Gold Coin Prices
A question sometimes asked regarding investment grade coins; why are the gold coin prices often higher than the price of their gold content?
Well, the premium you pay on gold prices is thanks to a few reasons. Of course, there is the minting process. They don’t simply divide the gold into one ounce pieces and call it a day, but rather, there is the entire striking process, there is the running of the Mint itself, then of course, the filler metals, used to strengthen the 24 karat metal to produce the 22 karat blanks, and of course, the mixing process involved with that, and so on and so on. What it really comes down to, though, from an investor’s perspective, is that you’re paying for the convenience of trading in gold coins.
The convenience is key, and exactly why gold coins are becoming the primary way that many American investors choose to get involved in the metal. By having not only the one ounce coin, but the half ounce, the tenth ounce, and so on, you have a few advantages.
First, the metal is made more accessible to those who want to invest in gold but don’t always have a few thousand dollars whenever they want to buy some more for their investment. Where gold is often seen as an investment option open only to the incredibly wealthy, the tenth and half ounce coins make the metal accessible to middle class investors and even those just making ends meet.
Secondly, these gold coin prices of the smaller coins make it easier to move your investment money around no matter how much you can afford to invest. An ounce of the metal is in the area of nine hundred dollars as of the time of this writing. If you need to dip into your metals to cover some expense or other, and you only need a few hundred dollars, then it hardly seems wise to cash in a thousand dollars at a time when gold is still rising. Furthermore, any investor can enjoy the option of putting more into their savings whenever is convenient, and that doesn’t always mean buying thousands of dollars in coins at a time.
Of course, convenience and accessibility are the main reason people are becoming more interested in the coins themselves, but the reason people are becoming more interested in the metal in the first place is because, well, it’s gold, and this is a recession.
As the value of the dollar goes down, gold coin prices almost invariably tend to go up. It is unfortunate that so many investors waited until the dollar was already down to start investing in the metal, but at least they did start investing. With any luck, many of the young investors trying gold for the first time over the last couple of years will continue to use gold as the backbone of their investments in the future, as well. People entering the workforce today may say otherwise, but as we know, this isn’t the first recession, and it certainly won’t be the last.
Joseph Morton
August 9, 2009
