Types of Gold Coins according to Investment Purpose

In an article entitled ‘Inflation, Deflation, Stagnation and the Gold Price’, investment expert Julian Philips reported, “Gold is both an international asset and international cash. It’s the combination of these qualities (and the liquid nature of gold, in the most difficult of situations) that set it apart from paper money and other assets. It’s these qualities that will force the monetary system to bring gold back into the global, monetary system in one way or another.” Investors have always included gold in their portfolios as a safe haven investment. There are various ways of acquiring gold, but most experts agree that a secure long-term strategy is to invest in physical gold. For this, there are gold bars and different types of gold coins to choose from.

Type of Gold Coins

It is of utmost importance to first be clear about your own intent for purchasing gold coins. Depending on your needs and requirements, there are several different types of gold coins that can be used for asset protection or growth.

Bullion gold coins: Bullion gold coins are bought solely for asset protection purposes. They are valued, based on their weight and gold content. Bullion gold coins are minted by the governments of various countries. These are legal tender, certified as authentic, legitimate and have standard weights. They can be bought for the lowest percentage over the spot gold price and they always carry a mark up. Since they are government minted, they are highly liquid and do not suffer from any subjectivity or conflicting opinions about their value, which can sometimes affect other gold coins. The American Eagle, South African Krugerrand, the British Sovereign, Chinese Gold Pandas and the Australian Gold Nugget are some of the more popular and famous bullion gold coins today.

Proof coins: Proof coins are minted exclusively for such purposes as serving as collectibles, souvenir, for exhibition or numismatics. A proof coin differs from other coins by its hallmark sharpness of design and attention to detail. In addition, it is also uncirculated. Proof coins are minted by the “proof” method. They are made with die that is specially treated and polished for proofing. They are further struck twice to make the details stand out and come out finer. Since producing these coins requires extra time, effort and labor, these coins are generally sold at a higher price by the government mints. They are typically minted in limited quantity and their price is determined by several factors such as their condition, rarity and the spot gold prices.

Numismatic coins: Numismatic coins are more for people who are interested in history and historical artifacts, and want to buy coins for long-term growth potential purposes. Their prices are flexible and depend on factors like relative rarity, grading, historical importance, quality, condition, etc. Numismatic coins are graded and authenticated by third party graders like the PCGS (Professional Coin Grading Services) or the NGC (Numismatic Gaurantee Corporation).

Gold coins and the gold coins business is subject to suffering from counterfeiting that can potentially lead to losses of millions of dollars. It is a hazard that individuals need to beware of at all times during transactions. Adulterants such as tungsten and other metals are mixed with gold. These impurities are undetectable and can easily escape the naked eye and the unassuming investor. Casual attitude and improper practices, such as buying without looking for required certifications or buying online, can lead to customers getting deceived by counterfeiting. It is a good practice to consult an expert at ITM Trading and seek their advice before buying gold coins.