Gold coins for sure! The value increases most of the time every year, and most of the times more than spot does. But be cautious of counterfeits! I would only buy slabbed coins or from a very reputable dealer! Just a question but why not silver? If you wanted to do silver i'd go Morgan dollars! But the answer to your question is also followed by another question how much is your budget? (and dont answer if you dont want to) But the more you have to play with the more rare the coin i'd buy.
I prefer coins to bullion. For the most part the resale will be higher and it is easier to liquidate coins than bars. The only problem I have noticed lately is that it seems like you could get screwed on platinum. Most dealers mark up platinum coins around $100 but will only buy at spot. Gold coins have a tighter spread and some will pay over spot. I am speaking from experience. Platinum has gone up this year but I still can't recover my investment.
Stay away from bullion coins! You are spot on to the question we all discuss these days. A few weeks ago I did an interview with a reputable dealer who's been in the business for 40 years. He made a difference between bullion and (what he called it) "real coins"(i.e. collectors items). His advice was clear: If you buy a bullion coin and the spotprice drops with 50% your coin also drops 50%. If you have a collectable coin with historic or collective interest you may limit your loss to about 20%(As an example). That makes a difference!
But the bottom line is that you lose both ways. It's just that one way is less negative than the other. And don't forget that bullion costs a LOT less than coins. That 20% drop in a collectable coin COULD equal or exceed the 50% drop in bullion. I still believe you use bullion for investments, and coins for the pleasure of collecting. And since I'm not savvy enough about investing, I'll stick to collecting.
A fair question. And so far the answers are about what you would expect them to be. But I always have to wonder what people are basing their answers on. Here's what I mean. First let's take a look at what gold bullion has done vs gold coins for the past 10 years. Gold bullion - Generic gold coins - Mint State gold coins - Now I'd be willing to bet that some of you are kinda surprised by those graphs. And I'll admit the past 10 years does present a bit of a skewed picture because gold started taking off 10 years ago. But then so did coins. So let's take a look at what has happened in the past 40 years. Gold bullion - Generic gold coins - Mint State gold coins - I'll let you draw your own conclusions
I'd love to, but those last two graphs make it nearly impossible to tell what the starting figures are. Without that, I can't tell a thing. Do they start from $1000? A little help, please? (BTW, the first three graphs don't start at 0, so you have to be careful. Giving them all a baseline of 0 would make the graphs for coins look even flatter.)
Dealers buy lesser-known bullion coins at a discount I'm no expert in gold investments but here some basic data: Not all gold bullion coins are traded equally. Dealers pay more for US Eagles, Canadian Maples, and So. African K-Rands than they do for some other "lesser known" world bullion coins. I sold some beautiful Canadian Philharmonic gold & it was like pulling teeth to get money for them. I had no difficulty finding many eager buyers for my Eagles, Maples & K-Rands.
I see one possibility for this. US Eagles, Canadian Maples, and So. African K-Rands are often collected by date making them a cross between bullion and a collectable. And it's the "collectable" aspect that makes them easier to deal in. Also years ago I read an article that indicated that IF you are going to go for just bullion then buy the .999 Fine stuff. This has to do with ease of assaying and reprocessing (melting). Bars generally come in .999 Fine. Bullion "coins" come in varying fineness. The only .999 Fine coins that I'm aware of are the Canadian Maple Leaf and the two Austrian bullion coins. (Info from Coin World as best I can remember it.)
Do you understand what each of those graphs represents ? The one on bullion should be obvious - it's the spot price of gold, in dollars, at various dates over the years. The other 2 graphs represent a basket or group of gold coins and what each of those baskets cost back in 1970. Your eyes are as good as mine. Of course they don't start at 0, they aren't supposed to start at 0. They start at what the value of the basket of coins was 10 years ago. And apparently you miss the point of the graphs. What the graphs show you is the increase of each item for a specific period of time. And since all 3 graphs in each of the 2 groups start at exactly the same time and stop at the same time you can easily see which item - bullion, generic gold coins, or MS gold coins - was the better performer for that period of time. I would have thought that should be obvious.
i agree with GDJ In my 40+ years of collecting coins ... whenever I have bought bullions coins ... i always made a lot of money whenever I have bought rare coins ... i rarely if ever break even (usually I lose perhaps 10 to 20%) ... however I know that completely depends on when you buy and when you sell. with bullion. you just buy and hold for a few years and you make $$$ at least that's been my experience another good thing about bullion is there is no grading risk ... even TPG's screw up ... and (i think) less of a chance of coming across a counterfeit ... although i know today some bullion coins are counterfeited.
