What Gold Traders Should be Careful About

The US economy has been struggling to regain its composure after the 2007-2009 housing market collapse. The banks curtailed interest rates, forcing buyers to look for safer investments. During such times investors turned towards buying gold coinsconsidering its 5,000-year history of preserving its value.

The price of gold has been rallying since the onset of 2010. Congressional hearings in the last week of September about trading gold coins involved talks about the high prices that gold traders are paying to buy the yellow metal.

Veteran rare coin investor Steven L. Contursi advises investors to do their homework and not overpay. He said, "When purchasing common gold bullion coins, such as modern American Eagles, you should not be paying more than five to ten percent above the spot price of gold, and you should be able to sell for at least the spot price or more. The current spot price is easily available from many sources on the Internet, so it’s easy to avoid overpaying with just a minute or two of investigating before you invest.

A gold trader can be an buyer or a collector. Buyers typically try to resell the coins at a higher rate and earn a profit out of their trades. Contrary to this, US gold coin collectors (also called numismatists) buy rare gold coins to increase their collection for their own satisfaction. This makes it important for everyone to distinguish oneself as a buyer or a collector while buying gold coins. This would help you a great deal in making appropriate decisions in terms of which coins you should buy at a particular time and which you should not.

Gold Traders: Points to Consider, here are some points helpful for sound gold trading:

• Steven L. Contursi also stated that some retailers even sold gold coins at around 25% higher than the spot price. It is important for buyers to conduct thorough research before making an investment. They should stay updated with the latest news, prices of gold and factors affecting the same. Investors should keep an eye on other red flags while buying gold coins, advised Contursi.
• Many times television and radio commercials promote some coins as ‘rare’. Such coins may have an interesting historical background, but if these can be acquired without any hard work, these are unlikely to be authentic rare coins. Moreover, they may not fetch a good value when they are sold.
• The price of US mint gold coins varies on the basis of quality. However, many traders are not experienced enough to judge the quality of gold coins in terms of color, strike and shine.
• The value of a gold coin can also be judged by knowing how popular it is. For instance, American Eagle coins and Krugerrands are quite popular with gold traders.

Gold traders must keep a note of the date of the minting of specific coins. This is because lower quality coins were minted at certain times. History is replete with enthusiastic gold coin collectors, many of whom were known for their discernment when it comes to choosing gold coins. Many of them have paid astounding amounts of money and have set world records and lived up to their favorite hobby with pride. In May 2010, Steven L. Contursi earned the $7.85 million by selling a silver dollar minted by the United States Mint in 1794 (believed to be the first one from the Mint by experts). The sale has set a world record due to its highest value till now.

When dealing in rare coins it is important to work with a firm that is reputable and deals only in certified coins through PCGS or NGC. These two firms guarantee quality and authenticity. Throughout history there have been instances when rare gold coins have outperformed gold bullion by a wide margin. Because there are different types of gold that will provide differences to your portfolio, it is important to get the right tool for the right job. Please contact one of our account representatives for more information.