Nov 2013


Nov 2013

How to identify an investment-grade gold coin

By StoneX Bullion

Gold as an asset is not a new idea; for many centuries the precious metal has been squirrelled away as a means of accumulating wealth and providing financial security. But despite the many different options for investors to consider in the modern world, the concept of physical gold has never really fallen out of fashion. Gold acquires a value both in terms of its actual content as well as its collectability. Whilst the latter can be more easily established, identifying a coin which is of good enough quality to be of real value as an investment can be more challenging. Gold coins are a great investment and nice hobby With this in mind, below are a few tips which should help you understand what to look for and ensure you end up getting a great deal whatever coins you choose.

Content is king

Before you start to examine the coin in any detail, it's a good idea to first establish the actual gold content it contains. As a rough rule of thumb, you shouldn't consider any coin with a gold content of less than 22k. The better the grade of gold, the less junk content it will contain – this could include alloys such as copper or in some cases even silver. It is possible to get 24k coins and some investors prefer these. However, it's worth bearing in mind that these coins will be softer in comparison and can be damaged more easily. Even if you are holding gold coins for investment rather than collectability purposes, an untarnished coin will still fetch more than one which looks damaged.

Rarity isn't a good thing

You may well be under the impression that a rare gold coin is much more desirable than one which is in wide circulation. And if you were in the numismatic market, you would be correct. But if you are interested in acquiring gold coins for investment purposes, a rare coin can have low levels of liquidity and even fail to hold its value suitably. This is because without a specific market, the actual value of the coin can be hard to establish a factor which in turn diminishes what it is actually worth as an investment. Look for coins which are in high circulation and you won't have any problems with either liquidity or valuation.

Consider the aesthetic value

As mentioned above, the physical appearance of a coin can ultimately impact on its worth, even if it was originally intended to be a pure investment only. However, it's not just how well looked-after the coin is which counts, but also the market that it may appeal to. Having a high degree of liquidity is essential to drive up the price and also allow you to buy and sell without a delay. For example, the China Panda attracts investors from the West, despite the fact it is an Asian coin. Compare this with a coin which features Arabic writing and no appealing design: unlikely to hold any appeal outside its area of origin. Panda coins are still popular in the west, even though they are from Asia Selecting a coin with the right aesthetic appeal for the market in which you operate is important for investment-grade coins.

Consider your investment plans

Although you may be purchasing gold coins without the intention to sell them anytime soon, if you are buying them as an asset, it is worth considering what you might want to do with them in the future. If you want to sell your gold coins to capitalise on spikes in the price of gold, you will need to have a flexible asset. So whilst purchasing a large 1 ounce coin may be within your wealth range, you may be better off buying fractional gold coins instead. This will ensure that if you need to sell off some of your assets, you aren't left with an all or nothing situation. Smaller investment-grade coins provide you with the opportunity to sell some of your stash without having to liquidate everything at the same time.


Probably the most important aspect is to ensure you are buying from a gold coin specialist you know and trust. There are many online dealers and indeed, this is often the best way to trade, but make sure you only use a reputable provider and wherever possible, stick to the same one for any future buying or selling you want to do.