Gold coins are a popular way to hedge against inflation.
Physical gold and precious metals are alternative investments that do not require the same time, research, and energy as ETFs and stocks often do. Read on to get our opinion on the best gold coin to buy for your portfolio and where to find the purest gold coins.
How are Gold Coins Valued?
Gold coins are valued based on four primary factors: rarity, grade, quality, and popularity. If the coin is in perfect condition and is part of a limited quantity collection, by default, it is going to be highly valued. Conversely, coins in bad condition with low demand are valued at less.
There are four popular types of gold coins:
1. Certified Coins: Certified coins have their condition verified by an official coin-grading organization. This organization studies the coins and grades them between 1 to 70 on the Sheldon Coin Grading Scale, with 70 being the best grade. The coin comes in a protective slab with the grade and serial number.
2. Bullion Coins: Bullion coins are made from refined precious metals such as gold, silver, platinum, and palladium. Bullion coins are used for investments because of their perceived value as a hedge against inflation. Their value is based on the weight in ounces.
3. Proof Coins: Proof coins are valued based on the manufacturing process. They come in an elegant, frosted finish and are kept in high-quality packages.
4. Uncirculated Coins: Uncirculated coins refer to coins that are released to the public but are not in general circulation. These coins are removed from the production process and are only available through a mint or local coin dealer. Uncirculated coins have a grade of 60 or higher on the Sheldon or European grading systems.
Gold coins come in different sizes, such as 1 oz., ½ oz., 1/4 oz., 1/10 oz., 1/20 oz., and 1/25 oz. Anything below 1 oz. is called a fractional gold coin. The spot price is based on standard weight, meaning that a 1/10 oz. gold coin is worth 1/10 the spot price of a 1 oz. coin at the time of purchase. However, the cost per ounce may increase as you go down in size.
For example, collecting a troy ounce of gold costs more when buying ten 1/10 oz. coins than a single 1 oz. gold coin. That’s why it is wiser to buy the 1 oz. coin rather than two ½ oz., four 1/4 oz., or ten 1/10 oz. coins. If you can’t buy a one-ounce coin or gold bar, a fractional coin is also a good option.
The condition or the grade of a gold coin plays a significant role in determining its value. Coin-grading companies grade them between 1 and 70 on the Sheldon Coin Grading Scale. The higher the number, the better the condition of the coin. If the coin has a low grade, that means that the gold has imperfections. You can store gold numismatic coins in a protective case to keep them safe.
The two primary places you can safely buy gold coins are local coin shops and online dealers. You can find real gold coins from either of these. However, the best way to buy gold is through your local coin shop because storefronts are easily verifiable businesses. Also, they typically have the best prices on gold coins. However, the gold coins might be from the secondary market, which means that the selection may be limited and in imperfect condition.
Online bullion coin dealers will typically cost you a bit more, but you will be able to shop around and compare prices. If you choose to buy from an online dealer, be very cautious that the business is legitimate. Check reviews before purchasing from them and verify that those reviews are from real customers. You should also ensure that the gold you are buying is IRS-certified. Any old gold you find online won’t do; it needs to meet a purity standard set by the IRS to be included in a Gold IRA.
Another issue with buying online is that the price is tiered depending on your payment method. For example, paying with a credit card may cost you more in premium than if you were to pay through a wire transfer or by check. In addition, you may also have to pay a shipping fee.
The Most Popular Gold Coins
If you’re ready to start investing in gold coins, you are probably asking yourself, “what are the best gold coins to buy?” There are plenty of options available to you, and not just from the U.S. Mint. You can also buy an IRS-certified foreign gold coin.
The most popular type of gold in the U.S. is government-backed bullion coins. Gold bullion coins are investment-grade coins that don’t carry additional collector value. This means you are paying for the gold content plus a premium above the spot price of gold. The U.S. Mint produces two gold bullion coins each year, including two of the best gold coins to buy: the American Gold Eagle and the American Buffalo.
American Gold Eagle
The American Eagle is the most popular bullion gold coin in the United States. The U.S. Mint introduced it in 1986. It is a 22-karat gold coin made of 91.67% gold and 8.33% copper and silver alloy to harden the coin and make it more resistant to wear. Note that the American Gold Eagle coin is an exception to the 99.5% purity standard for IRS-certified coins.
The gold American Eagle coin comes in four sizes: 1/10th oz., ¼ oz., ½ oz., and 1 oz. The coin has the Liberty sign carved on one side and the bald eagle on the other. The American Gold Eagle coin is currently in circulation and has a $50 value when used as legal tender.
