Heading: Introduction
Gold has always been an attractive investment option. It is often seen as an ideal hedge against inflation and provides a sense of security amid economic uncertainties. Today, investors have a plethora of options to buy gold, including gold bars, gold ETFs, gold funds, and gold coins. But, not all gold coins are created equal. In this guide, we will discuss the reasons to avoid US gold coins and provide a comprehensive guide on how to buy gold.
Heading: Understanding US Gold Coins
US gold coins are those that were minted by the US government. These coins have a historical value, and their bullion value may vary depending on the current gold prices. There are numerous US gold coins in circulation, and the most common ones are the US Gold Eagles, US Gold Buffalos, and US Gold Coins from the 1800s.
US Gold Eagles: These coins were first minted in 1986, and they are the most popular gold coin in the US. They are available in four sizes – 1 oz, 1/2 oz, 1/4 oz, and 1/10 oz.
US Gold Buffalos: These coins were first minted in 2006 and are considered the purest gold coins in the US. They are available only in 1 oz size.
US Gold Coins from the 1800s: These coins were minted between 1795 and 1933 and are known for their historical significance. They come in different sizes and designs and are considered very valuable.
Heading: Why to Avoid US Gold Coins
Now that we have discussed the different types of US gold coins, let’s delve into why you should avoid them.
1. High Premiums
US gold coins are expensive because they carry a high premium. This premium is the amount you pay over and above the spot price of gold. It is calculated based on the rarity, mintage, and historical value of the coin. For example, a 1 oz US Gold Eagle coin may have a premium of 5-7%, which means you will have to pay $50 to $70 extra for the coin. This premium does not add any value to your investment and reduces your potential returns.
2. Lower Purity
US gold coins have a lower purity compared to other gold bars and coins available in the market. Most US gold coins have a purity of 22 karats, which means they contain 91.67% gold and 8.33% copper or silver. This reduces their bullion value and puts them at a disadvantage when compared to other gold coins with a higher purity.
3. Confusion Between Numismatic and Bullion Value
US gold coins have both numismatic and bullion value. Numismatic value is the value of the coin as a collectible item, often depending on its rarity, condition, and historical significance. Bullion value is the value of the coin based on its weight and purity. This dual value often creates confusion among investors, who end up paying a higher premium for a coin’s numismatic value, thinking it will increase their returns.
4. Difficulty in Selling
US gold coins are not easy to sell, especially if you do not have a dealer or a collector to sell to. It can be challenging to find a buyer who is willing to pay an appropriate price for the coin based on its numismatic and bullion value. This may cause you to sell the coin at a discount, leading to a loss.
Heading: How to Buy Gold
Now that we have discussed the reasons to avoid US gold coins, let’s look at how to buy gold.
1. Determine Your Objectives
Before buying gold, determine your investment objectives. Do you want gold for hedging against inflation, as a safe-haven asset, or as a long-term investment? Once you have clarity on your investment objective, you can select the appropriate form of gold investment.
2. Choose the Form of Gold Investment
You can buy gold in different forms, including gold bars, gold coins, and gold ETFs. Gold bars and coins offer a physical ownership of gold, while gold ETFs are a paper investment that tracks the gold prices. Choose the form of gold investment that suits your objective, budget, and convenience.
3. Research and Compare
Research different types of gold available and compare their prices, purity, and premiums. This will help you choose the best investment option that meets your investment objectives and offers the best returns.
4. Buy From a Reputable Dealer
Always buy gold from a reputable dealer who is authorized to sell gold. Look for dealers who have been in business for a long time, have positive reviews, and provide reliable information on the gold products they sell. This will help you avoid scams or buying fake gold products.
5. Store Your Investment Safely
Store your gold investment safely in a secured facility, such as a bank safe deposit box or a home safe. This will protect your investment from theft, loss, or damage.
Heading: FAQs
1. What is the best form of gold investment?
The best form of gold investment depends on your investment objective, budget, and convenience. Gold bars and coins offer a physical ownership of gold, while gold ETFs are a paper investment that tracks the gold prices. Choose the form of gold investment that suits your needs.
2. Is it a good idea to buy US gold coins?
It is not a good idea to buy US gold coins because of their high premiums, lower purity, confusion between numismatic and bullion value, and difficulty in selling.
3. What is the premium on gold coins?
The premium on gold coins is the amount you pay over and above the spot price of gold. It is calculated based on the rarity, mintage, and historical value of the coin.
4. Should I invest in gold for the long-term?
Investing in gold for the long-term can be a good idea as it provides a hedge against inflation and provides a sense of security amid economic uncertainties.
5. How should I store my gold investment?
Store your gold investment safely in a secured facility, such as a bank safe deposit box or a home safe. This will protect your investment from theft, loss, or damage.