Don’t take our word for it, compare for yourself. If you want a source for gold bullion coins, LearCapital.com will likely wind up being your last stop. Let me give you some examples by providing a spot comparison. As this article is released the spot price of gold is $1212.40 per our displayed real time price.
Let’s first look at the American Gold Eagle Coin. Lear Capital’s on line price for this coin is $1267.17. The South African Krugerrand is $1265.35 and the British Sovereign Gold Coin is $297.45.
These are just a few examples of ways to hold gold coins as investment at prices very near the melt price of gold. Some have asked, "what is the spot price and how is it fixed?" Generally, the spot price of gold is based on the current prevailing gold spot price from the COMEX market during the U.S. trading day. These prices are for Gold Bars typically of the 400 troy ounce variety or approved 100 troy ounce bars.
400 ounce bars comprise the typical Central Bank inventory and certain 100 ounce bars are also approved for trade on the COMEX. People often wonder why an ounce of gold, such as the Gold Eagle, cost more than the quoted spot price. The answer is simple. There is obviously a cost incurred to take one of those 400 ounce bars and convert it to 1 ounce units. It is that cost that must be covered in order to make the process possible.
In as simple terms as can be offered, the spot price of gold is basically a bulk price just as a truckload of grain has a bulk price as compared to a bushel.
When reference is made to bullion coins, that is a general reference to coins that are mass produced for sale to the general public. The U.S. Mint’s 1oz. Gold Eagle is one of those coins. It carries a face value of $50 but the mint sells it for significantly more based on the spot price of gold at time of sale plus any manufacturing costs (minting costs) associated with the coin’s production . . . plus a profit. Yes, the U.S. Mint earns a profit that is turned over to the General Fund of the Treasury.
In the case of some coins it relies on a network of Primary Dealers and Dealers to service the needs of the population. In the case of others they sell direct to the public.
In the case of coins minted for purposes other than circulation as legal tender, the Mint hopes you will buy coins to collect. In the Collectors Club, a section of the Mint’s official website, it acknowledges that, "Some people collect coins in the hope that they will appreciate in value. Some coins have intrinsic bullion value (such as silver, gold and platinum coins). Others become valuable because they are rare."
I think it is safe to say, the typical buyer of a "Bullion" coin is one who wants a stake in the spot market without making an investment into 100 oz. or 400 oz. gold bars. If you owned large bars it would be hard to sell off small portions. You can’t just chip off a corner, weigh it and exchange it for cash or make a payment.
Still others, do buy coins for the potential of some day owning something rare and much more valuable than it was when it was purchased. Proof gold coins are one example of coins that the Mint says could "become valuable because they are rare." The U.S. Mint puts a limited number of gold coins through a special minting process that turns them into a more brilliant specimen that the mint sells for a significant premium. It knows there is a segment of the population that loves these coins and wants to own them for their potential to increase in value as collectibles.
Special Note: Right now the mint has halted production of Proof Gold Coins as it can only procure enough gold to mint its required quota of regular gold eagles.
Coins that already carry collector value are said to carry numismatic value. Generally, these are coins that once circulated as legal tender but now carry significantly more value in terms of bullion value as well as collector value. Some hundred year old $20 gold coins, for example can carry tens of thousands of dollars in collector value, premium. Yet they still only contain an ounce of gold.
The history of value of many of these remaining coins shows outrageous potential to rise in value. However, past performance can never be used to determine future value. Yes, history can repeat but there is no guarantee it will. Yet, it is this allure that causes people to want to own these precious bits of coin history.
My favorite example of a coin whose collector value was unimaginable, is the 1909S VDB Penny that sold for $92,000 in 2005.
Regardless of what you see on TV with respect to fluctuations in the spot gold price, worldwide gold demand is growing by the minute. And, it’s physical gold that people want in their hands. A strategy employed by many is to own some "Bullion" and some rare coins. I invite you to check out our "Bullion" coins prices on line and if you want to talk to one of our coin experts call the Lear Capital Gold Hot Line to check out the latest rare coins have toi offer.
In the end, if you are just an average person, saving for retirement or just a rainy day, there is only one reason to own gold in any form and that is to invest in the preservation of wealth.