Saturday, January 10, 2009

Introduction to Gold Bullion Coins

There are many ways to invest directly or indirectly in gold. You can buy a gold Exchange Traded Fund (ETF) such as GLD. You can buy common stock in gold mining companies such as Goldcorp (GG). A third way is to buy gold coins.

Gold coins are commonly divided into two types. The first type, bullion, are generally coins minted recently, common and trade at a small premium to the spot gold price. The second type, numismatic, are generally old or rare coins that have a collector value and thus trade at a premium to the spot gold price. For those interested in gold coins but not knowledgeable in the ins and outs of coin collecting, bullion coins are the way to go.

Gold bullion coins typically come in four sizes: 1 ounce, 1/2 ounce, 1/4 ounce and 1/10 ounce, with the 1 ounce coins being the most popular. Pure gold is soft and susceptible to scratches so traditionally gold coins were made of 90% gold and 10% a variety of harder metals. This carries over to modern bullion coins, with some of them also containing roughly 90% gold. Many coins nowadays, however, are made of 99.99% gold or in other words .9999 pure. For modern coins, if they contain only 90% gold, there is still 1 ounce of gold, so the total coin size is bigger than a pure gold coin.

There are many places to buy coins online. You can buy them directly from the US Mint, Royal Canadian Mint, Perth (Australian) Mint, or thousands of privately owned coin dealers. The full list of US Mint approved coin dealers can be found here. This list is also sortable by state, so you can find coin shops near you.

Below are some of the most popular gold bullion coins traded around the world:

American Eagle
.9167 pure (91.67% gold, 3% silver, 5.33% copper)

American Buffalo
.9999 pure (99.99% gold)

Canadian Maple Leaf
.9999 pure (99.99% gold)

Chinese Panda
.9999 pure (99.99% gold)

Australian Kangaroos
.9999 pure (99.99% gold)

South African Krugerrands
.9166 pure (91.66% gold, 8.34% copper)

Austrian Philharmonic
.9999 pure (99.99% gold)