You can invest in gold in various ways, but the most common type is by buying gold bullion.
Many people mistakenly believe that gold bullion comes only in large bars as seen in James Bond movies or in Fort Knox. By definition, however, gold bullion refers to a bulk of gold measured by weight. It comes in various forms, the most common of which are gold bullion coins.
Buying gold bullion coins
Gold coins have been around for thousands of years, and was standard currency for many civilizations around the world. They lost their currency status in the 1930s, when their circulation was stopped to curb the hoarding that took place in the wake of the Great Depression.
After their demonetization, gold coins were mostly relegated to the category of “collectibles.” This changed in 1967 when South Africa introduced the gold Krugerrand, a one-ounce gold bullion in coin form, available at the prevailing price of gold plus a certain markup. The Krugerrands’ nominal value made them legal tender, free from the taxes, duties and other restrictions usually associated with regular gold bullions.
Today, Krugerrands are among a selection of gold bullion coins you can buy on the market. The United States, Canada, China, Great Britain and other countries issued their own gold bullion coins, with guaranteed purity, gold content (measured in weight) and international liquidity. They have made buying gold convenient and accessible to everyone.
These gold bullion coins are made of 90% to 99% gold. While they have nominal or face values, their real worth is usually far more than these, and depends on their gold content and the prevailing market price (spot price) of gold.
Types of gold bullion coins
In buying gold bullion coins, you will likely come across the terms “proof” and “uncirculated.” These are two types of coins minted by the U.S. and other governments. Of these, the uncirculated type is more common.
Uncirculated gold bullion coins mean just that – these are gold coins that were never in circulation and are issued mainly for investment purposes. They are available through select banks and brokers around the country.
Proof bullion coins are minted specifically as collectors’ items and, as such, are finished to a much higher standard. “Proof” is a term that originally referred to pre-production samples, implying more careful workmanship and a better-quality finish than their mass-produced countertypes.
As may be expected, proof bullion coins generally come with a higher premium over the spot price, but this is not always the case. It also has to be pointed out that uncirculated bullion coins are, by nature, collectors’ items as well, with a different edition coming out every year. If you are buying gold coins and are unsure about which type would fit your investment goals, contact us anytime for help and guidance.
The most popular gold bullion coins in the country and the world often come in both proof and uncirculated finishes. They include:
Commemorative gold bullion coins
Every year, mints in various countries, including the United States, produce commemorative coins in honor of significant events or milestones. Some are also replicas of past gold currencies.
These lesser-known coins often come in BU Proof finish, BU being the acronym for “brilliant uncirculated.” It basically means that the coin is uncirculated, and has thus retained its original mint luster and condition. But it has also been mass produced, so a few minor imperfections can be expected.
In buying gold, these lesser-known coins make excellent options as they usually come with a lower premium over the spot price. Examples of these coins include:
|
|
|
