Gold coins have been around for quite a long time. In fact, gold coins have been around since coins have existed. Gold’s usage in coinage was very popular for a number of reasons, one of the main reasons being that it was easy to carry and had a high value. It’s logical to assume that it would have been more convenient to go to market with several small gold coins rather than hundreds of copper coins.
While gold coins were initally used for the purchase of goods and services they are now either owned by collectors or investors.
Collectors are interested in more than the value of the gold in a gold coin. The value to collectors lies in a number of factors such as rarity and age. The rarer a coin is the less supply there is to keep up with demand, typically pushing its value higher. In a sense gold coin collectors can be considered investors as well, especially those that anticipate a coin’s increase in value over time. As an example of an extreme price that a gold coin has been sold for, a Double Eagle coin has been sold for a record 7.5 million dollars. That’s quite an impressive increase in value from its original $20 face value.
Investors choose gold coins for reasons different than those of a collector. An investor is mainly interested in the weight and purity of the coins and their potential appreciation in value. Gold coins used by investors are known as bullion coins. Gold Bullion coins are valued for their gold content rather than any aesthetic value they may possess. Coins are of a convenient size to make storage simple as a large dollar value of coins can be stored in a relatively small space.
Gold coins are sold at a small premium to the actual value of gold as there are manufacturing and storage expenses associated with it. This premium is a cost which the gold coin investor must factor in in order to make a profit. The level of the premium is typically small. Because gold coin investors hold onto their coins for long periods of time the small amount of the premium should easily be overcome by the appreciation of the coin over time.