General gold coin collecting questions

I've recently decided to collect some gold coins. I have some general questions based on some of the things I've learned on the web and going to a couple of coin shops. I know some of my questions will be a little strange in nature, but please bear with me on my current paranoid line of thought brought on by reading some survivalist talk on other gold coin forums.

1: Is it a bad time to buy gold? Of course, I'm not looking at gold at the top of the market. Maybe this is the wrong group to ask since you'll be a little biased, but I'd like some feedback on that question.

2: Does it matter what gold coins I buy? I've seen a wide range in above melt value premiums on coins. I'm looking at buying gold more from a investment/dollar hedge point of view. If this is the case, does it really matter what coins I purchase? A couple key arguments I've encountered,
+ Better to buy US for IRA investing. They also accept 24k purity coins from English speaking countries.
+ English language coins since they are recognized and can be read.
People are familiar with oz. vs. grams ect...
+ U.S. coins will general have better values in the long run

3: Should I buy fractional gold vs 1 oz. bullion? The fractional coins have terrible markups. However, they also give you the ability to easily divide your gold, sell less at a time if you want. Also from a survivalist point of view, if Armageddon gets here and you need to trade gold for goods, the fractional coins make better sense. What is your guys take on this keeping #2 in mind. I considered silver, but that has even higher markups than fractional gold!

4: Is it safe to buy circulated coins? My main concern is gold loss. I don't know how much gold loss occurs from general circulation use. Is this something to be concerned about? Most coins I've seen in shops are in some sort of holder, either fancy plastic or cardboard with plastic window.

5: How do you make sure you you're not getting ripped off without offending the dealer? I suppose weighing a coin helps you know if it's whole or not. However, is this improper etiquette?

Any input would be much appreciated.

Regards,

Panamagold

 

Log in or Sign up to hide this ad.

I will quickly chime in and tell you now is NOT the time to buy gold in my opinion. Wait until it hits the low 900's.

 

Any thoughts on my other questions? I'd still like to get input so that when the time is right, I'll know what to look for.

 

Make sure to buy any gold purchase or larger silver purchase from a reputed dealer (not from a flea market or some shady place), or from a high-volume online site (apmex.com is a good site with fair prices)

In my opinion, getting gold as close to spot as possible is important. Modern bullion coins generally sell for a premium which is why I and some other stay away from them. US circulating gold sells for an even higher premium and you're then dealing with more of a numismatic type purchase instead of gold investment. In my experience getting circulation gold is your best way to get gold! You can get them in a variety of sizes meaning you can divide your gold however you like. I have 5 pieces in total from Mexico, Britain, and the Netherlands which add up to 0.8oz of gold. You can get circulating coins for close to spot, and I've gotten all but one at spot or just below. As long as the gold coins aren't heavily worn, you have nothing to worry about in regards to gold loss. There is also lot's of information available on the web that describes the gold content of coins from all over the world. They also have beautiful designs which is great!

Oops, and another option is gold bars! But, it's hard to find smaller sizes at reasonable prices so I'd recommend circulation gold once again.

Hope this helps

 

Thanks for the input. I'm curious, how did you manage to get gold coins at or below spot from a "reputable" dealer? I haven't be able to find such deals. Mike

 

I got a half-sovereign and a 10 peso mexican gold coin just below spot because of differences in the exchange rate between american to canadians dollars (I'm Canadian) so I got like 1% off My dealer is very fair and sells common bullion at spot. I've gotten ounces of franklin halves at spot from him too.

I also got a sovereign off of eBay (I made sure the seller offered a full refund if not satisfied) 2.7% below spot at the time. This is because the seller only shipped to Canada so there was much less interest than if he offered it to the rest of the world. This coin is definitely worth 10-20% above spot (MS-64,65 condition)

I also got a 10 guilden gold coin for a tad above spot from another dealer near me.

And i splurged on a 2.5peso gold coin and paid a little extra because of it's smaller size and pretty design

The key thing is to shop around and wait for a good deal. Don't get things on impulse because it's the only thing around.

But, now is not the time to buy. Wait for gold to drop.

 

...

 

Wow, how common are gold dealers that sell at spot? I haven't been able to find such a thing. How do these guys make money?

