Gold coin collecting has long been a fun and interesting hobby for many Americans. Since the price of Gold has tripled since 2001 and looks to remain strong, gold coin collecting has also become a lucrative and serious business. The thought of a good, seemingly steady, investment means that many amateur buyers are trying their hand at the coin buying business as a means of investing. There are a few pitfalls every investor should be aware of before they invest so that they don’t overpay for their investment or fall victim to an untrustworthy dealer.
Dealers often use several false logics to be able to up charge on Gold Coins:
- Dealers claim that gold coins (other than bullion) are not eligible to be seized by the government should the government decide to confiscate gold like they did in 1933. While President Roosevelt did make the exception of gold coins in 1933, that Executive Order was repealed in 1974 by President Gerald Ford and has no validity today should another government mandate come forth. Additionally, there are no reason that this would ever happen again as the confiscation was solely for generating money that at that time had to be backed by gold; today’s currency is not gold backed.
- Dealers try to push European coins at a premium although they are not valued as much on the open American market. Professional coin collectors tend to stick with their country of origin (stamped in that country’s language) when collecting, so American collectors see little value in a coin from another country. So, while you are paying a premium to purchase a European coin, it may have little value to an American collector should you sell it in the future. Additionally, coins from other countries typically have weight and gold contents different than those valued in the American market.
- Dealers will say that a buyer will not have to report the purchase of gold coins to the government implying that purchases of other gold is reportable. This is only the case should the transaction be in cash and over $10,000. Therefore the purchasing of gold coins is no different than other commodities in that way.
These are a few of the main pitfalls new investors may unknowingly stumble into when buying gold coins for investment purposes. It is important to do your research and remember that there is no point in paying more for your investment than its worth; it kind of defeats the whole point of investing.