Mixing Gold Coin Types, or Staying Consistent?

[TripleB]

I found a thread from last year where people asked which gold coin was the favorite of each other. I'd like to hear if people tend to stick with a single type of coin, or mix them up for whatever reason.

I used to own Kruggerands, and I sold them, in order to shift my PP into tax-sheltered accounts. I'm currently 100% tax-sheltered so no coins for me for a couple years until I make more money that exceeds annual tax-shelter contribution rates.

When I get back into gold coins, I wonder if I should keep them consistent, i.e. only buying Eagles, or if it's a good idea to mix and match for whatever reason. I like the idea of consistency, because doing verification tests on the gold will be easier. If they all make the same unique spectrum when bounced on the table, they are easier to compare than if I have multiple types.

I'm shying away from Eagles and leaning towards Maple Leafs or Kruggerands. The gold portion is supposed to hedge against the US, since 75% of the PP is US-based assets. I realize the Eagles are really gold, but since they say US on there, it may cause problems in the event of a US collapse. I'm not too worried about it, and believe the risk is small, but all else equal, I think non-Eagles make more sense for a US-based PPer.

I like the Leafs because they are Canadian, so in the event of US Collapse, Canada may still be recognized. I like Kruggerands because they remind me of international super villians from the movie Lethal Weapon 2. No joke. Ever since I saw that movie, I wanted to own Kruggerands, and eventually, I did. There was also confirmation bias, because once I researched buying coins around 2006, I discovered the Kruggerand traded at the lowest premium of the other coins; then I REALLY had to buy them 

The movie-thing is a stupid reason, which is why I am considering standardizing on the Maple Leaf once I get back into it. I'm investigating the potential for using Eagles due to special considerations for them having a $50 legal tender value. If I discover solid benefits for that, I will use Eagles over Leafs, since my Canadian country-hedging is fairly weak due to the fact that gold is gold so it doesn't much matter which country is stamped on there.

[MediumTex]

I would split it evenly between krugs, maple leafs and eagles, and then hold a few British sovereigns as well.

This way, if you need to sell any you can pick the one that will get you the best premium.

Also, I just think having different coins is fun.

[hogtied]

I own Eagles, $20 gold Liberties and Saints (non-numismatic), Leafs, Sovereigns and swiss francs.  One Ultra Eagle and also several fractional eagles and leafs.  Also Silver eagles and leafs.  I live in the US on the Canadian border and hence the reason for many leafs.

[Pkg Man]

I'd buy what's on sale. Occasionally some coins are relatively cheaper compared to the normal premium over spot.

[Tortoise]

TripleB, I think you can rest assured that nearly 100% of a gold bullion coin's price is determined by its gold content alone. If the U.S. were to collapse, that would just cause Gold Eagles to very gradually transition from being bullion coins to numismatic coins over a number of years. And since numismatic coins tend to fetch premiums above their metal content, that would be a good thing, right? If you think not, you'd have plenty of time to trade them in for Krugs and Maple Leafs during the slow bullion-to-numismatic transition period.

In general, I agree with MT's and Pkg Man's recommendation to hold a variety of different bullion coins so that you can buy what's on sale and sell what fetches you the highest premium.

[cabronjames]

disclaimer: I've yet to buy buillion coins, so my knowledge is theoretical

isn't their some notion of the Canadian Maple Leaf being 99.99% gold, & more easier to "damage" under normal handling (iirc I read this somewhere, probably on this board or on wikipedia)

& the US Gold Eagle & South African Krugerrand being 91.67% gold, & relatively less "damageable" than a 99.99% coin?

Even tho I'd imagine any coin I'd keep in some protective casing & barely ever handle it, I'd rather go with the 91.67% type coin.  I'd hate to go to sell it & have some douche whine that the coin's not in "mint condition" or whatever.  I thought the whole point to these coins/gold for PP purpose, is that they are recognized as a standard country-less form of money.

Am I missing something here?

[FarmerD]

In the long run it probably doesn't matter whether you buy Gold Eagles, Buffalos, Maples, or Krugerrands.  Krugerrands sell for the lowest premium but when you go to sell, they fetch the lowest buy back price.  As I showed in my thread about online dealers, the buy/sell spread is about the same for all the common bullion coins.  Personally I like having all of them.

