american gold bullion

Ah yes, luscious American gold bullion: now, there’s a love story that’s still unfolding. Since 1986, the U.S. Mint has made the mellow yellow metal available for a reasonable price, in an easily purchased form for anyone willing and able to buy. The American Eagle has since become the world standard in gold bullion.

Easy to invest in or not, though, you can still make some rather startling mistakes if you’re not careful — so try to avoid these common ones.

Mistake #1: Don’t assume you got more gold than you paid for.

If you buy American gold, the bullion may weigh a bit more than you’d expect. For example, the 1-ounce Gold Eagle actually weighs 1.0909 ounces. This is because it’s 22 karat gold (91.7% pure), so extra weight has to be added to make up the difference.

All told, one-ounce bullion weighs about 2.8 grams more than its “official” weight.

Why? Because when gold is pure, it’s too soft to withstand handling without wear or deformation. The balance, amounting to about 5% silver and 3% copper, hardens the alloy quite a bit. No worries: you’re still getting the amount of gold stamped on the face of the coin.

There’s one exception to the alloying rule: the MMIX Ultra High Relief gold coin, minted in 2009. This 4 mm-thick beauty is 99.9% gold. So if you find a genuine overweight Ultra High Relief bullion coin, you really have got something.

Mistake #2: Don’t assume you’ll pay spot price.

Here’s an assumption that soon falls by the wayside for even the most casual investor. The novice, especially he who would convert silver to gold bullion, might assume (as your Humble Writer once did), that he could sell the silver for the spot price and then buy gold for its spot price. Well, no.

Gold Eagles and other gold coins of all denominations sell for a significant premium. The Mint adds a small premium to account for minting and distribution costs; the dealers add the rest, charging whatever they think they can get away with.

Sadly, you can’t buy the standard Gold Eagle directly from the Mint. You have to be an authorized dealer to do that, and the requirements are stringent. Since that source of relief is out, expect the premium to vary (depending on the type of gold and the dealer) from as little as $15 per ounce all the way up to $200 or so.

Mistake #3: Don’t buy from just anyone.

While you can purchase what’s supposed to be gold bullion in just about every corner pawn shop, coin store, or jewelry emporium, you probably shouldn’t. You never know what you’re getting into — and you may fall prey to a slick con.

First of all, how do you know the coin weighs what they say it does? Even if a coin is genuine, gold is so valuable these days that even dust and tiny shavings are worth something. If a coin is worn or polished, it may be that someone’s been fiddling with it to get a bit of gold here and there.

Even if that’s not the case, it probably weighs less than it should due to everyday wear. You need to pay only for the gold you get, not for some hypothetical weight that doesn’t exist anymore.

There are also a lot of fake gold bullion coins out there. So if something doesn’t look right to you, pass it up. Don’t let someone browbeat you into buying something you’ll later regret. Investing in American gold bullion ought to be a sweet experience… not a bitter one.

Naturally, there are other common mistakes people unwittingly make.  Discover how you can easily avoid 7 of the most common ones by subscribing to my free Mini-Course and newsletter.

Have you made any of these mistakes? Any others you want to share? Comment below…