Gold coins have been used in circulation as well as being in collections for centuries. With the abolition of the gold standard, most gold coins were melted down or became collectible coins or bullion coins. Since the late 1970s, gold coins were used as investment and became fashionable almost overnight. The main event was the introduction of the Krugerrand and the lifting of the ban on private gold ownership in the United States in 1972, which had been enforced in 1933.
Important Criteria and Tips when Buying Gold Coins
The following tips are the 101 on how to successfully invest in gold coins. The most important criteria when buying gold is the price of gold, surcharges, VAT, tax, alloy, weight, fine weight, fineness, manufacturer, mintage number, scratch resistance, and degree of preservation.
Gold Price and Gold Coins
The price of gold coins is the composition of the current price of gold, which is traded on the commodity exchange, and the so-called premium levied by the Mint and the bullion dealers. Here, buyers should find out about the gold prices in recent years to develop a feeling for the gold price. It is of no use to the investor to buy gold coins when a peak has been reached. This is because the capital investment of gold coins may quickly lose value when the gold price drops. Many physical gold buyers secure the investment and hold it over the long term as a form of savings.
Furthermore, a significant factor in the price of investment gold coins is the premium, as it can vary from 2% to over 35%.The premium is in addition to the actual price of gold. This is the most important criteria, because it will determine the final price of the gold coin.
Premiums
The premium includes the cost of minting, packing, insurance, transportation of the mint and the bullion companies margin. The main factor for the premium is the size of the gold coin. The 1 ounce gold coin has the smallest premium, which usually ranges from 2% to 5.5%. Smaller weight coins, also called fractional sized coins, such as 1/10 oz can have premiums of over 15%. You want to get as much gold for your money? Then the 1 oz gold coins are the most sensible option. Gold bars have even lower premiums.
Furthermore, there are differences between the various gold coins and manufacturers such as Maple Leaf, Krugerrand, Britannia etc. The premium is different because, firstly, each institution has a different cost structure for embossing.
Secondly, the mintage influences the premium. This can be seen clearly with the Vienna Philharmonic, Krugerrand and Maple Leaf as these 1 oz gold coins in most cases have a small premium of just over 3%. Other bullion coins such as the Britannia trade at a higher premium of more than 5%.
Third, the premium for the current year's coins is often higher, as these gold coins are uncirculated and come directly from the Mint. Demand for the uncirculated coins is usually very high.
Fourth, the difference in premium can vary by alloy components, as is the case with the "American Eagle". This gold coin has a three percent share of silver, whereby the surcharge may be slightly higher, as silver over copper is a more expensive alloying ingredient and thus slightly increases the cost of manufacture.
VAT
The biggest advantage of gold bullion coins is the VAT exemption. In Germany §25c Umsatzsteuergesetz regulates the VAT exemption. Gold coins must in this case be recognised as investment coins and meet four criteria: the coin must have been minted after 1800; be of a purity of 900/1000; the value of the gold coin may not exceed more than 80% of the open market value; and the coin must be legal tender in the country of manufacture.
Different Types of Investment Gold Coins
There are a lot of investment coins available to buy on the world market. Some of them are very old and were minted more than 100 years ago. For example the Sovereign is the most famous with a total circulation of more than 2 billion pieces. Most bullion coins were introduced after the 1967 Krugerrand.
Krugerrand
The most famous gold coin in the world is the Krugerrand. The coin has been minted by the Rand Refinery since 1967, and is from South Africa. The Rand Refinery is by far the largest precious metals processing refinery in the world. According to data, the refinery has processed approximately 50,000 tons of gold, equivalent to over 30% of the world's gold ever mined. Krugerrand gold coins have 22 karat, which is a fineness of 916⅔ / 1000. The alloy components are 91.33% gold and 8.67% copper. This high copper content gives the coin it’s reddish golden colour that still may slightly oxidate with age. The appearance of the gold coin has not changed since 1967.
Also one of the best-selling bullion coins in the world is the Maple Leaf gold coin. The Maple Leaf gold coins are minted in Canada at the Royal Canadian Mint. It is the official Mint of Canada and among other things is responsible for the production of the Canadian dollar (CAD). The first edition was launched in the year 1979. Maple Leaf gold coins had a fineness of 999/1000 until 1981. Since 1982 it has been produced with the fineness of 999.9/1000. The design on the front shows a maple leaf, the design on the back shows Queen Elizabeth II. The gold coin has a rippled edge and rod for more stability.
