Gold coins
It is believed that the first minted gold coins were introduced some 2,700 years ago. Since that time they have been used sometimes together with and sometimes as a substitute for other forms of currency. These coins have functioned as a medium of exchange (the usual purpose of currency) and have also served as a final store of value and unit of account.
Collecting and investing in gold coins
The Byzantine Empire had a gold-based monetary economy during its entire 1,100-year history. It issued gold coins containing approximately 4.5 grams of this beautiful precious metal. These coins were known as the bezant and enjoyed free circulation both within and outside the territories of the empire for 645 years, from the time the Byzantine capital of Constantinople was established in 324 CE until 969 CE.
There are two broad classifications of precious metal coins: gold bullion coins and numismatic gold coins. Bullion coins are coins whose value is strictly related to their gold content. On the other hand, numismatic coins are coins whose worth is estimated as much on their condition as on their rarity or history.
A hybrid classification, to which the semi-numismatic gold coins belong, is also becoming popular among investors and collectors alike. Semi-numismatic gold coins are not as hard to come by as the true numismatic coins, and their prices combine the value of their gold content plus a perceived value for rarity.
Bullion coins
Gold bullion coins are minted by governments, which guarantee the content of the gold. These coins come in a wide variety of shapes and sizes. You will find that some are made from pure gold, while other coins are mixed with copper to act as a hardener. The American Eagle, the Mexican Peso, the Australian Kangaroo, the Canadian Maple Leaf, and the South African Krugerrand are the major gold bullion coins.
If you are an investor who would like to buy gold in small amounts, then bullion coins are the ideal investments for you. You can usually purchase gold coins weighing 1 troy ounce or more, but there are also coins in smaller denominations. Bullion coins are sometimes bought as a final store of value by those who fear a possible worldwide disaster, since gold coins are easily carried and exchanged.
Numismatic gold coins
Numismatic coins are rare coins, not traded based on the content of gold but rather on their value as collectors’ items. The price also take into account the quality or condition of the coin and its demand (popularity) among coin collectors. For very rare numismatic coins, their bullion or gold content is a minor element in pricing.
Categorizing the condition of rare numismatic gold coins, called grading, can be a very complicated business because of the highly subjective process involved in estimating the value of coins. Grading is critical because there may be minute scratches almost invisible to the human eye which can reduce the price by several hundreds of dollars.
Note, however, that since the grade of gold coins is based on the opinion of an expert, error or fraud may exist. You have to watch out for dishonest dealers who may downgrade coins when they are buying but overgrade the same gold coins if they are selling them, thus making more money for themselves.
If you are into collecting and investing numismatic gold coins, deal only with reputable dealers of coins. Such dealers will guarantee, without qualification, to return your money or exchange the coins if the experts’ grades are in conflict. Before you purchase numismatic coins, you should make sure to consult guidebooks. Compare prices from at least three different dealers so you can get a good idea of the value.
