by A.W. Berry

Created on: September 17, 2009   Last Updated: March 17, 2011

Gold coins are an investment that can and do appreciate, depreciate or keep a steady value depending on when they are invested in and liquidated. Gold coins are a dynamic investment that have a reputation for being 'safe' and 'stable' because gold traditionally holds value, and gold is by virtue of its rarity, in short supply. In other words, there are some reasons to invest in gold coins, however there are also good reasons not to.

Gold coins experience price fluctuations as does the spot gold price, and they are subject to inflation that is the very thing some investors buy gold for in the first place. Gold coins are also a more complex investment than they appear on the surface due to elaborate global economics, historical asset diversification, and market mechanisms. This article will discuss the dynamics of gold coin investing in terms of advantages and disadvantages.

Advantages of investing in gold coins: 

Global gold coin demand increased 40% from 137 tons to 191 tons between 2007 and 2008 as per the World Gold Council's gold statistics. Since demand is a driver of price when supply is limited, the increased demand in relation to price is positively correlated. In recent years, gold has appreciated in value a great deal. There is a lot of analysis and thought in to the reasons why this has happened. Among those reasons are those listed below:

1. Reasons to invest in gold coins

• Gold supply is limited
• Gold prices rise during and with inflation
• Traditionally gold is a safe asset
• Lower currency values mean higher gold prices
• Gold coins may have aesthetic and collector appeal
• Gold is forecasted to continue rising (2)

In addition to the reasons for buying gold coins are the types of gold coins on the market. This is an important aspect in gold coin purchasing as the type of coin can affect its value, liquidity, and availability. Some gold coins are only partially gold with other metals within the coin, other gold coins are almost 100% gold. Gold bullion coins are considered investment grade and are 99.9% gold and between 22-24Karats.(3) Being aware of the percentage and authenticity of gold within a gold coin is an important aspect in its valuation, as gold is valued by weight so a mixed gold coin trader may charge more or less for gold depending on their skill and objectives in assessing and valuing gold.

2. Types of gold coins

• Rare and historical gold coins
• Collectible gold coins
• Gold bullion coins

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