Advantages and Disadvantages Maple Leaf
+ very good brand recognition
+ low premium
+ recognised worldwide
- low scratch resistance
Details Maple Leaf
Country: Canada
Mint: Royal Canadian Mint
First year of Mintage: 1979
Karat: 24 K
Fineness: 999.9/1000 since 1982
Weights: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz, 1/20 oz
Scratch resistance: bad
Vienna Philharmonic
The best-selling European bullion coin is the Vienna Philharmonic. The gold coin was released in 1989 by the Austrian Mint AG and was an instant bestseller in Europe and even worldwide. The Austrian Mint AG is the official manufacturer of the Austrian Euro and other coins, such as the Maria Theresa thaler. The Vienna Philharmonic gold coin consists of 24 karat pure gold, with a fineness of 999.9 / 1000. The appearance has not changed since the the first year of mintage. The coin shows on the obverse the famous organ of the Vienna Orchestra in the Golden Hall. Reverse shows typical instruments of classical music, including the horn, bassoon, harp, cello, two violins and two violas. The Vienna Philharmonic is also available as a silver coin.
Advantages & Disadvantages Vienna Philharmonic
+ very good brand recognition
+ resistant gold colouring
+ low premium
+ recognised worldwide
- poor scratch-resistance
Details Vienna Philharmonic
Country: Austria
Mint: Austrian Mint AG
First year of Mintage: 1989
Karat: 24 K
Fineness: 999,9 / 1000
Weights: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Scratch resistance: bad
American Eagle
The gold bullion coin American Eagle is minted by the United States of America. The superior office of the four mints is the United States Mint. The first issue of the American Eagle was in 1986. This year was not chosen without reason, since in 1986, a ban on imports of Krugerrands was imposed by the United States and the European Community. Although the American Eagle has been around since 1986, it can not be put on the same level as the Krugerrand, Maple Leaf and Vienna Philharmonic, since they have much higher specifications. The motif of the gold coin has remained unchanged since 1986, it shows Lady Liberty on the front and on the back an eagle landing on its nest, with a second eagle and a chick. In the clutches of the flying eagle is an olive branch, which stands for freedom. An advantage and disadvantage at the same time for the American Eagle gold coins is the alloy. The 22 karat alloy has 5.33% copper and 3% silver, has good scratch resistance and thanks to the silver content, a not too reddish tint, as is the case with 22 karat gold coins. The hard copper is responsible for the good scratch resistance. Silver acts to negate the copper tone to the colour, as silver is considered to be one of the brightest precious metals in the world. Another small drawback is the slightly higher premium, which is caused by silver being a relatively expensive alloy.
Advantages & Disadvantages of the American Eagle
+ very good brand recognition
+ good scratch resistance
+ recognised worldwide
+ beautiful colouring
- slightly higher premium
Details American Eagle
Country: USA
Mint: United States Mint
First Year of Mintage: 1986
Karat: 22 K
Fineness: 916.7 / 1000
Gold: 91.67%
Copper: 5.33%
Silver: 3%
Weights: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Scratch resistance: good
Australian Kangaroo
One of the finest investment gold coins in the world is the Australian Kangaroo (Australian Nugget / Kangaroo). The first year of mintage of the Australian Kangaroo was in 1986, the same year the American Eagle was released. Produced by the Perth Mint, one of the major refineries and mints in the world. The Perth Mint was established in 1896 as a branch of the Royal Mint London. The Australian Kangaroo gold coin is 24 karat, with a fineness of 999.9/1000. The nominal value is indicated in AUD.
A special feature relates to the name of the gold coin. The coin was issued in 1986 as the Australian Nugget. The motifs show famous nuggets which had been found on the Australian continent. Since sales remained below expectations, a new design was chosen in 1989 for the new series and also the name of was changed to Australian Nugget / Kangaroo. In 2008, the nugget was permanently removed. Since then the Gold Coin is called Australian Kangaroo.
