Investing in Gold Bullion
Investing in Gold Bullion is often a smart vehicle for investors seeking a narrow spread between daily buy and sell prices. Bullion can be an important component to the portfolios of investors seeking high liquidity, privacy, portability, security against economic uncertainty, along with an easily referenced value.
A gold bullion coin’s value is based on the price, plus a small premium to cover coinage and distribution costs. They are typically minted in four weights – 1/10, 1/4, 1/2 and 1 ounce – to fit a variety of budgets. The smaller sizes also make affordable and thoughtful gifts.
Daily market prices and trend charts can be found in most any major daily newspaper, and is frequently tracked in leading financial reports, including the McAlvany “Market Charts” page.
There are several bullion coins to choose from. ICA recommends the following coins because they are the most widely traded and accepted all over the world.
American Eagle Gold Coins
Authorized by the Bullion Coin Act of 1985, American Eagle Gold Bullion Coins quickly became one of the world’s leading gold bullion investment coins.
Produced from gold mined in the United States, American Eagles are imprinted with their gold content and legal tender “face” value. However, the face value is largely symbolic since their market value has historically been much higher. This has also caused some dealers to claim that American Eagle Gold Coins are “numismatic” coins, which is not a legal opinion. Beware of any dealer attempting to sell American Eagle Gold coins with a numismatic value or premium price. (Please see our section on reporting requirements for gold bullion coins and investments).
American Eagles use the durable 22 karat standard established for gold circulating coinage over 350 years ago. They contain their stated amount of pure gold, plus small amounts of alloy. This creates harder coins that resist scratching and marring, which can diminish resale value. Minted to exacting standards, the obverse (front) design is inspired by what’s often considered America’s most beautiful coin: Augustus Saint Gaudens’ celebrated $20 gold piece, minted from 1907-33. The reverse features a nest of American Eagles, symbolizing family tradition and unity.
Canadian Maple Leaf
The Royal Canadian Mint was the first world mint to commercially produce 99.99% pure gold. Although this makes the coin “soft” and is more easily damaged, this innovation gave the Gold Maple Leaf instant recognition when it was introduced to the bullion coin market years ago, and it remains the one of the most well recognized and sought after bullion coin in the market today.
Made of 99.99% pure gold, Gold Maple Leaf coins come in five sizes ranging from 1 oz. to 1/20 oz, (smaller sizes are often not available).
South African Krugerrand
The South African Krugerrand was first released in 1967. For the first 20 years of its existence, it dominated the gold bullion market, and is still the most widely held gold coin in the world today. The obverse of this 22kt coin depicts Paul Kruger, President of the original South African Republic from 1883 to 1902, and the reverse shows the springbok, the national animal of South Africa.
Because the spread between the buy and sell price are typically lower on the Krugerrand than other bullion coins, it makes it simple to know the exact value of your coins, and are often purchased by “price conscience” investors. The Krugerrand is available in four sizes: one-ounce, half-ounce, quarter-ounce and one-tenth ounce. Each size relates easily to the current 1-ounce gold price.
The Credit Suisse gold bar is an internationally recognized product made of 24 kt gold. It is unique among gold bullion products in that it comes housed with its own certificate of authenticity and purity, including its own unique serial number, which is stamped both on the bar and on the certificate. At one time this bar was the only way to purchase 24 karat gold at close to bullion prices. As with all bullion products, the bar trades for its content plus a small premium to cover the cost of minting, distributing, and advertising.
At ICA, we stand ready to assist you with your gold and other precious metals bullion investments. Further, we have a wide range of knowledge and contacts to assist you with finding appropriate storage to store and safeguard your investment wherever you choose.