Recently, I received several emails touting the investment potential of Dutch gold. Now, I’ve always been cosmopolitan about my gold investments; I don’t care where the metal comes from, as long as the price is good and the bullion has decent investment potential.

When I opened the first email, I was expecting to hear of a new bullion provider, or one I’d previously paid little attention to for one reason or another. Possibly, I figured, someone had begun a new EFT or mining company based out of the Netherlands. Imagine my disappointment when I realized this gold was coinage.

Old Gold

Let me hasten to point out that I love coin bullion, because it’s portable, easy to store, and easy to liquidate. But let me further point out that my love affair with gold in the round is limited to investments intended as actual bullion. I’m not overly fond of gold coins intended to be (and once used as) legal tender.

I’ll readily admit that coins tend to be lovely little pieces of numismatic art, whatever the producer; it’s hard to get gold wrong, no matter what the designer attempts to depict. It’s gold, after all. But the problem is that old coins often have a value beyond that of their gold content.

Dutch gold

At some point, you might be pitched Dutch gold coins as a good bullion investment. But are they really?

The Collectibles Factor

Being what they are, coin collectors are inevitably interested in old gold coins; and their interest typically drives the value higher than it should be, except in the cases of the most damaged of boring coins.

While the precious metal investor’s interest in such coins is (or at least should be) pegged strictly to the metal value, numismatic value is hard to understand or predict. A particular coin worth $1,000 based on its gold content might go for twice that amount or more on the collectibles market.

Value Inflation

Why are collectible coins often overvalued? Well, it could be that a particular coin is just popular during a particular season, or it exhibits a tiny flaw caused by a crack in the die used to stamp the coin, or there’s one mint mark on it rather than another.

The point is, paying far more than the gold is worth is a fool’s errand. Given the fickle finger of fashion, in a year the coin’s value might be much less than what you paid for it. This is especially true if counterfeits water down the market, as has begun to happen more often lately.

The Coins Themselves

Among the positives of collecting most bullion coins is that they tend to be uniform in size and gold content, and they’re easily recognized. Dutch gold coins are less reliable, though. Holland (a.k.a., the Netherlands, or the Low Countries) is an old nation with a rich and varied history, and their gold coinage reflects that.

During your research, you may come across cavaliers, ducats, ducatons, duits, florins, florins d’or, guilders (a.k.a. gulden), and stuivers. All this can generate some confusion, so rather than try to keep the various categories straight, I recommend you base your purchase decisions strictly on weight and content.

The Bottom Line

All this said, foreign coins are less likely to suffer from the collectibles premium than American ones; most coin collectors are American, and we tend to be most interested in our own nation’s money. For this reason, you may be able to find guilders, ducats, et al. for a fairly good price every once in a while.

If so, don’t hesitate to buy. Gold is gold, and Dutch gold bullion stacks just as well as anyone else’s.

 

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