The Different Types of Gold Coins

The Washington Post reports an unusual situation as gold prices are up even as some investors put their money back into the stock market. These prices usually fall when the stock market rises, however the 9th of August saw December Gold futures up by $29.80 to close at $1,743 an ounce. The Associated Press report also goes on to say, “Investors aren’t willing to let go of their gold reserves, which are seen as a secure investment in times of economic turbulence.”

More often than not, economic experts have pegged gold coins as a safe haven. However, one must be aware of their purposes and available options before acquiring any of the different types of gold coins.

Purposes of Different Types of Gold Coins

For a novice, the gold coin market can be overwhelming with the kind of choice it provides. Before you put your savings into gold, you must be clear about your goals and objectives. There are different coins for different purposes.

Bullion Coins: these coins are based purely on their gold content. Some popular bullion coins are the Canadian Maple Leaf, the American Eagles, the Chinese Gold Pandas and the South African Kruggerrand. These are all minted by their respective governments and which is why they have legal tender. These bullion coins also have standardized weights and gold content. They are valued according to their weight and purity and can be acquired at the least mark up value over the spot price of gold. The only mark-up costs are those of minting and marketing the coins plus a dealer premium.

Numismatic Coins: There is no limitation to the values of these coins. Several of them have been known to be auctioned off for millions of dollars based on rarity, circulation, quality, grading and historical significance (as is the case with commemorative coins). Collectors are usually willing to purchase these gold coins notwithstanding weight, content and purity, because they collect series of such coins. These coin collections or sets are invaluable to the collector as what is priced by him/her is the design, the designer and the history of the coins. The Numismatic Guaranty Corporation and Professional Coin Grading Service grade and authenticates such coins.

Proof Coins: These coins are minted carefully with much emphasis on sharpness of design and detail. They are also uncirculated and therefore do not suffer damage from any kind of tampering or mishandling. The die is specially treated and polished and the coins are struck twice to ingrain the extra layer of detail to the metal. This method is called the ‘proof’ method which is where the coins get their names from. Regular coins may even have imperfections during the minting process, but special care is taken with proof coins as they are minted for the purposes of exhibition, presentation, souvenir or numismatics. Because of such fineness of detail the coins take extra time, labor and production costs to mint and so government mints usually sell them at higher prices. For sale, their prices are determined by their condition, spot gold prices and rarity because of limited mintage as well.

Counterfeit Gold Coins

Investors and collectors alike have been fooled many a times by counterfeit gold coins. The most common counterfeiting practice is to fuse some gold around a tungsten centre because the metal is undetectable when mixed with gold. Millions of dollars have been lost to such deception because often traders don’t look for certification and take risks such as not going through a reputalbe dealer. Numismatic coins too can be copied to the finest detail. One must be assured of quality and genuineness of the coins lest one buys in counterfeits (always buy NGC or PCGS certified). Some obvious markers are discoloration and bumps along the surface, but the professional investors are well versed with details and certifications that tell of real gold coins.