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What are the Best Tips for Investing in Gold Coins?

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  • Written By: A. Leverkuhn
  • Edited By: Andrew Jones
  • Last Modified Date: 03 February 2020
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For those who are interested in investing in gold coins, some of the best tips from finance professionals, experienced traders, and others, focus on how to understand the market for gold, as well as knowing about how coins in particular are often bought and sold within their own markets. Individuals who want to make a solid investment in gold have many options available to them, from raw gold, or gold bullion, to crafted items like coins. It’s important to know the difference between these various options in order to make the best investments.

One of the first and most important tips for investing in gold coins is to understand the greater market context for precious metals, including gold. Precious metals are essentially commodities, but they are also items that get abstracted into various funds, stocks, and other financial instruments. The price of raw gold is a specific value that changes, but always has its roots in what the global community agrees is the current value for gold by the ounce. The ways that this price changes have a huge effect on buying or investing in gold coins.

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Another great tip for investing in gold coins is to figure out your desired exposure to gold as a part of your overall portfolio. Finance professionals recommend that every investor have a very deliberate plan to diversify economic holdings. That means looking at what percentage of your available capital you want to put into gold, not just "buying some gold coins on a whim," but actively hedging your risks for gold or anything else with a structured multiple investment plan.

Those who are interested in buying gold coins as an investment also need to understand the issues around numismatic value, or the value of coins as opposed to raw gold. This common tip is critical. Without a good knowledge of how coin values compare to bullion values, the single investor can be easily duped by various companies recommending gold coins without a solid and reasonable disclosure of the risks of owning these bits of metal. The basic idea is that numismatic value is a value that is largely independent of the actual value of the raw gold that was used to make the coin. The problem is that timing numismatic values can be vastly more complex than timing values for raw gold, i.e. for buying and selling your physical pieces of gold.

Since gold coin sellers may not be counted on to objectively explain numismatic values to the buyer, investors have to do this research on their own. Another good tip for investing in gold coins is to be exhaustive with the research around a specific coin’s value. Not all coins have a risky numismatic value: for example, the South African gold Krugerand actually does have a value fixed to the value of raw gold. Investors who can tell the difference between coins carrying numismatic values and those tied to the price of gold can make the best decisions about what to buy and when to buy.

As well as knowing what to buy, investors also have to know about how long to hold onto gold coins. This involves a particular holding strategy which is part of good investing, no matter what the holdings consist of. From a traditional “buy and hold” strategy, to a modern day trading perspective, think about exactly what you are doing with the gold coins that you buy, in order to profit from their sale at some future date.

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