Gold coins hold a great attraction for many of us from the time we are children. The very mention of gold coins conjures images of hidden treasure and old wooden chests full of coins in our heads. For more serious buyers of collectable gold coins, numismatics is more than just a hobby. It is an investment, which they hope will reap rich rewards in the years to come. Yet another class of investors choose to buy gold bullion as an investment and not as a collectable. Many of these investors prefer to buy their gold bullion in the form of coins.
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Coins are easy to store and come neatly wrapped in their own packaging or stacks loaded in cases. They can also be sold or liquidated in smaller quantities, as opposed to gold bars (especially 1KG bars), although smaller bars such as 100g and 1oz can be bought.
Gold coins are also preferred by many for their aesthetic value, in addition to their convenience, when it comes to storage and disposal. Several investors see these investments as an integral part of their portfolio expansion strategy and hedging of risks.
If you’re an investor, looking to invest in gold coins, here are a few things you should know. Also, check out our beginners guide to gold terms here.
If you’re unsure whether the gold coins you just received are real are not, the best way is to take them down to a gold expert to ascertain their authenticity. However, there are several things you can do at home to check whether the coins are real. We must remember that precious metals are incredibly dense. This means if the weight of the coins you bought is right, the size would be too large. In the same way, if the coins are forged using a base metal and the diameter and thickness are accurate, the coins would be too light.
So, simply measuring the diameter, thickness and weight of the coin and confirming that it’s accurate could be one way of making sure that the coins are genuine. This test can be done at home with a set of inexpensive tools, such as a set of Vernier callipers and a jeweller’s scale. Another home test involves using a magnet. Since gold coins (such as Sovereigns and gold Britannias) are not magnetic, the magnet should drop off instantly.
If you’re a more serious investor, you could also use a device called a Fisch Tester to test your coins. The device measures 4 parameters, namely the thickness, diameter, weight and shape of the gold coin to ascertain its authenticity. While the tool is effective, you might have to purchase different testers for each different coin that you buy. Each tester and its parameters are designed to fit different coins like the Krugerrand, American Eagle or the Canadian Maple Leaf. Buying so many of these machines is likely to set you back a bit, and is only worth the investment if you’re an avid buyer of gold coins.
There’s an app for everything these days, and sure enough, there’s one to test the authenticity of your gold coins as well. These apps work on the ‘ping’ test and can detect whether or not your gold coin is genuine, simply by the sound it makes. The first of these apps is called Coin Trust and you can test your coin by selecting the specific coin you want to test from a drop-down menu within the app. Next, spin your coin on a hard surface and just have your smartphone microphone nearby. Yet another one that works on the same principle is called the Bullion Test app, and you need to balance the coin on your fingers and hit it to produce a sound.
A reputed gold coin dealer will usually provide you with a 10 commandments certificate of authenticity from a bona fide coin certification agency like the PCGS or NGC. Once you are satisfied with your purchase, do not open the original packaging or the slab that the coin came in. If the packaging is removed, it could cast doubts on the purity or authenticity of the coin when you plan to resell it. When buying in bulk, aim for a discount!
The Physical Gold Limited team of gold coin experts can guide you on how to buy gold and make the right coin purchases, as well as ascertain the authenticity of your purchases. Call us on 020 7060 9992 or email us to connect with our team. The right advice can help ensure you buy the right gold coins and help you get great returns on your investment in the long run.
Image credits: Money Metals and Motoyen
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.