Four Factors to Consider Before Buying Gold Coins

June 17, 2014 By ekr


By Tony Davis

As a coin and bullion dealer, we regularly meet with individuals who are interested in purchasing gold coins for the first time, and as you would expect, for newcomers, the number of potential options can be overwhelming. Inevitably, our prospective customers ask us which gold coins they should purchase. Rather than recommend a specific coin, we discuss with them a few factors that they should consider. Once we discuss the various options, including the pros and cons of each, we’re in a much better position to serve our customers. In today’s post, we’re going to walk through the same steps that we discuss with our customers by addressing four factors that you should consider before buying gold coins.

Sovereign vs. Private

You may have heard the term “sovereign” or “privately” minted gold coins in the past and may be confused as to the difference between the two. A sovereign minted gold coin is one minted or produced by a government-owned mint. Examples of sovereign issued gold coins include American gold eagles, South African gold krugerrands and Canadian gold maple leaf coins. One benefit in purchasing sovereign-issued gold coins is that they’re guaranteed by the issuing government to contain the exact purity and weight of gold as highlighted in the specifications. Secondly, government-issued coins are typically more recognizable than privately minted gold coins. However, there are also some widely recognized and respected private mints, such as Pamp Suisse, Credit Suisse, Engelhard and Johnson Matthey. Typically, government minted gold coins sell at higher premiums than privately minted gold bars and rounds, so the price difference should be taken into consideration before deciding on which item to purchase.

Numismatic vs. Bullion

Another factor to consider is numismatic versus bullion coins. Numismatic coins are typically purchased by coin collectors and contain collectible value over and above the coin’s bullion value. Factors that contribute to the value of a numismatic coin include the coin’s age, mintage, condition and number of coins still in existence. In fact, some coins, such as the 1933 St. Gaudens Double Eagle, are so valuable, that the gold content is almost inconsequential in determining the coin’s value. Some more reasonably priced numismatic gold coins include proof American gold eagles and common date $20 Liberty Head and St. Gaudens gold coins. Bullion coins, on the other hand, derive most of their value from the gold content of the coin. Some of the previously mentioned gold coins, such as South African gold krugerrands and Canadian gold maple leaf coins are frequently referred to as “bullion” coins. If you’re interested in purchasing gold coins primarily as a collectible due to their rarity and historical significance, then numismatic coins may be the best choice for you. Alternatively, if your primary reason for purchasing gold coins is as a hedge against inflation and as a way to maintain your purchasing power, then you should consider bullion coins.

Certified vs. Raw

If you’ve made the decision to purchase sovereign-issued gold coins, and in particular, those that contain numismatic value, the next step is to determine whether to purchase a certified or raw coin. Certified coins are those that are graded and encapsulated by third party grading services. While there are a number of companies from which to choose, you’re probably best off sticking with the three top grading services, which include PCGS, NGC and ANACS. ICG is also a respectable second tier grading service. Purchasing certified coins is a more secure way to invest in numismatic coins but it is also more expensive. As we discussed in a previous article, learning to accurately grade coins and submitting them yourself to a third party grading service is a more cost effective approach and is a way to earn an immediate profit on your investment. Just be sure that you’re able to verify the authenticity of the coin and confirm that it hasn’t been cleaned or altered prior to making your purchase.


Last but not least, we recommend that you consider the purity of the gold coin that you’re considering prior to making a purchase. Our suggestion is to stick with gold coins that have a purity of 90 percent or higher. Most obsolete world gold coins, as well as $20 Liberty Head and St. Gaudens gold coins, contain 90 percent gold content. It wasn’t until more modern times that the purity increased from to 90 to 91.6 percent (22k) or higher. The South African gold krugerrand was introduced in 1967 as the first gold bullion coin with a purity of 91.6 percent and is the highest minted modern gold coin in existence today.  More recently, sovereign mints began to issue 24k gold coins. Examples of gold coins that contain .999 fine gold (or higher) include American gold buffaloes, Chinese gold pandas and Austrian gold philharmonics.


In summary, on the surface, purchasing gold coins appears to be a relatively simply process; however, there are a few factors that you should consider before taking the plunge. Consider the price difference and liquidity of sovereign issued versus privately issued gold coins. Assuming that you’ve chosen to purchase sovereign issued gold coins, determine whether you’re purchasing gold coins as a collectible or as a hedge against inflation. Certified versus raw coins should also be a consideration. Until you feel comfortable grading and authenticating gold coins yourself, it might be best to stick with certified coins.  Last but not least, the purity of the gold coin should be considered. We recommend that you only consider gold coins with a purity of 90 percent or higher.
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Visit his website at for additional information on the products, services and educational resources offered by his company. 

Return to top