I'm sorry for the tone of my initial response; rereading it, it sounds kind of hostile, and I didn't mean it that way. I'm talking about the Y-axis of the charts. They're "normalized" so that the lowest value is close to the bottom, and the highest is close to the top. The problem is that this exaggerates the degree of change in the third chart (and, to a lesser extent, the second chart). Glancing at the first three charts, they appear to show roughly comparable change. You have to read the Y-axis labels to understand that the first represents a more-than-fourfold increase, the second a not-quite-threefold increase, and the third a mere 1.5x. Normalizing them together, so that each Y-axis starts at 0 and each curve starts at the same height on the chart, would make the relative performance obvious at a glance -- the first one would still soar, while the third would show a fairly weak rise. For the second set of charts, each curve starts out very close to 0 -- on the last chart, it looks like it starts at zero, which of course would make no sense. I can sort of see, and sort of guess, that the bullion chart starts at $35/oz. It looks like the generic gold chart starts at $1000, and I can guess that the MS chart does the same. If that's true, then the first chart represents a 40-fold increase, the second a 30-fold increase, and the third a 110-fold increase! Again, though, the graphs are scaled in a way that tends to conceal, rather than emphasize, these differences. Sorry -- I don't mean to pick nits, but visual perception is a big interest of mine, and sometimes I can't help myself.
I see your point ... However I think the big upshot to the charts is ... look how ONLY bullion coins would have captured the explosive move starting in 2001. The rare gold coin and rare silver coin charts show much more muted gains this decade ... with the current prices nowhere near the peak prices realized in the late 1980s. One possible strategy might be to find coins that sell for only a slight premium over bullion that have low mintages and might someday get a "rarity" kicker. For example some of the First Spouse Gold coins recently minted sell for a small premium over spot ... but many have mintages of less than 10,000. If you can pick up a few of these near spot, you have little risk and some good potential upside not tied to the price of the underlying bullion. And if they never get a rarity kicker ... you still have the underlying bullion as a potential money maker in the years ahead. Just a thought.
It is worth noting that the charts I used for bullion do not refer to bullion coins. They refer to plain old gold bullion - as in bars.
I did not realize the difference in percentage drops that could take place. Many of the collectible coins I want sell at many times greater than melt. Sometimes I feel like I have been a reckless wife, with my affection for old and every expensive tokens. This post was nice to read. It lightens up some of the guilt and fear about the concern that I should have focused on bullion more.
One more note, with spot prices rising so quickly, I have come across some deals on pre-1933 gold coins. They are still over spot by a good size premium, but not as high of a premium as at other times. Personally, I am partial to pre-1933 au and better if I can get them close to spot. I do not mind paying a worthwhile premium for MS62.
WingedLiberty; Do you think that the First Spouse coins would run into a problem that kanga mentioned? Lesser known gold coins not trading as well as the US Eagles? I almost made a purchase today from Ampex for gold. This was the exact topic (coins vs bullion) that held me back.
Everything in life is a gamble! The good thing about the First Spouse coins is it's still possible to buy them close to spot because there is little collector interest right now (don't chase these for larger premiums though). Buying close to spot reduces your risk. In my opinion, if you hold them for 10+ years, the extremely low mintages (around 10,000 or less coins on some of the types) could give you a potential rarity kicker. The operative word here is "could". No guarantees on this ... they may always remain a bullion coin, as the series is currently being pretty much ignored by collectors. I personally like the 4 first spouse coins in the "Liberty" subset (esp the Jackson, Van Buren, and Buchanan), those coins use a design on the obverse that was used in American coinage -- which i think could increase demand down the road since coin collectors will recognize the obverse design. Some of the other (non liberty) spouses, have uncirculated mintages around 3,000 which is crazy low in the modern age. (Just a note that the First Spouse Gold coins are all 1/2 ounce). In any case, I do agree that the American Gold Eagles do trade better (very liquid) because they are so popular, however they will never be rare. I think the series mintage on AGE's is over 15 million right now. Another coin to consider is the American Buffalo Gold coin, they also trade fairly close to spot, but the series mintage is less than 1 million so far. If you feel hesitant, just go with the Gold Eagles (a pure bullion coin play). Sometimes the simple play is the best play, especially if you are just starting out. In terms of pure visual appeal, it's hard to beat the American Gold Eagle.
