What One Needs to Know Before Investing in Gold And Silver Coins

If you wish to invest in gold coins, one of the first things you should know is that their value isn’t always based on their gold content, and that they have a premium attached. This means that the price of a gold coin can fluctuate even if the gold market has remained stable. To calculate the true worth of a gold coin, simply work out the price of that premium and then add it to the value of the gold content.

How is this Premium Calculated on Gold Coins?

Many criteria are used to calculate this premium, as discussed below:

  • Rarity. It’s all about supply and demand. If a coin is very popular and hard to find, it will fetch quite a high premium. If, on the other hand, the coin is not immensely popular, was minted in great numbers and is therefore widely available, then the premium will be very low or even nonexistent.
  • State of Conservation. If a coin is in pristine condition, the premium will be at its highest. However, if the coin has been in circulation and is scratched or tarnished in some way, the premium will be reduced. If you would like to clean your coin, ask a specialist to do it because you might damage it if you try yourself.
  • Etching. If a coin has fine and detailed etchings, showing an immense amount of detail, there is a good chance it could fetch a high premium.
  • Country of Origin. Many countries mint their own gold coins and those coins are popular in those countries. This is why you’ll find it easier to sell a Royal Britannia in Britain, and a Napoleon in France. However, some coins, such as those minted by the Perth Mint and the Royal Canadian Mint (the Maple Leaf series in particular), are valued highly wherever you go.

The premium is set at a percentage of the coin’s price, and the calculation is: (coin’s price – its value in gold / its value in gold)* 100 = premium percentage.

Silvergoldinvestment.net’s Opinion on Gold Coins

If you can afford it, our advice is to buy small 100g ingots instead of gold coins. Unless, of course, you are investing in less than 3 ounces, in which case coins might be your best bet.

In case of a major crisis it might be useful to own gold coins, but silver coins would be preferable in that instance. Another problem with gold coins is that the premium doesn’t necessarily follow the gold price, as explained above. This basically means that a coin with a big premium could increase in value due to a rise in the gold market, whilst decreasing in value due to a fall in the premium.