Gold coins are an exceptionally compact store of wealth. You can easily hold $25,000 worth of coins in one hand. This extraordinary portability allows you to quickly move from place to place, or escape, carrying your wealth with you. This has been a critical factor in human history. Thousands of people fled Germany in the 20’s and 30’s with much of their wealth in their pockets.
Gold coins have a standard of identity, like a shared language, that the world understands, can identify and unconditionally accepts. The history of gold is the history of man’s quest for security. Gold, and to a lesser degree silver, is the only wealth that has stood the test of time. Gold coins can be passed from generation to generation with no government interference. This simple attribute makes coins attractive.
In 1933 President Roosevelt closed the banks, opened safety deposit boxes, removed gold and replaced it with paper money. It then became illegal to own gold at all. Not until 1974 could American citizens legally own gold again. The Chinese could not own gold until 2009. When a government feels threatened, it wants to control everything as much as it can. That includes the monetary supply. Gold coins allow the holders great control over their future.
It seems evident that the government fears individual gold ownership because it limits the ability to print money (called fait money). No financial system based on the ability of the government to simply print fait money has ever lasted.
At this point in history it is highly unlikely that the government would again prevent citizens from owning gold. There are far too many people holding gold. It would put the government in a less than tenable position, but if history is any guide, it’s best to cover your bets and gold coins are the best bet there is.
There is a vast worldwide market for gold coins. Millions and millions are sold yearly and are held by individuals as well as banks and governments.
As a rule, gold coins are priced at 2 to 5 percent above spot price**. Some dealers charge a flat fee for each coin. Spot price changes to reflect market supply and demand and can change in seconds. Before you buy, check with your dealer or check the spot price on a number of websites that provide this information. kitco.com is such a site.
A local coin shop in your town or hundreds of sites online can offer you every coin you can imagine. It is best not to trust an unknown seller like on eBay, so shop around. You need to test your purchase to be sure you are getting a true gold coin. There is only one system on the market that lets you verify a coin yourself: The Gold Coin Balance™.
Yes, there are a number of ways, each with its own positive aspect, but none allow the flexibility that coins offer. You can buy gold bars locally or online. Although bars demand a smaller premium, they are easier to fake and often require a more complex analysis if you choose to sell them.
You can also buy gold mining stocks, ETF’s (exchange traded funds that represent mining stocks) and GLD. (With GLD you own the gold you buy, but they keep it for you). In all these cases, you are trusting your investment to the management team of the company, or to a holding company. During times of turmoil, timely access to the gold you “own” can be tricky at best or nonviable at worst. The most trustworthy management system for your coins is you!
There are three factors to determine whether a bullion coin is really gold or a counterfeit: diameter, thickness and weight. Gold Bullion coins are made under conditions that no other metal is and has the properties of density (weight) within the specific parameters. The important point to remember is: if a specific coin has a specific size and a specific weight, it can only be gold***
There are a large number of gold coins on the market. If you decide to make this investment, you will do best to stick with the major ones that are recognized everywhere. There are 7 coins that have a solid position in the world market: The American Eagle, The Philharmonic, The Krugerrand, The Canadian Maple, The Panda and The Buffalo. All of these coins are issued in 1oz denominations and many come in 1oz, ½ oz. ¼ oz and 1/10th oz. As a rule, the best investment is the 1oz coin.
*Gold bullion refers to a bulk quantity of gold. Gold bullion is traded in commodity markets in the form of ingots, bars, or coins. Unlike money, gold bullion is valued by a not valued by any government but by supply demand factors. A gold bullionis nearly pure gold. It has little value as a collectior coin.Purchasing gold bullion offers an investor a way to invest directly in gold. Gold bullion is a tangible investment in which value can be stored. –Source: Investor Glossary—www.dogsofthedow.com
**Spot price of gold: The spot price or spot rate of a commodity, a security or a currency is the price that is quoted for immediate (spot) settlement (payment and delivery). Spot settlement is normally one or two business days from trade date. -Source:Wikipedia
***Please note: we no longer guarantee Eagles or Kruggerrands. See our recent blog post about the fake Tungsten Eagle we discovered.