Why Rare Gold Coins are Popular

Collecting old items is a popular hobby, be it statues, paintings or rare gold coins. Collectors don’t mind traveling long distances to obtain the desired rare items and expand their collection. Rare gold coins are among those collectibles that attract both collectors and investors alike.

Gold coins were initially used as legal currency. Since the introduction of paper currency, the use of gold coins as currency has diminished considerably. The value of gold almost doubled between 2005 and 2010. However, the value of rare gold coins is significantly more than the gold content of such coins.

The 1795 $5 half eagle was the first gold coin to be minted in the US and is highly sought after. Another example of an extremely valuable rare gold coin is the 1933 St. Gaudens $20 gold coin. These coins fetch astronomical amounts of money at auctions. In July 2002, a rare $20 Double Eagle fetched more than $7 million, creating history. However, it is not easy to get hold of such a coin, but many people like to own rare gold coins.

Mr. Louis Eliasberg, Sr. was known to have successfully collected every date, mint and denomination of the highest quality US coins. The value of his purchase from the 1920s till the 1950s was $400,000. In 1996-97, his collection was sold at a public auction for more than $44 million. This represents a 200% annual return.

Why ‘Rare Gold Coins’ are referred so?
In the numismatic industry, the word “rare” is not synonymous with scarce or unusual. In other words, the rarity of a coin is relative. A coin may fall under the category of rare coin even if there are over 100,000 specimens in existence. For instance, the 1909s VDB Lincoln Cent is a much sought after rare coin even though 484,000 specimens of it were minted.

A coin may be referred to as rare because it is not easily available, people don’t want to sell it, it is highly desired or its mintage was relatively low.

Mintage of Rare Gold Coins
For almost 100 years from 1838 to 1933, millions of gold coins were minted by the government for use in the US and international trading. The US Mint melted most of these coins and many of them were lost. It is estimated that nearly 5% of the original minted gold coins are still in existence and in demand by traders. Many rare gold coins have been hoarded by collectors to enhance their personal portfolio.

The Rare Gold Coins Industry
The rare coin industry is managed, tracked and regulated by the Federal Trade Commission. Rare gold coins are graded by Professional Coin Grading Service (PCGS) and Numismatic Guarantee Corporation (NGC). The cost of grading a coin ranges from $25.00 to $50.00. If you are considering buying rare gold coins from a dealer, ensure that the dealer is registered with either of these organizations.

It must be noted that gold coins were minted in many countries. However, the ones that were minted in the United States are the most famous and considered of high quality.

How to Buy Rare Gold Coins

Buying gold coins requires preparation and learning. Before you buy your first coin, you should commit yourself to learning as much as you can about coins, so that you can make an informed buying decision.

This won't guarantee that you will make a profit from your investment in rare gold coins, but it will increase your chances greatly.

There are many resources available in print and online to help you educate yourself about rare gold coins.

You should start with The Guidebook of United States Coins, popularly referred to in the industry as the "Redbook." This book lists every coin ever minted by the U.S. mint which will enable you to know what's out there. It also gives brief histories and descriptions of the coins and lists their original mintages.

A couple of notes of caution are in order, however.

First of all, original mintages are not always indicative of current rarity. The key to current rarity is the number of surviving specimens believed to be around today. In some cases, issues with small original mintages have high survival rates, making them relatively less scarce today. Conversely, some issues with very high original mintages have experienced huge attrition rates, primarily due to meltings, and thus are very rare today.

Second, the Redbook lists prices which are not at all reflective of current market value. This is because the Redbook is published annually and the coin market trades actively throughout an entire year. There is simply no way for an annual guidebook to accurately indicate the current price of a rare gold coin.

We will let you in on an important fact now, before you embark on your education process (you will discover this on your own later anyway): you should only buy rare gold coins which have been graded and certified by Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). PCGS and NGC are the two leading independent coin grading firms whose standards have been accepted industry-wide for many years. Buying rare gold coins which have been graded by lesser services creates too much risk and should be avoided.

Just as is the case with any major purchase, you need to know what you are acquiring. Make sure that you are getting advice based upon your goals and objectives. There are many ways to acquire gold across that asset class. Therefore you need to make sure you are applying the right tool to the right job. Lower graded, higher population type coins will tend to perform more like asset protection, whereas higher graded rarer issues will tend to grow more over time.

In addition to buying the right coins for you, you should also compare coin dealers. You will want to buy coins from a dealer who is reliable and can provide you with the level of service and education that you desire. Not all dealers provide ongoing client education in the form of newsletters, special reports and periodic, complimentary portfolio updates. Before you decide to buy a rare gold coin from a coin dealer, you may wish to know what your relationship with that dealer is going to be like.

One final note in comparing dealers: you should check to see what each dealer's rating with the Better Business Bureau is before making your final buying decision.

ITM Trading offer expert advice on how to buy gold coins including rare gold coins.