Gold coins are a timeless investment. If I wanted to start purchasing gold coins, there are a number of factors to consider that require the expertise of a dealer or the education of internet resources on the subject matter.
One of these considerations is the size of the coins I end up purchasing.
Based on the most popular gold coins for investment, 1 oz is the most common and widely circulated standard size for gold coins. There are other sizes of gold coins, but 1 oz is the only size that runs across the board of the most popular coins for investment.
Depending on the investment I am willing and able to make, size will be a considerable factor in that decision. There are both advantages and disadvantages to going with the popular one-ounce option of gold coin.
Gold Coin Factors
In terms of size, there are a few when it comes to gold coins. These sizes are also dependent on where the coins originated. For example, the United States previously made gold coins in one ounce, as well as a half, quarter, and tenth ounce.
If I am looking at gold coins from The Royal Canadian Mint, however, I would add to that list twentieth ounce as well. When deciding what size gold coin to purchase, there are a few factors that could assist me in making this decision.
- Affordability
- Supply
- Resale Value
Looking into each one of these topics will give me a greater understanding of why size plays a factor in my investment in gold coins.
Affordability
The issue of affordability covers a range of different topics including but not limited to the production of the coins, sales tax, and my means to invest.
Each one of these topics can serve as a pro or a con to the popular and most commonly circulated 1 oz size. The other fractional sizes could possibly be a better investment, depending on my needs and desires as an investor.
One advantage to fractional sizes, ones less than an ounce, is liquidity, which in turn could give me more flexibility in my investment.
For example, if I need to sell one of my gold coins for cash and my financial need is less than $1,000, it may be easier to find a buyer who is willing to part with $400 for a fractional gold coin, as opposed to $1,250 for an ounce gold coin.
Due to the size of fractional coins, states may charge a sales tax for the purchase of these gold coins. This is because of the belief that fractional gold coins are bought for gifts or to be melted down to make jewelry and not for investment and therefore, should be taxed.
Now, this can be avoided if I purchase at least $1,000 or more in bouillon, but at that point, I might as well go with the one-ounce gold coin as opposed to having to combine a bunch of smaller purchases of fractional gold coins to equal the value.
The cost of refining and minting fractional gold coins is more costly than the standard one-ounce gold coin. The rule is, the smaller the portion of the gold, the more it costs per ounce.
For example, I could be looking at a $170 difference in the price of a ten-tenth-ounce gold coin versus a one-ounce due to fabrication costs, the more expensive coin being the ten tenth ounce.
Supply
When looking at the most popular coins for investment and the differing sizes they come in, the one size that is universal across the board is the one-ounce gold coin.
From the US American Eagle to the British Britannia and everything in between, except for the British Sovereign, all have one-ounce options. There are even options that only come in one ounce size like the British Britannia and American Gold Buffalo.
Since size is only one factor in determining which gold coins to purchase, it’s helpful to know that there are many options in this size, as opposed to the fractional sizes that have their limitations in popular gold coins.
The flip side to a plethora of supply is that scarcity tends to drive up the value, so it’s possible that the fractional sizes may be more sought after because they are not as common.
If that is the case, then I can get more from a buyer than perhaps a one-ounce size.
Resale Value
Resale value is the trickiest of the topics when it comes to size. Reason being is the aforementioned scarcity rule versus what is most popular among investors.
It’s common knowledge that the one-ounce size gold coins are more popular. And therefore as a buyer or seller, I shouldn’t have a problem purchasing or selling these coins at any given time.
Additionally, because these coins are considered investments, as opposed to gifts, I don’t have to be concerned with sales tax.
On the flip side, as stated previously scarcity tends to drive up value, so even though I would have to deal with sales tax and a higher cost due to fabrication, but because these coins tend to be more liquid than the larger coins, it could possibly be a better investment when thinking of resale.
Which Gold Coins Should I Buy?
Whether I go with the common and more popular size of one ounce or any one of the fractional sizes of gold coins, there are pros and cons to any of them.
Depending on my needs or purpose for investment will determine what size gold coins I will ultimately purchase. It is wise to look at the market and see what other investors are doing and take note of that for my own investment, but every situation and every investor is unique.
As long as I have the knowledge, I can make an informed decision that is best for me.
