What you need to know before investing with Gold Coins.

Gold was one of the first forms of currency in the world, it has been used for thousands of years. Today, it is still acquired as a way to protect capital against possible economic and social crises that could negatively impact other investment assets.

There are two main ways to diversify the portfolio through physical gold: buying gold bars or coins.

Although fine gold bullion is a safe way to buy gold, it is not always the most practical compared to coins, which are more liquid and widely accepted worldwide.

To make a successful investment in gold coins, it is important to know the basic principles such as purity, learn to assess their value, and become familiar with some of the most common and reliable pieces on the market.

Gold Coins Categories

Gold coins fall into two basic categories based on how their value is priced:

Bullion Coins

It's a gold coin designed to store value, whose weight and purity are guaranteed by a sovereign state. Its value is intrinsic because it is derived only from the weight of the gold it contains, which is related to the price of this spot metal.

Numismatic and semi-numismatic coins

They are collectible coins, their value is determined by their history and rarity. The price may vary according to demand and manufacturing age.

An example of these pieces is the notorious Double Eagle of Saint-Gaudens from 1933, which is among the rarest and most expensive collector coins in the world. All specimens of this coin were confiscated in the United States to be melted down, but some specimens were stolen and distributed to wealthy collectors. Today there is only a record of two of them; one is in the Smithsonian and the other is in the collection of King Farouk of Egypt.

Although collectible coins have a special attraction for their history and peculiarities, bullion coins are the safest when investing since their price is determined by the market and not by added values.

The fineness of Gold Coins (Purity)

There are two ways to measure the purity of gold coins: by karat and by their fine gold weight.

Karat

This is the most common way to rate the purity of gold, with 24 karats being its purest state. The most popular coins usually come with a variable purity between 22 and 24 karats.

For example, 22 karat coins have 22 parts of gold and 2 parts of other metals that can be zinc or copper, which are usually added to provide more resistance and hardness to the coin.

Fine gold weight

It is another parameter that measures the amount of gold in proportion to the total weight and is measured in a system called millesimal fineness.

The purest form of gold corresponds, in theory, to 1000 millesimal fineness, but this metal usually contains impurities due to the chemical and physical properties of its production, which is why it is considered pure gold from 999,99.

The purity in precious metals is known as “fineness” and in this way, it is represented in the certificates and specifications of each coin.

How Are Gold Coin Prices Determined

The value of the coin is obtained taking into account the total weight (what it weighs on the scale in grams) multiplied by its fineness, this would give us the fine gold weight. We then must multiply the fine gold weight by the price of the gram in the market.

For example:

Let's calculate the (hypothetical) value of the Mexican currency of 50 pesos, which has a total weight of 41.66 grams and a fineness of 900. Assuming that the weight of a gram of fine gold is 62.3 US dollars, we would make the next calculation:

41,66 grams x 0.900 = 37,50 grams fine gold weight

Now, we’ll multiply the fine gold content by the market’s price of the gram of gold:

37,50 x 62,3 = 2.336,02 USD

We should also consider the price gap between the seller and the buyer, which is around 10%. The cost would be between  2,336 and 2,530 USD approximately.

There are also coins whose fine gold weight is less than one ounce and they are called fractional gold coins. These are usually more affordable, although their manufacturing premium is higher.

Most commercial gold coins

When investing we must choose among the most commercial bullion currencies. Here are some of them:

The Mexican Centenario 

It was first minted in 1921 and is one of the most commercial investment coins in the world.

The reverse of the Centenario shows the Mexican national shield surrounded by eagles. The obverse of the image of Winged Victory, the monument of Mexican liberation.

South Africa Krugerrand

It was the first gold coin valued for its weight in gold and not for its face value, which means that it was the first bullion coin. It is widely recognized in the world for having one of the lowest manufacturing premiums in the market.

The obverse shows the profile of Paul Kruger, president of the former Republic of South Africa, and the reverse features one of the symbols of South Africa the springbok antelope.

American Gold Eagle

It’s the official bullion coin of the United State, was introduced to the market in 1986, and has grown in popularity over the years generating enormous demand from investors.

On the obverse, it shows a full-length figure of Lady Liberty and on the reverse the bald eagle, the official emblem of the North American nation.

Canadian Gold Maple Leaf

It was produced by the Royal Canadian Mint in 1979. It was born that year to replace the Krugerrand amid an international boycott against South Africa. It is one of the first coins to reach the highest level of purity. It has a fineness of 999.99. 

On the obverse, it shows the image of Queen Elizabeth II and on the reverse the maple leaf, the emblem of Canada.

British Gold Sovereign

It is a gold coin of the United Kingdom, being the most recognized and valued in much of Europe and the world.

On the obverse, it shows the profile of Queen Elizabeth ll, with the phrase: “Dei gratia Regina”, which means “By the grace of God, Queen”. On the reverse side, Saint George can be seen killing a mythical dragon.

Chilean Pesos Gold Coin

It was minted for the first time in 1932  for La Casa de la Moneda and has a face value of 50 pesos. On the obverse, it shows the left profile of a female face wrapped in a cloak with the Chilean 5-pointed star. The reverse shows the 5-pointed star on the shield surmounted by a plume of feathers, supported by two animals on a laurel wreath.

Ducat

It is a gold coin used for trade in Europe from the Middle Ages to the 20th century. Austria began to mint ducats and assumed them as local currency until the ban on gold coins during the Second World War.

The obverse shows the bust of Franz Joseph I and the reverse the coat of arms of Austria with the double-headed eagle.

Peruvian Soles

Minted by Lima's Casa de la Moneda between 1950 and 1970. These pieces are widely valued by both investors and collectors for their beauty and historical value.

It shows on the obverse the coat of arms of Peru and on the reverse a seated woman representing Liberty.

Gold Argentinos

They are the only gold coins minted by the mint between 1881 and 1896. They have a numismatic value because they are relatively rare.

The obverse shows Liberty by the French artist and engraver Eugène-André Oudiné; the reverse features the Shield of the Argentine Republic surrounded by the flags of the 14 provinces that existed at the time of its issuance.

How to buy gold coins

In the U.S you can buy gold coins at banks, exchange houses and private sellers. It is important to consult with a trusted jeweler to make a secure purchase.

Here you will find a list with the data of fineness, fine gold weight and country of issue of the most commercial coins on the market, both in gram and in troy ounces.