First, let’s clarify the difference between gold bullion coins and numismatic gold coins.
Gold bullion coins are minted on a regular basis, each containing a fixed weight in gold. They are not rare, or collectible. You buy and sell them according to the spot price of gold on any given day.
Numismatic gold coins, however, usually are rare. Their price takes into account the price of gold, but their real value lies in their rarity and condition. Think of it this way – collecting numismatic gold coins is like collecting stamps. The rarer the stamp, and the better its condition, the higher its value.
If you are buying gold coins as a way to secure a part of your wealth in the form of a tangible, portable asset, the simplest route is to buy gold bullion coins. The mark-up you will be asked to pay by the dealer will be anything between about 2% and 4%.
You know what you are buying, and you can track its value simply by looking up the spot price of gold on a regular basis.
With numismatic coins, things get more complicated, and more subjective.
You have to do a lot more homework, and know your coins in the way a stamp collector knows his or her stamps.
Fortunately, there are catalogs which list the values of certain coins, according to their condition. And this is where you should look, before you decide to buy or sell any coins.
When you negotiate with a numismatic coin dealer, know the book value of what he is selling, before you ask the price. And keep in mind that most dealers will add a mark-up that is much higher than the 2%-4% you deal with when buying gold bullion.
So you have to ask yourself – Is this coin worth the extra premium? Am I being asked to pay a fair price? Will the value of this coin increase significantly over time?
Here is the bottom line…
Buying gold bullion coins is relatively easy. Prices are pretty standard, and all you have to worry about is whether or not gold prices will continue to rise, or at stay more or less where they are, over time.
Buying numismatic gold coins is a lot more complicated. It’s harder to price them, and you’ll always be paying way over their value in gold, because of their rarity.
That said, if you invest a lot of time in learning the ins and outs of collecting numismatic gold coins, their value over time can increase a great deal more than the price of gold bullion.
Buying gold bullion is about security and peace of mind.
Buying numismatic coins is about passion, speculation and a potentially high return.
Further reading…