How do Gold Traders Evaluate the Value of Rare Gold Coins?

Gold futures witnessed a sharp fall on November 17th of 2011, hitting the lowest level in two weeks. The prevailing debt crisis in Europe seems to have prompted the liquidation of profitable positions by gold traders for covering losses incurred in other assets. In the Comex Division of the NY Mercantile Exchange, futures for December delivery traded at $1,743.55 per troy ounce.

Concerns over the debt crisis in the Eurozone are exhibiting no signs of abating in the near term. On the contrary, the crisis has been aggravated by the Treasury of Spain selling off ten year bonds worth €3.56 billion, with a yield of 6.97%, as compared to a yield of 5.43% last month for debts maturing in April 2021. Meanwhile, France has followed suit. It has sold 2016 notes worth €33.3 billion for a yield of 2.82% as compared to 2.31% at an earlier auction in the recent past.

Following these auctions, the European Central Bank has again started purchasing debt from the Spanish Government with the aim of easing the mounting pressure over borrowing costs. Although this should have proved to be good news for the precious yellow metal, gold traders and investors preferred selling their profit-yielding gold holdings in order to raise cash to cover other accrued losses.

According to the figures furnished by the World Gold Council, the demand for gold has risen by almost 6% in the last three months of 2011, as compared to the figures recorded last year. The Eurozone debt crisis has positioned gold as a safer asset. Many are investing in gold coins of high value. For those new to gold investing and trading, knowing how to assess the value of gold coins would definitely help.

Coin Quality: Some Useful Pointers Used by Gold Traders

Rare gold coins would be typically assessed on the following parameters:

The Rarity Factor: The value of the coin you buy would be determined by how rare the coin is. The rarity would depend on the number of coins that had originally been minted and the number of them that have survived. The more limited the availability, the higher would be the value. Most often, rare coins would be bought at auctions or coin shows or from dealers.

The Grade Factor: The grade of the coin would be representative of the condition it is in. Considering the fact that these coins would be antique items, some of them might not have been preserved well. The Sheldon Scale system is used for grading purposes and grades are awarded by recognized authorities like the NGC (Numismatic Guarantee Corporation) and the PCGS (Professional Coin Grading Service). Higher grade coins would be priced higher. On the other hand, in case the coin has undergone damage through the years and has visible scratches and marks, the value of the coin would deteriorate accordingly.

The Quality Factor: You would probably require expert intervention for assessing quality. A lot of factors, including coloration, mint state, luster and strike, would have to be taken into consideration. High quality coins are naturally valued at a higher price.

The Popularity Factor: If you wish to acquire coins that are more popular with gold traders, investors or collectors, you should expect to pay a higher price for it. For instance, buying the popular St Gauden’s $20 coin would cost you more than its less popular counterpart, the half dimes.

According to a news report, US Money Reserve Inc (a commemorative coin marketer based in Austin) has agreed to pay $5 million to customers for deceptive trade practices. This highlights the importance of identifying a reputed and experiences gold trading company for all your gold investment needs.