That bring up another question I had. How easy/difficult is to liquidate your gold coins in the case you need cash? I'd expect to get spot for the gold in the coins. Is this reasonable or will a gold dealer expect a better price?

PG

 

If things went really south, it would be better to have 'goods' to trade for goods. Stuff like power generators, fuel, food and water, guns and ammo. These items will be worth A LOT. Gold might not be desirable and there are no trading standards for it and most people don't have any anyway.

 

Panama, read up on some of the Bullion Investing threads here. You'll find lots of answers, advice and opinions there too.

 

it sounds like you are interested in bullion investing and not coin collecting, which means buying paper gold is a much better option for you.

The spread on gold bullion coins is usually between 4 and 8% so if you pay a premium of more than 8% over spot for a coin from a reputable source you will likely be able to sell it for melt or a little more.

Currently we buy US Eagles for more than spot (Last I checked, which was a couple weeks back). Everything else would be purchased back of spot depending on what we can get for it. The less pure a coin is and the less easily it trades the wider our spread on the coin.

 

Thanks for the feedback, I have a few follow on questions related to your response, I'd appreciate your input.

Regarding the coins, why is it that "purity matters"? If a coin like a GAE is 22k vs a Maple which is 24k contain the same amount of gold, why does purity draw a premium? I'd think in some way less pure would be better if the coin was circulated, since less gold would be lost to daily use.

When you say wider spread do you mean variability in price power/demand for the coin? That brings me to another question, I'm surprised that there are some pretty old coins available, such as gold francs from the 1800's, that have a small "collectable" premium tied to them, I was wondering why this was the case. Is there future potential in these coins or is this just a gold oddity?

I do plan on buying some paper, ETF, but would also like some of the physical stuff. Is there an ETF you prefer? I'm looking at SGOL ATM.
Thanks again for the education.

Regards,

 

I wouldn't advise buying paper gold. Most were scams and never paid out. If you can't have product in hand, I'd stay away. If this is for investment only, why buy coins? You can pick up 1oz bars at about any decent sized coin shop for less than 1% over spot, especially now that gold isn't selling too well. Of course, that just brings up the disadvantages to investing in bullion...when the prices are high, like now, people assume they can sell at a huge profit, when in reality, nobody will buy high, so they're stuck with the goods until the prices fall. Most refiners will not buy from individuals, so if you have to sell, it's at much lower premiums to dealers. Don't think you're going to get rich off gold. If this were the case, many of us here would be retired right now.
Guy~

 

I'd be lying if I didn't say I'd like to get rich off of gold. Truth be told, I'm more interested in hedging against the dollar in case of inflation. Given the current state of the market, govt. printing money at will, I need a place to try and protect my money.

Mike

 

The time to buy gold was back in 2005. For me this is still hold time. I buy it when I can get it close to melt like this one the other day:



Really pretty coins, unusual to find in the USA these days. The newer ones with the updated design are much more common.

 

Since gold is priced in dollars, as the dollar weakens, it takes more of them to buy the gold, thus the gold price goes up...same with oil and stocks. I think gold is a great hedge against the dollar weakening at this time. Now, if only I had some...lol.

 

Well, I didn't have the foresight to buy back in that time frame. Question is, can I still safely buy gold without taking a beating. I don't know if this is 1980 all over again.

Mike

 

I don't think it really matters when you buy it. If you buy today at $1000/oz. and the dollar becomes worth 50 cents, the price of gold should double. If you have gold, you can replace your dollars and be even. Those who are holding cash just lost 50% of their wealth. That's the hedge to me.

 

I would say it is safe, but nobody can guarantee it. Inflation, perhaps fairly significant inflation, is still in front of us and isn't being discounted at all by the market [witness the ultra low interest rates]. 1980 was a very special case. At the beginning of December, 1979 gold was about $435 and before January, 1980 was over it hit $800 briefly. In this particular gold rise we've seen slow and steady increases. If you see gold double in a month, that will probably mark the end of the bull market. If you wait for $900 gold, you might get it and you might never get it. How high do you think it will go? If you think it will go to $1,100 you shouldn't be buying it anyway. If you think it will go to $3,000, then it won't matter much whether you pay $900 or $1000. Gold is a very volitile asset class. If you are afraid of "taking a beating" in the short run, and if you buy at $1,000 and can't sleep at night if it goes to $800, then you shouldn't buy it in the first place.