Investing in gold bars and coins? Pros and cons to know
Just like any other investment option, physical gold has its advantages and disadvantages. Investing in gold is a useful way for investors to protect their wealth and safeguard their portfolios from losses — no matter what the broader economy looks like. And the most straightforward way to invest in gold is buying physical gold, or bullion, in the form of gold bars and coins. Just like any other investment option, physical gold has its advantages and disadvantages, and it’s important to understand them to make the best decision for your financial goals and needs. Keep the following things in mind when considering whether you should invest in gold bars and coins. Pros of buying gold bars and coinsThere are plenty of reasons to invest in gold in any form. Here’s why gold bars and coins can be particularly valuable. Cons of buying gold bars and coinsWhile gold bars and coins offer plenty of benefits, it’s important to also keep the following drawbacks in mind. Investing in physical gold is a great way to enjoy the benefits of gold as an asset. It’s a tangible investment that’s easy to buy and sell, it’s a solid store of value and it can be converted to cash quickly. However, it’s important to also consider the drawbacks of buying physical gold so you can make the best decision for you. Be sure to weigh the benefits against the overall costs (including storage and insurance), choose a trustworthy dealer and take the time to inspect your bars and coins carefully. Article courtesy of CBS News
Beware the pitfalls
Treachery, Fraud, Scams, Cons, Rackets, Swindles, Hoodwinking, Chicanery, Flimflammery and Bamboozlement!In the precious metals sector most of the dealers are honest, hardworking people. However, there are a lot of cons and scams to watch out for. I have condensed a few of the best, most creative cons, to give you an idea of what to look for. But, be warned, it’s going to be different each time, and though these examples are creative, there will always be some cunning individual who comes along and shatter the old record of corruption, and take double dealings to a new level. Phone ScamsOne of the largest rare coin scams came to light when, on 24 May 2001, the New York attorney general announced the indictment of six New York residents and five corporations for running a rare coin scam that defrauded investors out of $25 million. It appears that six people who jointly owned five corporations, and opened five separate high-pressure telephone boiler room operations, were marketing rare numismatic coins nationwide. They would pressure customers into buying these rare numismatic coins. Of course, the salespeople would lie about the rarity and condition of the coins, but if a customer had any doubts, the salesperson would give the customer the phone numbers of several of their competitors so that the customer could get an “independent” appraisal. Little did the customer know that the company the coins were purchased from and all the competing coin shops were not actually competing….they all shared the same owners. TV and Magazine ADSAvoid TV and Magazine ads like the plague. There is just not enough profit in the precious metals field to support this type of advertising. Wait a minute, let me rephrase that. There is not enough profit for a dealer who is offering fairly priced precious metals to support this type of advertising. Commemorative CoinsAnother popular precious metals scam is the commemorative coin. When you see them offered on TV or in magazine ads, something is fishy. It’s most certainly a scam. CounterfeitsThis is another shady scam that revolves almost exclusively around numismatics. Almost 99 percent of all counterfeit coins are counterfeit numismatics, not bullion coins. This makes perfect sense because a bullion coin’s value is derived solely from its metal content, and a counterfeiter must therefore counterfeit the metal (substitute a far less expensive metal for the precious metal) to make a profit on the coin. This makes a counterfeiter’s job incredibly difficult because he must duplicate the colour, density (weight per volume) and sound (ring) of the specific metal he is trying to duplicate in order to pass it off as authentic to the unsuspecting buyer. Numismatic coins, on the other hand, derive their value from qualities that are far easier to replicate, like the specific design, rarity, age and condition. Therefore they can be made of the same metal as the original coin, making it far easier to duplicate the original look, sound, and feel. Do Your Due DiligenceSo now I am going to say it one more time. If you are going to buy collector coins, please do your due diligence and develop a relationship with a dealer you have researched. If you buy from a reputable dealer there should be nothing to worry about, other than the buy/sell spread (aka bid/ask spread) From the book: “Guide to Investing in Gold and Silver” by Michael Maloney
The Royal Mint honours the Queen one last time
The Royal Mint has decided on the way forward with regard to the final design of the 2023 British Silver Britannia. For a limited time only, the Royal Mint has decided to launch a limited number of Britannia coins with the effigy of Queen Elizabeth II. The minting and production of this version of the 2023 Britannia will be terminated by mid-November. I suspect that production may be less than 2 million coins. This is based on the assumption that there are no breakdowns, interruptions, and a full supply of silver blanks available thought the 6 weeks. In any case, no doubt, these coins will trade at a premium over previous or possibly even later releases. From mid-November onwards, the Royal Mint will swap over to the effigy of King Charles III for the remainder of 2022-2023 production season. In short, there will be a 2023 Britannia with the Queen’s effigy (limited to volumes that can be manufactured in a 6-week period). Article courtesy of Silver-Sphere