American Gold Buffalo
The next popular gold coin the U.S. Mint produces is the American Buffalo gold coin. It was introduced in 2006 and is the highest in purity. It is a 24-karat gold coin that is refined to 99.99% fine gold. The coin has a figure of a buffalo on one side and the profile of a Native American on the other. The coin has a $50 value in legal tender.
Canadian Maple Leaf
If you want a non-U.S. gold coin, there are plenty of other popular foreign government-backed options. The Canadian Gold Maple Leaf coin issued by the Royal Canadian Mint was the first pure gold bullion coin, and it is one of the most popular gold coins in the world. The Royal Canadian Mint introduced it in 1979. It has 1 oz. of 24-karat pure gold content. The Canadian Maple Leaf gold coin is a legal tender with a face value of 50 Canadian dollars. You can find the gold coin in the following sizes 1/25th oz., 1/20th oz., 1/10th oz., ¼ oz., ½, oz., and 1 oz.
South African Krugerrand
Many collectors say one of the best gold coins to buy is the South African Krugerrand. The coin was first minted in 1967 and is widely accepted in the U.S. The 1 oz. gold Krugerrand coin’s overall weight is 1.0909 ounces. The coin is made of 22-karat gold. It is minted from gold alloy that is 91.67% pure. The remaining 8.33% of the coin’s weight is made with copper to make it harder and more durable. The coin is available in 1/10 oz., ¼ oz., ½ oz., and 1 oz. coins. It has a symbol of an antelope on one side and portrays the first South African Republic’s president Paul Kruger on the other.
Austrian Gold Philharmonic
The Australian Gold Philharmonic is among the most popular in the world, and you can find it at a low premium. It was first minted in 1989 and is made of 24-karat gold and 99.99% in fineness. This pure gold coin can be found for less than the options mentioned above. The Austrian Gold Philharmonic gold coinage is also available in fractional gold coins: 1/25th oz., 1/10th oz., ¼ oz., ½ oz., and of course 1 oz. The coin is designed to pay tribute to the world-renowned Vienne Philharmonic Orchestra.
The Australian Kangaroo coin was first introduced in 1987 by Perth Mint Australia. It is a favorite among coin collectors and investors worldwide and can be found at around a 5% premium. The Australian Kangaroo is one of the purest gold coins. It is a 24-karat gold coin that is refined to 99.99% fine gold. One side of the coin features a kangaroo, and the other side features the portrait of Queen Elizabeth II. The Australian Kangaroo gold coin is issued in 1 oz., ½ oz., ¼ oz., 1/10th oz., and 1/20th oz. sizes.
Experts say that one of the best gold coins to invest in is the Gold Britannia. It is a 24-karat pure gold coin refined to 99.99% fine gold. It had been in production by the Royal Mint since 1987. The coin’s front side showcases Queen Elizabeth II, and the reverse features Lady Britain guarding the seas. The coin is available in 1/20th oz., 1/10th oz., ¼ oz., ½ oz., and 1 oz. sizes.
Chinese Gold Panda
The Chinese Gold Panda coin was issued in 1983. It has a purity percentage of 99.99%. Each year, the coin features a different panda portrait. However, the other side remains the same with an image of the Hall of Prayer of the Good Harvests, also known as the Temple of Heaven. This coin is available in 1/20th oz., 1/10th oz., ¼ oz., ½ oz., and 1 oz. sizes. Currently, the Chinese Gold Panda coin comes from several mints in China.
British Gold Sovereign
The British Sovereign, which some investors say is one of the best 1-ounce gold coins to buy, was initially issued as a circulating coin by the Royal Mint in 1817. However, it is now used for trade and bullion coin purposes. The British Sovereign is an affordable gold coin for many investors. The gold bullion coin is available in 1 oz., ½ oz., and ¼ oz. sizes.
French Rooster Gold Coin
The French 20 francs Gold Rooster was manufactured from 1899 to 1914. The old gold coin weighs 6.45 grams or 0.22 ounces and is composed of 90% gold and 10% copper. One side of the coin is the design of the Proud Gallic rooster. On the other side is the national emblem of France, Marianne. You can get the French Rooster Gold Coin for small premiums over the current gold coin price.
If you are looking for the most options to choose from, then the best gold coins for investment are bullion coins. Remember, many gold coins are IRA-eligible, making them an option to grow your portfolio. Investing in bullion products is a way to prepare for retirement because of their perceived value as a hedge against inflation. If you want to make a gold investment but are not interested in coins, you can also buy gold bullion bars from a bullion dealer.