The value of gold coins is determined by the gold bullion content and numismatic features (if any) of a particular coin. You are likely to encounter three different categories when shopping for gold coins:
Bullion and Semi-Numismatic Gold Coins
This means you are primarily paying for gold bullion plus a small premium for a coin’s manufacture, popularity and possibly moderate (semi) numismatic quality.
Paying only a modest premium above the spot gold price will help maximize the return on your investment. Click here to learn how dealers price their gold products.
Numismatic Gold Coins
Numismatic gold coin prices are determined by collectors who place a sizable premium on the rarity of a particular gold coin. This collectible value lies outside a coin's gold bullion content (intrinsic worth).
A gold coin’s intrinsic value is in accordance with its gold weight regardless of its type (i.e. numismatic or bullion).
Numismatic gold coins are often formerly-circulated legal tender coins. This means the public used these coins for commerce.
While in circulation, the value of gold coins is diminished since handling them can damage their appearance.
As a result, circulated gold coins are rarely in an “uncirculated” or “mint state” condition … which is essential for them to receive a high grade on a certified coin grading scale.
Lightly-circulated numismatic coins are sometimes rated “uncirculated” by graders. Visit the gold and silver rare coins grading scale section to learn more about these terms.
I would be very hesitant to buy any numismatic gold coins that were not preserved (encapsulated) soon after they were minted or certified by a reputable coin grading service company like PCGS or NGC (photo above).
Bullion vs. Numismatic
I believe the number of people who buy and sell gold bullion coins is larger than those who collect rare gold coins.
Therefore, if the number of collectors shrinks during difficult economic periods, so, too, can the prices of numismatic gold coins.
Helpful Hint: If a numismatic product truly has a collectible value based on market forces, other gold bullion dealers - or numismatic coin traders - will price that product similarly. It’s wise to compare prices.
If precious metals prices fall during difficult financial times, the value of gold coins deemed bullion or semi-numismatic will also drop.
Some believe you can diversify your risks by purchasing numismatic gold coins since they are valued for their gold content and numismatic quality. If gold prices drop, a coin’s collectible value may remain intact.
Visit ungraded American Gold Eagle Proof Coins for a gold IRA to read more commentary on this subject.
What do you believe? A few questions you might ponder as you study this subject are:
Answering these questions should help you develop your own informed opinion ... which I hope will serve you well when making decisions.
Now you know how the value of gold coins is determined. That's a good starting point.
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