Gold coins are valued using four different qualifying factors: quality, popularity, grade, and rarity. Due to the collectible nature of gold coins they quite often sell for more than the spot gold, or gold melt, price. All five factors come into play when considering whether or not to make a gold bullion coin purchase. Generally gold bars are a better value to purchase if the investor is looking for purely a gold investment as they sell for a very low minimum above the melt price. Educate yourself for how to value a gold coin so you can avoid overpaying when you invest. Here is a bit on each factor:
Quality- Quality is a difficult factor to measure. Quite often the beauty of a particular coin will influence it’s value on the market. But also quality has to do with the strike, the shine, and the color of a coin. Unfortunately not all coins are minted exactly the same and as such some have a lower quality of execution. If you are truly looking for a valuable coin, look both at its rarity, and it’s quality. Another factor to consider is the the date it was minted. Most coins have key rare dates where they were minted in lower quantities. A coin of lower quality, but of a higher rarity is often worth the tradeoff.
Popularity- As you invest in gold you will see that some coins are much more popular than other coins. The reasons are numerous, but the more popular a coin the higher a value it will command. The 1976 Krugerrand gold coin for example is highly popular, as are American Eagle coins before 1933.
Grade- A coins grade is the condition the coin is in and the amount of wear and tear it shows. Quite often investors will search for “uncirculated” coins which have not seen much movement and are near perfect. Be sure to inspect the coins closely or have them graded by a qualified professional as even the most minor of blemishes can devalue the coin.
Rarity- Coins that are rare, whether it is due to a limited quantity minted or a small number of surviving coins are always the best value to the investor. The NGC and PCGS both authenticate and certify the population of coins and the current general market value. The more rare the coin, the more valuable it is the better the investment. More popular coins like American Eagles, Gold krugerrands, and Maple Leafs are produced at a very high rate every year, and as a result do not appreciate in value as older and more rare coins.
Of course it can take a truly trained eye to accurately evaluate a gold coin. Much like a diamond, not all are created equal. If you are trying to build up a strong portfolio then you will want to invest in coins that are rare, popular, and of high quality and grade. Before investing be sure to consider these factors to determine the real value of the gold coins.