Coins and coin jewellery: their valuation and how to identify counterfeits
VALUE FACTORS It is important to note that age alone is not an indication of coin value. Three factors, rarity, demand and condition combine to give a coin its value. Rarity is the most important factor. This is determined by the number originally minted and how many coins survived. Without demand for the coin, rarity alone is not enough to ensure a premium price. The condition of the coins refers to its state of preservation. Those with shiny surfaces and no sign of wear are the most sought-after. Coins and commemorative medallions incorporated in jewellery are normally valued at 3-4% above their metal content. DESCRIPTION AND VALUATION Identify country of origin, the metal content, denomination, and date. Note the weight and diameter of the coin, if possible . Note the condition of the coins as follows: Fair – design and lettering can just be identified.Good – design and lettering are clear.Fine – a circulated coin with little wear.Uncirculated – no wear and tear visible, tarnish may be present on older coins.Proof – coins with a mirror-like surface, sometimes combined with sand-blasted or matte surfaces, specially struck for collectors. Determine whether the coin is authentic or counterfeit, legal tender or a commemorative medallion. If mounted in jewellery, describe and value as if normal jewellery. Rare coins of numismatic value are rarely found in jewellery. Once a coin is mounted in jewellery, it loses some value due to its exposure to damage. Some may even be soldered onto a frame. Never clean or polish a coin or rub it against a touchstone to determine its metal content. Although few jewellers are experts on world coin values, our modern information systems provided instant access to such values. You can current values for Krugerrands from the daily newspaper, while local and international coin dealers provide buy-and-sell price lists. Silver coins are normally sold at the silver scrap price, except for some rare issues. EXAMPLES OF RARE SOUTH AFRICAN COINS Year Face Value Approx. Trade Value 1931 Three pence (tiekie) R2 000 – R20 000 1932 Two shillings six pence R1 000 1933 Two shillings R1 000 1939 One shilling R5 000 1939 Six pence R5 000 1965 One cent (Afrikaans issue) R5 000 1965 One cent (English issue) R500 – R1 500 1965 One cent (English issue) R30 1965 Fifty cents (English issue) R10 000 – R15 000 1966 One rand (Afrikaans issue) R1 000 – R1 500 1989 Five cents R30 IDENTIFYING COUNTERFEIT COINS There are two main types of coins forgery: The one type produces fake coins en masse intended for circulation. Such counterfeit coins are often underweight or under-karat and may have designs that are less refined than those of the genuine coin. These forgeries are easy to identify when compared with a genuine coin’s weight, dimensions, sound when dropped and design details. The second type of Forgery produces coins on smaller scale to sell at a premium to collectors. Genuine coins are produced by a stamping process using sophisticated presses, while most counterfeit coins are cast by pouring liquid metal into moulds or dies. The latter process often leaves identification marks such as cards or pimples on the counterfeit coin. Antique coins are often forged in this manner. Such counterfeit can be identified by rough feel between the fingertip, the lack of patina, file marks on the edge where the casting sprue was removed or a thin raised line on the edge of the coin which formed at the joining edge of two moulds. REPRODUCTIONS OR REPLICAS OF ANTIQUE OR VALUABLE COINSThese are normally produced for educational purposes, stage money and historical enactments and are often sold by museums. They are not considered counterfeits as they do not purport to be the genuine article. Some may have deliberate changes in design and may have the word “copy” or a set of initials on one or both sides. Article courtesy of SA Jewellery News
Superficial scratches on coins
If scratches on your bullion coins don’t bother you, you are in the minority. Most investors object to even a small surface abrasion. Surface scuffs and scrapes will almost certainly affect the value of a coin for collectors of numismatic or rare coins. But what about silver bullions coins, rounds, and bars such as silver and gold Krugerrands, the American Silver Eagle, or the 10 oz. Sunshine Mint silver bar? Do minor surface abrasions on these bullion products affect their value? The tentative answer is no – they should not. Bullion products generally don’t have numismatic value over and above the value of the content and worth the precious metals they contain. They likewise have no rarity value per se. Therefore, even if the coin or bar has minor surface abrasions, the focus of the purchase for investors is on the weight of the bullion product. Commonly, all bullion products have some slight abrasions on them, since pure gold and silver products are extremely soft and are stacked on top of one another in tubes of 20 or 25. In my view, it is unreasonable to expect coins to be in perfect condition in a bullion tube. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
The Birth of Coin Money
