There are two broad types of gold: bullion and numismatic.
You’ve got to know the difference between bullion and numismatic gold coins before you start buying gold. Otherwise, your gold dealers will take advantage of your ignorance and you may find yourself overpaying.
In this video, I explain the difference between bullion and numismatic gold coins. I also share my recommendation on which of the two types you should buy, and some tips to avoid overpaying.
BULLION VS NUMISMATIC
Basically, the difference between bullion and numismatic gold coins is where their value lies.
The value of bullion coins is the metal itself. Gold is considered a safe haven investment that retains its value even in times of market uncertainty. It’s also a hedge against inflation. If you want to buy gold for these reasons only, it’s bullion you’re looking for.
The value of numismatic coins lies in the design or rarity of the coin. The numismatic category generally includes coin designs that are no longer produced. Numismatic coins are generally more expensive than bullion coins because of their rarity, design and collector’s value.
With bullion, you don’t pay a premium for the design because there are standard designs used around the world. Unless you’re a collector, bullion will get you the metal you want at the best price.
COMMON BULLION COINS
What are some of the standard gold bullion coin designs used around the world?
In Australia, there is the Australian Gold Nugget. This is a one ounce gold coin that features a kangaroo on its face. In Canada, there is the Maple Leaf, which features a Canadian maple leaf on its face. The United States has the Gold Eagle, which features an American eagle.
Because these are bullion coins, the availability is nearly universal. Your local bullion dealer will likely stock all of the major designs from around the world.
Note that the common bullion coins are alloys, meaning that they are not pure gold but mixed with other metals to add strength. If you held a piece of pure gold, you could probably bend it.
To preview all the world’s common gold bullion coin designs, Wikipedia is the best resource.
TIPS TO AVOID OVERPAYING
Let’s say you want to buy one ounce worth of gold bullion. How much will that cost you?
One of the standard gold bullion coin designs is the American Eagle. Typically, the gold bullion dealer will charge you $50 more than the value of the metal to cover the costs of manufacturing and their own profit margin.
Always check the price of gold online and verify that your bullion dealer is not trying to overcharge you. For example, if the price of gold is $1,250 per ounce, you should expect to pay approximately $1,300 for the coin.
Another tip is to know the limits of your knowledge. What if your dealer tries to offer you rare numismatic coins at a premium price? Unless you’re an expert on numismatics, you don’t know what is truly rare. Stick with bullion.
Finally, when you’re buying volumes of gold bullion worth into the six figures, you can also negotiate a better price with your bullion dealer.
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