So — you’ve decided to invest in American gold coins. Excellent choice! U.S. gold, whether in the form of modern bullion or antique coins, is one of the finest investment commodities in the world.
But of course, you’re still curious… so here are the answers to four of the most frequently asked questions about gold coins.
FAQ #1: Why do my Gold Eagles weigh more than they should?
Because they’re not solid gold. Now, don’t fret; if gold coins were made of 100% gold, they’d be so soft they’d easily deform or wear away. Therefore, a small amount of copper and silver are added to harden the metal.
The stated amount of gold is still present in the coin. That’s why a coin that’s supposed to contain 31.1 grams of gold (one troy ounce) actually weighs 33.9 grams. The extra weight in all modern American gold coins comes from the silver and copper in the alloy.
FAQ #2: Do I have to worry about the government confiscating my gold?
Probably not. Sure, it’s happened before — back in 1933, when FDR enacted the Gold Confiscation Act in response to a national banking crisis. The authorities enforced the law only once, and the prosecution failed. The Roosevelt Administration rescinded the hugely unpopular Act within a year.
Gold vendors like to stir up rumors about gold confiscation, though, because it lets them keep the price of antique gold coins high. They’ll happily tell you that their coins aren’t subject to confiscation, implying that modern bullion coins are. That way, they can sell you the coins for more than they’re really worth.
The truth is, if there’s another gold call-in, nothing is sacred: the government can take all the gold it can find. Equally true is the fact that most experts believe that a repeat of the 1933 gold confiscation is very, very unlikely.
FAQ #3: What kinds of coins should I invest in?
It depends on your goals. If you’re a beginner or primarily interested in gold as a hedge against inflation — which likely describes 90% of the visitors to this website, then you should invest in bullion coins or bars rather than collectible gold coins. I particularly like American Gold Eagles, Canadian Maple Leafs, and South African Krugerrands (see below).
If you’re gambling on numismatic (collector) value, we recommend the Saint-Gaudens double eagle, which was minted from 1907-1933 in a $20 value. These coins weigh an ounce and consist of 90% gold and 10% copper.
Double eagles are among the most beautiful of American coins, and have steadily increased in value. Look for coins that a reputable coin grading service, such as PCGS, has evaluated and sealed in plastic cases. The higher the grade, the more valuable these coins are.
Of course, coins can go down in numismatic value, too. So as I mentioned, if you prefer to hedge against inflation, bullion is a better choice.
Gold Eagles don’t have much numismatic value, but they’re always worth at least the spot price of gold. You can get them in tenth-ounce, quarter-ounce, half-ounce, and full-ounce coins.
FAQ #4: Why are antique gold coins so much more expensive than bullion of the same weight?
See above. These older coins often have substantial numismatic value, so their price may vary due to rarity, condition, and market demand. You should expect to pay a high premium over the precious metal value.
American bullion coins are deliberately stuck not to have numismatic value. They do have value as legal tender, but the U.S. Mint has never intended them for everyday usage. This isn’t the case for coins like the old double eagles; most were actually in circulation at one time.
Old gold coins are antiques, and valued as such. And frankly, dealers often do a little creative prevaricating to ensure that their value remains high. They often raise the fear of the government confiscating gold in order to get people to buy collectible coins rather than simple bullion — since they make a lot more profit on collectibles.
For the vast majority of our visitors though, we highly recommend you stick to simple American gold coins like American gold Eagles or other bullion coins.
And did you know that most people waste a lot of money by making 1 or more of the 7 most common gold investing mistakes? Find out how you can avoid all 7 here.
What’s your biggest question? Let me know by asking below…