Buying Gold Coins: Are They Worth the Price?

Gold coins are often sold as bullion coins, but not always.  Gold coins have a known purity and weight.  Most gold coins currently being minted have a purity of 0.999 or 0.9999.  These coins are considered 24-karat gold, or fine gold.  Expectation that these will be worth the value of gold is reasonable, provided you allow for a slight reduction of value when selling to a dealer, and a slight increase of value when buying from a dealer. 

Some gold coins, including the United States American Eagle and the British Gold Sovereign, are 22-karat coins, which means their purity is 0.9167 pure.  While more is often better, if the gold is to be used as gold for jewelry making, the 22-karat gold is actually a purity that is right for jewelry making.  Also, the British Gold Sovereign is a well-respected coin, and has a stellar reputation.  The United States Gold Eagle has appeal to collectors in the United States.

If a coin is not 0.999 gold or even of greater purity, know the AGW (Actual gold weight) before making your decision.

Numismatic value of a large gold coin requires a market.  Because of the high price of gold, the larger coins have fewer collectors who can afford to collect them.  Remember, a collection of a single type coin will not likely impact the numismatic value, and acquiring a collection of a coin with each date is less likely with large gold coins.  Yes, there are some wealthy collectors who can and do collect them, but they often have a source of supply.

The exceptions seem to be the older United States coins that have been removed from circulation in the thirties and possibly the British Sovereign, although their demand is also limited. 

Of course, the bullion value is preserved, since bullion is sold to those who wish to own physical gold.  So, if the intent of buying a gold coin has nothing to do with numismatic value, larger gold coins should be fine.  When selling gold for its metal content there is no penalty because collectors do not place a numismatic demand on the market, you are in an entirely different market.

Gold coins of one-tenth of a Troy ounce and one-twentieth of a Troy ounce are affordable to a wider group of coin collectors.  Coins that might find appeal to collectors and investors are fractional coins, those of less than one Troy ounce. 

One thing to consider is you can often buy one-tenth of an ounce of gold as a single coin much lower than two one-twentieth ounce coins. 

Gold coins such as the Mini Roo from the Perth Mint of Australia contain about one-sixtieth of a Troy ounce of gold.  Now, the Swiss Mint has a very small coin new for 2020 that contains about one-five hundredth of a Troy ounce of gold.  Intuition indicated smaller gold coins should be better, but these are priced so high compared with the metal value of the gold they contain it forces them to be dependent only on the numismatic value.  The Swiss coin contains, at today’s gold price, just over three dollars of gold.  These are novelty items for those who want to own gold, but contain much too little gold to make their gold content significant.

Some coins are selectively plated with gold, making a striking appearance.  These are gilded coins, and often the primary metal of the coin is silver.  The beauty of the coin can influence its collectivity, but is the gold it contains significant?  The answer is no.

The New Orleans Mint, now a museum, had a room built in the shape of a cube with ten-foot walls, and the only opening was on one side.  The inside was plated with gold.  So, how much gold was used in plating the inside of a ten-foot by ten-foot room that also had a height of ten feet?  The gold used to plate the inside of the room was a mere three ounces!  Think how little gold is used to selectively plate a gilded coin, then you will realize the gold content has little or no impact on the coin’s value.  Plating with gold uses an insignificant amount of gold.

Avoid handling coins, except by the edge.  Wear and oils from your fingers can cause loss of numismatic value.  A simple solution is to use coin capsules of the appropriate size so sliding is reduced or eliminated. 

Know your objective before buying gold coins.  Are you buying bullion, or are you buying for numismatic value?  For some coins you may be able to have some appreciation from either market, but these coins must be carefully selected.  Unfortunately, very small coins may bring people into the market who think they are buying for the value of gold, and when they eventually sell those released coins can reduce the numismatic demand.  Be careful before you buy.

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