WHAT TYPE OF GOLD COINS ARE RIGHT FOR YOU?
The best precious metals portfolios have a well-balanced mixture of the three main types of U.S. Gold Coins; Bullion, Common Date U.S. Gold, and Rare Mint State Gold Coins. Typically, individuals start with short-term Bullion investments and Common Date U.S. Gold Coins. Most individuals eventually step up and purchase Rare Mint State Gold Coins for their long-term potential.
BULLION GOLD
In basic terms "bullion" refers to any coin, ingot or bar which trades in direct relation to the spot price of the metals it contains. Take for example Gold American Eagles. If you are holding these coins in one-ounce increments, they will change daily as the spot price of gold changes on the open market. Typically they will trade at a very small percentage above their intrinsic or "melt" value. It is important to note that privacy can sometimes be an issue as certain governmental reporting requirements may apply when liquidating bullion positions.
COMMON DATE US GOLD
Common Date U.S. Gold: The term "Common Date" refers to a coin that is rarer than bullion but can be affected by both spot price movement and supply/demand scenarios. Unlike bullion, the Common Date U.S. Gold coins are Pre-1933 minted coinage that has been encapsulated by a third-party grading service (PCGS or NGC). And because of current laws, they are considered numismatic and as such offer more privacy than most other bullion options. Historically, these coins have been the entry-level coins of choice for investors seeking involvement in the coin market due to their ease of liquidity, privacy from government reporting and popularity. They should be included as part of a well-balanced portfolio. An example of a common date gold coin is the 1932 $10 Indian Head Gold Eagle. With a mintage of more than 4 million coins, 1932 $10 Indian Eagles are considered common.
RARE MINT STATE US GOLD
Certified rare coins are those that are typically available in very limited quantities and are valued more for their rarity than their intrinsic value. Historically, these are the coins that have produced the strongest return. In fact, over the last 45 years, rare coins have out-performed stocks, bonds, real estate, and even bullion. Understand that, while supply/demand factors continue to play a key role in the increasing value of these coins, it is important that you acquire the right coins. Staying in areas that offer continued demand for a coin is critical for value growth. In some cases, a coin may only have one or two examples that exist but the market has no demand for that particular coin. In this case, the only thing rarer than the coin is someone who is interested in acquiring it! At Aerlooms we focus on a select few areas of the rare coin market we believe will continue to see ongoing investor, collector, and dealer demand. By focusing in on these specific areas we are able to have a greater impact on the demand in these areas, thus further decreasing the finite supply of coins available on the market. As demanded increases and the available supply decreases, prices begin to rise.
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