Advantages & Disadvantages Australian Kangaroo
+ excellent brand recognition by the subject of the kangaroos
+ recognised worldwide
+ beautiful colouring
+ resistant gold colouring
- poor scratch resistance
Details Australian Kangaroo
Country: Australia
Mint: Perth Mint
First Year of Mintage: 1986
Karat: 24 K
Fineness: 999.9 / 1000
Gold: 99.9%
Weights: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Scratch resistance: bad
Australian Lunar II
Another very successful investment coin series from the Perth Mint is the Lunar II. It has been minted since 2008 and is the successor to the Lunar I series. The Lunar II is 24 K with a fineness of 999.9/1000. The theme of the gold coin is the 60-year-old Chinese zodiac calendar. The motif of the coins change according to the 12 zodiac signs of the Chinese calendar annually. The zodiac signs are: Rat, Ox, Tiger, Rabbit, Dragon, Snake, Horse, Goat, Monkey, Rooster, Dog and Pig. The coin appeals to the Asian region as its subject, the zodiac signs, is very popular.
Advantages & Disadvantages Lunar II
+ good brand recognition
+ recognised worldwide
+ beautiful colouring
+ resistant gold colouring
- poor scratch resistance
Details Lunar II
Country: Australia
Mint: Perth Mint
First Year of Mintage: 2008
Karat: 24 K
Fineness: 999.9 / 1000
Gold: 99.9%
Weights: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Scratch resistance: bad
Sovereign
One of the oldest and most famous gold coins of the United Kingdom is the Sovereign. The coin had a renaissance in 1817, after it had lost importance over the centuries. The first issue of the Sovereign was in 1489 under Henry the VII. The Sovereign is the most embossed gold coin of the United Kingdom and has a total circulation of 2 billion pieces. Previously, the Sovereign was a typical coin in circulation, however today the coin is minted as a bullion coin annually. The front of the Sovereign shows the image of the respective rulers of the United Kingdom such as Queen Victoria and Queen Elizabeth II. The design on the back usually shows Saint George slaying the Dragon. In some vintage editions another representation can be seen. Since 1817 the Sovereign has had the same alloy, it is composed of 91.67% gold and 8.33% copper. Due to this high percentage of copper, the coin is very scratch-resistant, but has a distinct reddish golden colour. It was coined in different countries of the British Empire:
Mints Mint Mark
Pretoria (South Africa) SA
Sydney (Australia) S
Melbourne (Australia) M
Perth (Australia) P
Ottawa (Canada) C
Bombay (India) I
London (United Kingdom) without mintmark
Advantages & Disadvantages of the Sovereign
+ recognised worldwide
+ scratch resistance
+ relatively poor recognition by various motives
- slightly higher premium
- unusual weight units
Details Sovereign
Country: United Kingdom
Karat: 22 K
Fineness: 917/1000
Gold: 91.67%
Copper: 8.33%
Sovereign (1 pound) fine weight: 7.322 g
Half Sovereign (1/2 pound) fine Weight: 3.661 g
Scratch resistance: good
Britannia
The Britannia is another bullion coin of the Royal Mint. It was introduced in 1987 in order to secure market share at the time of the imposed ban on Krugerrand imports. The Britannia has a typical 22 karat gold alloy, and had a share of 8.33% copper until 2014. This high copper content gives the coin a good scratch resistance, but a distinct red colour. The copper is responsible for ensuring that the gold coin gets darker in colour over time. A disadvantage of Britannia is the slightly higher premium because their circulation is relatively low. The design on the front is the Britannia, it is an allegory for the British Isles. The reverse shows, like all Commonwealth bullion coins made of gold, the current rulers of Empires. Since the first edition only Queen Elizabeth II is shown.
Advantages & Disadvantages Britannia
+ recognised worldwide
+ beautiful colouring
+ good scratch resistance
- slightly higher premium
Details Britannia
Country: United Kingdom
Mint: Royal Mint
First Year of Mintage: 1987
Karat: 22 K, 24 K since 2013
Fineness: 916 ⅔ / 1000, 999.9/1000 since 2013
Gold: 91.67%
Copper: 8.33%
Weights: 1 oz, 1/2 oz, 1/4 oz, 1/10 oz
Scratch resistance: good
China Panda
The China Panda gold coin is a very nice bullion coin. It is minted by the People's Republic of China, the official issuing authority is the China Gold Coin Incorporation. The first edition of the China Panda arrived on the market in 1982. The Panda is a 24 karat gold coin with a fineness of 999/1000. The theme of the series is the Panda, the subject of the display changes annually. The so-called Reflection Minting has been used for several years now. This method enables better black and white representation of the pandas. Since 2016 the China Panda has been issued in grams as the weight unit of the ounce is no longer "allowed" in China.
