Buy Gold Bullion Coins
Gold Bullion Coins
Throughout history, gold has always been considered a valuable resource and has been used for trading as far back as the early days of Mesopotamia. However, gold has only been made into coins since the 6th Century BC.
Gold bullion comes in two forms, bars (ingots) and coins. Bullion is defined as being a commodity of which the value is purely weight and gold content. There is no intrinsic value from the decoration on gold bullion coins for example, except to a collector rather than an investor.
History of Gold Coins
The first ever coins, produced for King Croesus of Lydia, were actually an amalgam of silver and gold, which is known as electrum. They were a very pale gold colour and depicted the image of a lion on one side and a seal on the other. By 560 BC, the Lydians were able to separate the two metals and produce pure gold coins.
The use of gold as coinage has spread from one culture to another through the years. The Ancient Greeks and Romans both used gold as currency, believing that it was created by the gods from a mixture of sunlight and water. Every culture that has used gold for currency has revered it and considered it to be an item of great value.
Gold is a very malleable metal and proved easy to turn into coins. Gold coins have a fascinating appeal to collectors (numismatists) and investors alike. One of the most sought after coins in modern times is the South African Krugerrand, which originates from Witwatersrand, dating back to the 1880s.
Today, the Rand Refinery still produces the blanks that eventually become Krugerrands and it is one of the biggest in the world. Krugerrands are somewhat unique in that they are both legal tender coinage as well as gold bullion.
The first Krugerrands were issued in 1964 and each coin has its official weight in gold stamped into it, making it clear exactly what is being purchased. The original idea behind creating Krugerrands was that anyone could have their own, albeit small, piece of gold bullion.
A Few Interesting Facts
• The word, gold is derived from 'gelo', an Old English word, which means yellow
• Gold is nineteen times the weight of water, making it one of the heaviest metals in the world
• Gold does not deteriorate in any way through oxidisation, corrosion or decay
• The Australian Kangaroo is the gold bullion coin weighing the most, at 32.15 ounces
• The most popular coin in modern times is the American Gold Eagle, first produced in 1985
Fineness, Carat and Grading
Fineness refers to the actual gold content of a gold bullion coin and it is expressed in thousandths. As an example, if the fineness was .900, the coin would be 90% pure. In reality, gold bullion coins are required to have a fineness between .900 and .999.
The carat (or karat) weight of gold relates to a definition of purity. One carat equals 200 milligrams (0.200 grams). There is also a correlation between fineness and carat weight:
24 carats = 1000 fine (pure gold)
23 carats = 958.3 fine
22 carats = 916.6 fine (common for many coins)
21 carats = 875.0 fine
Not all gold bullion coins are collectors' coins and vice versa, but there is some crossover. Other ways to value gold coins include age, condition, rarity and the amount that were minted. Condition grading is done by a visual evaluation known as GCC. The less wear, the higher the grade.
Trading in Gold Bullion Coins
The European Commission publishes an annual list of gold bullion coins, which are exempt from VAT on the basis that they are investable. The list is considered a legal document, with infringements punishable by law.
Gold bullion coins trade at a similar price to gold bullion bars. There is a premium of between 4% and 8% payable when either purchasing or when selling gold coins, the exact percentage being determined by the quantity being traded.
It is essential to use a reliable source for the purchase of gold bullion coins. There are many excellent fakes circulating that are almost impossible to spot unless you are an expert in numismatics. As well as this, dealing with commodities on the stock market is a task best left to experts.
Conclusion
Trading in gold bullion coins can be very lucrative whether as a private investor or as a business. Gold is one of the few commodities seemingly unaffected by economic or political issues and which appears to show continuous, steady increases in price. Trading definitely requires a certain level of expertise and technical knowledge and unless you are an expert, it is essential to seek the advice and services of a stable and reliable gold dealer.