Gold coins have proven to be a popular investment since the turn of the milennium. The world's currencies are devaluing by the day as governments print ever more money, which has had the effect of driving up commodities that you can't create out of thin air. This environment has been very positive for Gold (and Silver) but in regards to gold coins, a popular way to own gold, some carry an additional value. In addition to the value of the metal that they are made from, some coins carry a Numistic value due to the condition and rarity of the coin. Numismatic coins sell for a higher premiums than their "bullion" counterparts, because they have a strong demand among collectors. Whilst Gold "bullion coins" usually sell for a small premium over the gold spot price, based on their gold content.
Between 1933 and 1974, American citizens were not allowed to own any form of gold bullion. When this policy was signed into law by President Roosvelt, a provision was inserted in the bill allowing American citizens to own numismatic gold coins. These collector coins, whose value was based more on the collectability than the amount of gold that was actually contained within them. These gold coins have always sold for a higher value than gold bullion coins, many being sold for many multiples of their actual worth.
Gold bullion coins, valued purely for the metal that is actually contained in them on the other hand, sell based on the value of that gold content plus a smaller premium. The premiums for these coins are smaller than the those on numismatic coins because there is no collectability aspect to the coin at the time of the sale. This is why some investors regard bullion coins as more suitable for investment purposes as there are fewer factors determining their price. The factors driving collectors demands for numistic coins are always shifting, adding a element of addional risk in some investors eyes.
Once the US government restored the right of American citizens to once again invest in gold coins and gold bullion, the South African Krugerrands quickly became the most popular gold coin. They were the gold coins that triggered the rapid growth in the number of different types of bullion coins available today. The Austrian 100 Coronas and the Mexican 50 Pesos were two other coins that quickly rose to popularity in the 1970s, but unlike the Krugerrand, do not enjoy the same level of popularity or availability today.
Following the runaway sucess of the Krugerrand, the American Gold Eagle bullion coin have risen in popularity to be the best selling gold coins in the United States. Like the Krugerrand, many people around the world have invested in them in large quantities. At one point in time the Canadian Maple Leaf Gold Coins were as popular as the American Gold Eagles, but they scratch and damage easily due to the softness of the 24 karrat gold in them.
Article Published On: 12 May 2009
Article Revised On: 11 May 2011