Coinage as a technological development came to the rescue in Lydia (an area of the Mediterranean region that today is part of Turkey) around 600 BCE, and was soon adopted throughout the Persian Empire and by the Greeks. For the first time in history, dies were manufactured to impress images onto various disc-shaped objects made of gold and silver. The first Lydian coin, made of a specific weight of electrum, contained the government-mandated image of a lion. This image became recognized and synonymous with authenticity by the people of that city. The first bimetallic coinage system (silver and gold) most likely originated with King Croesus, with the following exchange rate between the two: 1 gold starter = 8.17 grams of gold 1 silver starter = 10.89 grams of silver 1 gold starter = 10 silver starter The use of bimetal coins rapidly spread throughout Greece (silver coins with an image of a turtle as a representation of the city’s prosperity based on maritime trade). Gold and Silver discs, having been assigned standardized weight and sizes, officially became coin money. Trade was now a simple matter of counting rather than weighing the purity and composition of precious metal pieces and nuggets. Money as concepts soon became synonymous with pure silver and pure gold. It is clear that within a few short centuries, silver and gold had become so important that they made and sustained empires and even financed expansionary wars. While nations and empires may fall, owners of precious metals will withstand anything a badly conceived economic system can throw at them. If pure silver and gold sustained empires, imagine what they can do for individuals. Article courtesy of Going for Gold: A guide for the South African precious metal investor by Zoltan Erdey
The global standard for gold coins
Article courtesy of Farmer’s Weekly People know that the world’s first heart transplant was performed in Cape Town by Dr Chris Barnard, but do they know that other South African inventions include the CAT scan, Q20, Kreepy Krauly, and a unique wealth preservation vehicle, the Krugerrand? The first Krugerrand was minted in South Africa in 1967 and has been making news and breaking records ever since. Rael Demby, CEO of The South African Gold Coin Exchange, The Scoin Shop and SafeGold, explains that the launch of the gold bullion Krugerrand created a new marketplace and made gold ownership more accessible. “The idea behind the coin was to create something that would appeal to collectors and investors, as well as serve as legal tender bullion.” A world first The first batch, issued in 1967, were the first modern coins to consist of one troy ounce of 22-karat gold with a gold purity level of 91,67%. Over 50 million ounces of Krugerrand coins have been sold globally, by far the most of any bullion coin in terms of volume. The Krugerrand set the global standard for collectable and investment gold coins. Since 1967, many other countries have taken their cue from South Africa and have produced their equivalents, including the Canadian Maple Leaf, the American Eagle, the Gold Panda of China and the British Gold Britannia. All of these coins are based on the South African Krugerrand model. The Krugerrand is one of South Africa’s most important assets. It is still the most extensively collected and traded bullion coin in the world. Keeping it safe What gives gold coins and collectables such a sparkling reputation? Gold has been used as a form of currency for more than 2 000 years, showing gold coins and collectables to be historically valued. Gold coins and collectables are categorised as safe-haven assets, which include property, diamonds and fine art. According to Demby, gold coins occupy the top spot in the ranking. “They withstand periods of crisis, fluctuation and inflation. Gold coins are a physical commodity; they’re tangible. You can feel the weight of a coin. That’s very reassuring,” says Demby, and adds that buyers appreciate genuine physical insurance. “Holding a gold coin or collectable is a comforting feeling. You appreciate the weight, enjoy the craftsmanship and are encouraged by your ownership.” But where are your coins when they are out of your hands? Did you know that you can’t insure Krugerrands that you keep in your own home? You can insure other valuables like jewellery and art, but not your Krugerrands. You can insure your car, your pet and your life. But within your own home, it is not possible to insure your Krugerrands! Demby says people instinctively know gold is valuable and understand that it must be stored safely. “You probably also realise that gold coins and bars come with no replacement policy. If you lose them, they’re gone for good.” Hop on the Internet, and you might come across a random post suggesting storing gold and silver in a water-filled fish tank. If that sounds crazy, home storage methods like hiding, burying or using a home safe are even crazier. Demby believes that at-home storage of uninsured valuables is ludicrous. “Our advice is to use a bank’s safe deposit box or a storage facility like SafeGold. Remember, once you lose your gold, you have no recourse should you become a victim. With SafeGold, your Krugerrands, medallions and other numismatic valuables are insured and kept in a state-of-the-art off-site storage facility that specialises in gold storage. When storing your gold, you need to think about security, ownership, accessibility and contamination.” Anonymous and secure SafeGold is a premium safe custody option at a highly competitive price that is fully insured, audited and unlimited. And for one fee, you can put in as much gold as you want. SafeGold offers unrivalled security and total confidentiality and discretion. SafeGold is a trusted, safe custody option that gives you the luxury of remaining anonymous while ensuring your valuable collection is locked up safely and insured for your peace of mind. You don’t want your Krugerrands, collectables and other valuables lumped in together with everyone else’s. So how do you keep possession of your specific gold? Every item is carefully audited and controlled by a team of highly skilled coin connoisseurs. You want to know that you can access or withdraw your gold when needed. SafeGold allows visits to the vaults and delivery services. You can inspect your coins at leisure, and then send them back. Importantly, your precious metals are protected from contamination by layers of physical and technological protection. “We’ve spent decades building an infrastructure of trusted and committed relationships with our vaults and insurers, allowing us to bring our clients the most affordable, secure storage facility,” Demby says.
