Gold is an excellent investment, especially when the economy is faltering.
When buying gold coins as an investment, or any other purpose for that matter, try to stick with gold bullion coins instead of denominational currency. The Canadian Maple Leaf and American Eagle gold coins are the most pure and can be easily bought and traded though dealers.
Recently, many investors have started to trade exchange traded funds (ETFs) instead of physical gold. One should be cautious, however, as many gold ETFs are not backed by physical gold and are their value is instead pegged to a gold index. The CBOE gold index for example tracks the price of gold mining operations, and some ETFs use the CBOE gold index for their valuation. Some gold ETFs may even may even be based on the value of gold futures contracts, which makes them highly risky, speculative investments.
Many people, because of this, prefer the trading of gold coins. The Maple Leaf coin, for example, is 24k gold, which means that its value closely follows gold’s spot price, both up and down. Both UBS and Goldman Sachs have stated that gold will be a high performance asset for 2012, and gold coins may rise along with it.
It’s really best to stick with gold coins from North America when trading them in North America. The Maple Leaf and the American Eagle bullion coins are the easiest to purchase and trade. Outside the United States the 24k Maple Leaf is the most popular, inside the United States, the 22k American Eagle is the most popular.
In order to try to compete with the Maple Leaf the United States Mint has begun selling the American Buffalo gold bullion coin in 2006, it is the full 24k and is the purest coin offered by the United States Mint in U.S. history. However, the American Buffalo is not traded as frequently as the the American Eagle, it’s also more expensive.
If you plan on buying gold coins, you should store your coins in a safety deposit box or a safe at home rather than storing them at a dealer. Having physical possession of your coins is generally accepted as being the best way to avoid scams conducted by dealers.
The United States Mint doesn’t actually sell the American Eagles directly. Instead, on their website is a dealer locator tool which can be used to find places that do. Comparing gold dealer prices online is easy too. Gold coins usually sell for a price above gold’s spot price and trade for less then than gold’s spot price.
Generally, paying more than a 5% premium for gold coins doesn’t make any sense. You should always try to purchase them at the lowest price possible. A nice tip is to avoid buying gold coins on eBay in order to avoid bidding wars.
American Eagle gold coins come in four different formats, 1oz, 0.5oz, 0.25oz and 0.10oz. The fractional coins, while cheaper, usually are purchased and traded at a higher premiums. It’s therefore generally recommended to stick with the 1oz coins.
Author: David Kennedy Google+