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Value of Gold Bullion Coins
By Misha Kerogazov
Bullion coins by definition are the coins minted for investments and not for circulation. They are valued for their precious metal content rather than for their numismatic value.
The value of gold bullion coins in its essence is the gold value of a coin plus the premium. The gold value varies with the time of course but it is what it is on the gold market, which is around $30 per gram at the present. The premium on the other hand is a very subtle subject and can be affected by many factors. And we're going to have a look at some of them.
One of the most usual factors is the coin grade. This one can be split into the coin finish and the coin grade itself. The finish for gold bullion coins can be either brilliant uncirculated or proof. Proof coins usually have higher premium than their brilliant uncirculated counterparts. The grade of a coin is basically its condition. And of course, better condition means higher premium. The grade can vary from PO-1 (pure) to MS-70 (perfect) for normal coins and from PF-01 to PF-70 for proof coins.
Another factor that can affect the value of gold bullion coins is the coin mintage, or the number of coins issued in any particular year or in total. This one is not as crucial for bullion coins as for normal ones because usually bullion coins are minted in great number, but for some coins and for some years it can be significant. It is not an issue of course for the coins that either don't have a year (which is quite rare) or have some set year in the past (like Mexican Pesos or Austrian Ducats).
And the last factor that can affect the value of gold bullion coins is actually the size of a coin. It may sound odd, but smaller coins usually have higher premium.
The first modern gold bullion coin was the South African Krugerrand minted in 1967 and weighed exactly 1 troy ounce (31.10 g). The value of the coin was basically its gold value plus very small premium (3-5%). As the coin proved to be very popular, other countries started minting their bullion coins and at the later years started producing coins as fractions of the troy ounce - half ounce, quarter, tenth, and finally twentieth, which is just about 1.5 g. The premium of the latter one can be up to 50% of the gold value. So, if you're planning on investing into gold bullion coins, consider buying bigger ones.
About The Author
I hope that you feel now much more comfortable about the value of gold bullion coins and if you feel adventurous, and want to have a look at some of the gold bullion coins and may be even make a few bids, click here.
Gold & Silver Coin Bullion Info
There are two types of coins, those bought for their rarity or numismatic value and those bought for their precious metal bullion value. I recommend buying a one troy ounce bullion gold coin because they are much more affordable than numismatics and also for the same price you will get much more gold metal content which is the whole point of buying the coin (gold attracts wealth). Now that we have decided to buy a one troy once bullion coin, there are many selections. There are 22 karat coins and also 24 karat coins. Due to their durability, I recommend buying a 22 karat coin because they are much more resistant to nicks and scratches. The two best 22 karat coins to invest in are South African Krugerrands and US American Eagles. If you decide to go the 24 karat route, US Buffalos and Canadian Maple Leafs are the best choices. All four of these coins are very popular and readily exchangeable at coin dealers all around the world.
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Bullish investors may choose to leverage their position by borrowing money against their existing gold assets and then purchasing more gold on account with the loaned funds. In order to keep the cost of debt to a minimum, these individuals would normally seek a loan in the currency with the lowest borrowing rate, which, as of April 2006, was the Japanese yen. This technique is referred to as a "yen-gold carry trade". Leverage may increase investment gains but increases risk, as, if the gold price decreases, the investor may be subject to a margin call. Leverage is also an integral part of buying gold derivatives and unhedged gold mining company shares.
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One of the reasons there is such a disparity between what the average consumer expects, and what the coin dealer actually delivers when it comes to buying coins from the public is that coin dealers see vast amounts of common "junk." By "junk" I mean common date wheat pennies, circulated Buffalo Nickels and Mercury Dimes, worn Washington Quarters and circulated Franklin and Kennedy Halves. Coin dealers are offered so much of this type of material that many of them get tired of seeing it. They give such material the cursory once-over and offer low-ball prices for it based on long experience. Usually people have already pulled out the more valuable coins, leaving the "junk," (or at least the the dealer must assume so.)
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