Advantages & Disadvantages China Panda
+ good brand recognition
+ recognised worldwide
+ beautiful colouring
- poor scratch resistance
Details China Panda
Country: China
Mint: China Gold Coin Incorporation
First Issue: 1982
Karat: 24 K
Fineness: 999/1000
Gold: 99.9%
Scratch resistance: bad
Advantages and Disadvantages of Gold Coins as an Investment
Non-depreciating & Valuable
Gold has always been sought after, on the one hand because it is very rare, and partly because gold has a magical attraction to humans. Gold can not be produced artificially, it can only be mined. In addition, it has properties that make it very valuable for industry and crafts. These properties include: excellent electrical conductor (see gold leaf); and does not corrode. The greatest demand is generated by the jewellery industry as currently about 85% of the processed annual amount of gold is needed in the industrial and crafts area. For all these reasons, gold is very valuable and gold coins as an investment are sought after.
VAT Exemption
Recognised Gold Bullion Coins have the great advantage in that they are exempt from VAT in Germany and most parts of the world. This is the opposite of silver where VAT of 19% has been due since 2014 in Germany.
Storage
Gold Bullion coins do not require a lot of space when it comes to storing them. In comparison with silver which takes about 60 times more space for the same invested amount of money.
Quickly Available
The nice thing about gold coins is also that when money is needed a few coins can be removed from the inventory and can be exchanged immediately for cash at a precious metals trader. Also, gold is easy to buy and sell almost everywhere in the world. This can be done online, in physically located precious metal dealers or in almost all banks.
Recognised Worldwide
The most important investment gold coins are recognised worldwide as the mints. and thus the country. guarantee the quality. Thus one can take gold coins on travels and use them as a cash reserve. The gold price is very transparent and this type of gold bullion investments has a global standard.
An Ideal Gift
A large number of customers buy gold coins as gifts. The occasions vary, but the meaning behind it is always the same: an investment for the future. Occasions are communions, weddings, birthdays or just because you want to provide for your loved ones.
Criteria Investment Gold Coins
In order to get benefit from the VAT exemption for gold coins, you should know the exact criteria. The criteria are set out in Germany in paragraphs §25c UStG. In addition, the gold coin must be approved by the Ministry of Finance as a VAT-exempt investment coin. The following criteria must be met:
the gold coin must have been coined after 1800's
the gold coin must be legal tender in the country of manufacture or have been
the gold coin must not exceed more than 80% of the open market price
the fineness must be at least 900/1000
Reporting Requirements from 2,000 Euros in Cash
One important piece of information on the subject of precious metals is the duty of the seller to identify the buyer, which shall apply from a purchase value exceeding 2,000 euros. For people buying their gold by credit card, PayPal, bank transfer or other digital payment methods this is not relevant, because the individual is already identified. For buyers who want to remain anonymous, the so-called over the counter business is the only and true method. The over counter trade is possible for all gold, silver and other precious metals. Currently it is still possible to buy gold and silver anonymously for up to 1999.99 Euros without the identification of customers. There is no clear ruling about multiple purchases up to this sum over a short period of time. In this case the bullion company has to be recording the customer data.
History of Gold Bullion Coins
The Krugerrand was the first real investment gold coin and was born in a time of upheaval as the money supply increased significantly. In 1971 the US resolving the gold parity after going bankrupt in 1969. Since 1968 the price of gold could develop freely again, as a dichotomy of the gold market has been decided. In 1972, the private ownership of gold was again allowed in the United States, although it was still banned in 120 countries around the world. As demand rose, gold coins were restored, the Krugerrand especially benefited, since no serious competition was available. In 1979 Canada introduced the Maple Leaf to the market and it is still regarded as one of the highest circulation bullion coins in the world. In addition, old Gold coins from circulation were gradually viewed as bullion coins, as they still exist in high numbers. The Sovereign should be regarded as the best example, because its history as coin in circulation covers several centuries and it is now minted every year as a bullion coin.
Repeal of the Ban on Private Persons Gold
Country Year
Germany 1955
United Kingdom 1971
USA 1972
China 1983
Russia 1987
India 1990
Gold and Gold Coins Main Details
Gold does not corrode
Gold is a precious metals colour
Appearance: metallic yellow
Gold content in the Earth's crust: 0.004 ppm
Elements Symbol: Au
Melting point: 1,064 °C
Boiling point: 2970 °C
Gold comes from the Indo-European. The root word is "ghel" and means something like (yellow, glossy).
Very high electrical conductivity
Very high thermal conductivity
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