmonic, and Aussie Kangaroo.
Generally speaking, investors should not have a hard time finding any of these. However, the Canadian Maple Leaf is perhaps the most well known among investors and dealers.
Canadian Gold Maple Leaf
The Canadian Gold Maple Leaf coin is among the most widely recognized gold bullion coins in the world. As the official bullion series of Canada, complete with legal tender status, the Maple Leaf is sought after by investors and collectors alike.
The Royal Canadian Mint began the series in 1979 with the introduction of the first Gold Maple Leaf (GML). At the time, the only other government-minted bullion coin was the South African Krugerrand.
However, the Krugerrand was scarce due to the economic boycott of apartheid-era South Africa. So for a lot of investors, it was the Canadian Maple Leaf or nothing. The U.S. Mint began production of the American Gold Eagle bullion coin in 1986.
Gold Maple Leafs minted between 1979 and 1982 have a gold content of .999. The RCM increased the gold purity in the Maple Leaf the following year, and the coin continues to have a .9999 purity to this day.
This puts the Gold Maple Leaf among the purest of all gold bullion coins. The gold purity of an American Eagle, for instance, is only .9167. The same is true for many other gold bullion coins. And there's a good reason: Pure gold is incredible soft.
Bullion producers like the U.S. Mint add alloys like silver and copper to coins like the Gold Eagle to strengthen the metal. One major problem with pure .999 fine (or higher) gold coins is handling. The softness of pure 24-karat gold means coins can easily become damaged.
Some special-edition Gold Maple Leafs are even minted with a purity of .99999, called the "five nine" bullion coins.
But honestly, I'd call this a gimmick. That extra “9” (even the last two) isn't going to make that much of a difference when you go to sell your coins. The RCM's addition of those extra nines is practically on par with the evolution of the multi-blade cartridge razor, with brands like Gillette and Schick continuously adding one more blade to up the competition.
And that's one thing I really don't like about the Canadian Maple Leaf coins: There are a lot of gimmicks.
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Monday, January 4, 2016
Most Affordable Gold Coins
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