Humankind has been involved in one conflict or another around the possession of gold for over 7,000 years. Through modern times the precious metal has served as the top investment metal being the ultimate store of value and extinguisher of debt. The demand for gold everywhere in the world appears to be constant and insatiable.
Each form has its own use case, advantages and disadvantages. But in particular gold coins hold a special place in history and in the portfolio of the precious metal investor.
We should make a distinction between gold coins and gold rounds. A gold coin is minted by a State-run mint and is usually legal tender in that particular country. Usually, coins will have a face denomination in the currency of the country of origin. A gold round can be minted by a private company and is not legal tender in any country.
With today’s spot and the market price of gold the intrinsic value usually far exceeds the face value minted on the coin of choice. For example, a 1 ounce American Gold Eagle has a face value of $50. However, the retail market value is somewhere around $2,000! Investors pay because of demand and several unique characteristics of gold coinage.
- Debasing Or Counterfeiting Coins Is A Serious Crime: Faking or misrepresenting the value or composition of a country's legal tender comes with serious consequences. Up until recently in the US counterfeiting was a hanging offense. These harsh level punishments are serious deterrents to would-be counterfeiters and are a trust point for buyers and sellers
- Gold Coins Are Legal Tender: The government assigned face value of a gold coin serves a minimum value guarantee. This guarantee basically tells the buyer that this coin will never be worthless. Gold will always have intrinsic value and thankfully though current prices are light-years beyond nominal face value. Finally being legal tender qualifies most gold coins for use in Precious Metals IRAs.
- Superior Quality: State run mints are expected to observe the highest of quality standards. Therefore, the quality of design, striking, and finish is often superior to other gold investment products from private mints. We should strictly qualify that by saying there are a number of bars and rounds minted by private companies that have fare superior quality than some of the best government mints in the world.
- Generation Series And Coin Programs: Since government coins are legal tender those governments obviously invest more than private companies. This fact allows State-run mints to produce the same series of coins for generations. That does not mean government mints can run at losses. In fact, the US Mint is bound by law to never lose money.
- Excellent Liquidity: Gold itself is a highly liquid asset so it follows that coins made of the metal are also highly liquid. Gold coins are easily exchanged for currency and in a crisis situation they are the token of choice for barter exchanges.
The Important Features of Gold Coins
The options for gold coins in the marketplace are innumerable. But there are some key factors that serious investors rely on when building their portfolio positions. Depending on the individual the degree of emphasis may vary but nonetheless the following characteristics are the most important ones.
Fineness or Purity
The purity of State minted coins varies from country to country and for specific reasons. In the US for example gold coins were circulated for over a hundred years so in order to add an element of durability copper and silver were added. Pure gold tends to wear very quickly. US gold coins are 91.67% pure gold by weight, also measured as 22 karat gold. Canadian gold coins on the other hand are 99.99% gold by weight or 24 karat gold. In both cases, a one-ounce Double Eagle and one-ounce Maple Leaf both contain 1 ounce of pure gold. It is just the total amount (and size) of the coin that varies.
Troy Ounce or Gram Weight
The troy ounce has been the standard measure of precious metal coinage for hundreds of years. More recently though some mints have begun to use metric weights. The weight of the gold in your coin is the most important point for investors. As a quick conversion lesson 1 troy ounce = 31.1035 grams.
Government Mint Gold Coin Series and Programs
Every investor has their own particular tastes and preferences. State-run mints their best to keep coin series interesting and pleasing to the loyal buyers. Knowing what program a coin belongs to can add value down the road so this is another key factor to observe.
Popular Gold Coin Series
HT Bullion markets a selection of gold coins from around the world. This ensures that you have the best choices for immediate delivery. In the following paragraphs, you will find the basic details of a few of the most popular gold coin series known around the world.
The official gold bullion coin of the United States of America, the American Gold Eagle is an awe-inspiring precious metals product. It is minted by the United States Mint and has been a regular annual feature since it first released in 1986.
These coins feature Augustus Saint-Gaudens’ rendition of Lady Liberty on the obverse and Miley Busiek’s depiction of a family of eagles on the reverse.
Although this series isn’t the oldest gold coin program in the world, it does feature among the most popular and successful ones.
Only the second gold coin to enter the precious metals market, the Canadian Gold Maple Leaf Coins have a rich history spanning close to four decades (launched in 1979). These coins are an annual feature from the Royal Canadian Mint and are assigned legal tender status in Canada.
As its name suggests, these coins bear the proud maple leaf design on their reverses. This leaf is one of the most iconic and important Canadian symbols – and its depiction leaves nothing to be desired. The detailed design captures the most intricate veins and textures, making the leaf look very real.
On the other hand, Queen Elizabeth II’s most recent rendition is featured on the obverse sides. Although these coins don’t boast annually changing designs, the design on this side changes when the mint starts using another portrait of the Queen on circulating currency.
South African Gold Krugerrand Coins
The South African Gold Krugerrands are perhaps the products that started the frenzy of gold coin production across the globe. In fact, it was the only gold coin on the market between 1967 when it first released and 1979, until the Canadian Gold Maple Leaf launched.
These coins aimed to increase private ownership of gold, and was struck using 0.9167 pure (22-karat) gold. However, economic sanctions against South Africa during the 70s and 80s saw this coin being banned in Western countries.
The proud Springbok Antelope appears on the reverse, while the portrait of Paul Kruger (the fifth President of South Africa) adorns the obverse sides.
British Gold Britannia Coins
Although these coins were originally struck using 0.917 gold, the Royal Mint adopted the 24-karat (0.9999) purity standard for these coins in 2013. This series is also among the more popular and older gold coin series in the world. In fact, the first Gold Britannia was released in 1987, just a year after the American Gold Eagles.
The reverses feature the image of Britannia, a personification of the geographical region that comprises Great Britain. She is seen holding a trident and shield, ready to defend the land against those who would do it harm.
On the other hand, the obverses bear the latest portrayal of Queen Elizabeth II, in accordance with the effigy being used on circulating coinage that year.