I'm new to investing in PMs and I was wondering about buying gold coins in smaller denominations. What do you guys think about buying 1/10 oz gold coins? I'm thinking about buying ten 1/10 oz Maple Leaf coins (because they're 24 carat gold) because that's all I can afford right now and it would just make me feel better to have 10 coins instead of just 1 one-ounce coin :P Do you guys think it matters what denominations I buy the coins in in terms of investing. I plan to hold them for a while. Would it be difficult to sell the smaller denomination coins should I decide to sell them in the future? Any advice/insight is greatly appreciated!
Oh, by the way, I already own some silver buillion with goldmoney.com. So I am now thinking about adding to that with gold. Thanks! :)
Welcome to the forums. I’m not a coin buyer myself, but I have done a little research. For gold coins under one ounce the dealer mark-up over spot price, to buy and again to sell, climbs rapidly. This makes them a poor value. If you want to have smaller values you can sell with flexibility then consider one ounce silver coins. A popular alternative is “junk silver”, the dime, quarter, half, and dollar coins of the US before 1965.
i agree 100% with travlin's comment, above.
1 x 1oz gold eagle would be $1778 at ampex (today's prices), while 10x 0.1 oz gold eagles would cost $2020. you'd be paying an extra $250 and still just getting 1 oz of gold.
i would also like to add, if you are buying gold/silver for wealth preservation, the best buy is bullion, not coins, in my opinion. when you buy coins you are paying for numismatic / collectible value, which is for the most part lost over time. minimize numismatic premium and other fees and try to maximize the amount of gold/silver you are getting.
Theoretically this advice makes sense. But, in practicality, for the purposes of most individuals here (and we'll get to that in just a moment), I'd disagree. First of all, there is the difference between the premium for a collectible coin and the premium for a bullion coin. The premium for a bullion coin is lower than the premium for a collectible coin (although still higher than bullion in the form of a bar, for example). But there is a reason for that premium and that is the liquidity issue. Coins sell much more easily outside the channels of selling back to large dealers than bars do. Those channels could be difficult to access under any number of scenarios that are easy to envision. Try a test run of selling coins vs. bars (as some have) and see how it works out . Also, coins are more identifiable as genuine and authentic (i.e. not counterfeit) and their content is more readily recognizable and determinable as well.
If one is making large purchases of gold or silver (7 figures or higher) where one is not concerned about short term liquidity issues, then I'd say, yes, go with the bullion bars (after having them assayed). But the poster was discussing a very small quantity of gold. In a stress scenario, the average person is generally unable to determine the value and/or authenticity of gold dust, gold nuggets, gold scrap, most gold bars or rounds, etc.
I decided to do like-for-like exchanges of bars for coins for this and other reasons when I saw the difficulties encountered in real world exchanges when running sell simulation tests. YMMV.
I am with AO. I recommend buying </= 1 oz coins of readily identifiable, highly liquid format. My own personal favorite is US Buffalos, either in original mint plastic lamination, or MS-69 slabbed (adds about $20 - $25 per coin). I like the Canadian maple leaf special addition .99999 coins as well (latest is the Mountie) because of the nice mint packaging that attests to the Gold (high purity) assay, unique among Gold coinage.
If we get into a SHTF situation, and two of us are offering a Gold coin in barter for the same item, I promise that my PCGS slabbed Buffalo is going to be more liquid than a loose Krug, or a generic bar.... and the extra $50 I paid will be well worth it. As well, in non-SHTF situations, the coins retain their relative premiums when selling back to reputable dealers...
you can see this quite readily on Tulving's website, where he lists his buy prices next to the sell prices;
Thanks so much for your input :) I think I'll go with bullion coins -- either 1oz silver or 1/2 oz gold. I think Chris recommended 25% of each (1, 1/2 of eagles and 1, 1/2 of maple leaf) for a "starter set".
I'd start with silver and move upwards later. I started with a base of junk silver dimes, quarters and halves, then moved up to the american eagle silver dollars then paper gold (GLD) for simplicity, finish with a variety of actual gold coins, american, all sizes. From there you can get other countries gold etc... The premiums are killer if you trade back in and out a lot.
Just for the record, silver dollars and silver eagles are different.
Also, you may want to peruse the archives for why a prudent investor would handle an investment in GLD as carefully as an epileptic black mamba on meth (meaning not at all!). Have you actually read the prospectus for GLD?
Coins sell much more easily outside the channels of selling back to large dealers than bars do. Those channels could be difficult to access under any number of scenarios that are easy to envision. Try a test run of selling coins vs. bars (as some have) and see how it works out . Also, coins are more identifiable as genuine and authentic (i.e. not counterfeit) and their content is more readily recognizable and determinable as well.
you raise a good point, though, it's impossible to guess what is entailed in a "stress scenario" - no gas to drive to the nearest PM dealer? armed gangs roaming the streets? no usps/fedex service to ship your items to a buyer? complete breakdown in trust? i wouldn't necessarily expect that this average person you mention will be the best buyer of my PMs. a dealer will likely be the best bet to maximize return on investment.
i have both PAMP suisse 1oz gold bars which come sealed/assayed with certificate, and canadian 1oz silver maples, as an easily recognized / liquid item that can be used for exchange if needed.
but for the most part i am currently only buying 100oz silver bullion bars as i believe they will be the best bang for the buck for the long term.
on how you think you will end up using the coins.
If you think they will be used for trade/barter, I think smaller may be better. But bigger would work if you use a bar to purchase a home or land.
If you think you will buy now to sell later at a much higher price to a dealer, then the larger bars may be better (with lower premiums)
I have mix and match. I bought some 1/10, 1/2 & 1 oz bullion coins, as well as some 1 oz & fractional bars.
I also added some junk silver, ASEs, Maple Leafs and a few 2012 Australian Kookaburras (just for fun) and silver bars to the stack.
Since I don't KNOW what is coming, a little diversity in my investment makes me think I have several scenarios covered
Plus, for me anyway, the smaller cash outlay for the smaller bullion, keeps me stacking on a consistent basis, even though the premiums are a little higher. But, if prices head up....in the long run, I think (hope) I will still bring in a little profit if I decide to sell. I suppose only time will tell.
There are a number of problems with this thinking. Larger bars have lower purchase premiums but you also take a bigger hit on resale in most instances because the dealers know you will have a difficult time selling such a bar to anyone but a dealer. Which brings us to the second problem ... the size of the larger bar limits the number of your prospective buyers. Third, ever try and ship a large bar back to a dealer? Kilo bars are running in the 55K range. There is no shipper (short of a very expensive armored car service) that will ensure a precious metal shipment that large. Fourth, your local coin shop is unlikely to want to plunk down the money, in one fell swoop, for a larger bar. Fifth, larger bars are much easier to counterfeit than coins and there are more and more counterfeits floating around out there.
As far as the smaller fractional gold coins go, that's what silver's for.
Check the friendly archives. These subjects have all been discussed at length previously.
Good points...I haven't really thoroughly studied the larger bars, since I don't really have that kind of cash to purchase. So, my comment was just a thought that jumped in my head as it might make sense to purchase larger items such as land. But, what do I know? lol Thanks for the clarification
I became aware of there possibly being more GLD than actual gold held in London so I sold most of it last year but kept some still. Paper gold is just easier to buy and sell but should be part of a complete diversity of holding type, coins and paper.... mostly coin is probably safer depending on how you store it etc..
if you are going to be long in paper gold, consider PHYS and GTU, which are fully backed by gold.
GLD is not.
I have got 20 coins of one-ounce each from store.sprottmoney.com . I am on my way to buy 10 more gold coins as smaller denominations are preferable to me.
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