[jco]

99.99% coins are very soft, and care must be used handling them... For this reason, I'd recommend slabbing and/or coin holder for them.

On the bright side, a 99.99% forgery is much harder to pull off than a 91.67% forgery.

[rickb]

In the long run it probably doesn't matter whether you buy Gold Eagles, Buffalos, Maples, or Krugerrands.  Krugerrands sell for the lowest premium but when you go to sell, they fetch the lowest buy back price.  As I showed in my thread about online dealers, the buy/sell spread is about the same for all the common bullion coins.  Personally I like having all of them.

I think you want coins with the lowest premium you can find (assuming you think gold is going up and the premium is not related to the value of the coin).  For example, say you buy 100 coins at $2000/oz and sometime later gold is $4000/oz.  If you pay a $20/coin premium which stays at $20/coin, your total holdings went from $202,000 to $402,000 (99.01% increase).  If you pay $40/coin (and the premium stays there), your total holdings went from $204,000 to $404,000 (98.04% increase).  This effect vanishes if the premium is a (constant) percentage of the price of the coin - i.e. whether such a premium is 1% or 2% your holdings would actually double if the price of gold doubles.  Your investment in coins is not just gold, but gold and premium - and these can increase or decrease at different rates.  Since the point is the gold, I think you want the premium to be as small as possible.  This is fundamentally the same reason you want bullion coins as opposed to numismatic collectibles, i.e. the numismatic markup will increase and decrease independently of the price of gold.

[WildAboutHarry]

Since the point is the gold, I think you want the premium to be as small as possible.  This is fundamentally the same reason you want bullion coins as opposed to numismatic collectibles, i.e. the numismatic markup will increase and decrease independently of the price of gold.

I think it is worthwhile to distinguish between "true" numismatic coins and "marginally" numismatic coins.  There are a pile of pre-1933 U.S. Double Eagles ($20 gold pieces) out there that have little or no numismatic premium and sell for approximately the price of gold in them (about 0.97 ounces of gold).  A quick look at the Bay shows a few coins that have sold with 5-6% premiums, which are not that far removed from bullion coins.  Just stay away from "true" numismatic coins, slabbed coins, etc.

I think most bullion coins are somewhat sterile-looking.  A US $20 gold piece from the last century (or the century before that one!) is a different animal.

[Larshus]

If you are just looking to amass physical, but the cheapest 1 Oz coin you can. Don't worry about the date, or the mint, as long as it IS a government mint (not a medal).

If you are buying pre-1933 $20's, this a different story. You can buy, whats know in the trade as polished, or LP (low Premium) coins for a small percentage over melt.. often not much more than current Dated Eagles or Maples. There are many reasons, much having to do with reporting, on why this would be beneficial to some clients. A competent tax ad visor who is versed on physical holdings (there are remarkably few!) can explain the reasons and scenarios.

[vnatale]

I'd buy what's on sale. Occasionally some coins are relatively cheaper compared to the normal premium over spot.

How often does the above occur wherein some coins are materially cheaper than other coin options?

[SomeDude]

I'd buy what's on sale. Occasionally some coins are relatively cheaper compared to the normal premium over spot.

How often does the above occur wherein some coins are materially cheaper than other coin options?

365 days of the year Vinny.

[vnatale]

I'd buy what's on sale. Occasionally some coins are relatively cheaper compared to the normal premium over spot.

How often does the above occur wherein some coins are materially cheaper than other coin options?

365 days of the year Vinny.

So with gold coins it is NOT an "efficient market"?

[SomeDude]

I'd buy what's on sale. Occasionally some coins are relatively cheaper compared to the normal premium over spot.

How often does the above occur wherein some coins are materially cheaper than other coin options?

365 days of the year Vinny.

So with gold coins it is NOT an "efficient market"?

Not all gold coins are valued the same. Some are less secure from counterfeiting, less beautiful, less rare, different tax treatment, different condition, less or more sought after for collection etc.

There's so much competition it's very efficient.

The difference between a "cheap" gold bullion coin right now (random year krugerrand) vs an "expensive" bullion coin (random year gold buffalo) is miniscule right now. $1,880 vs. $1,910 as of this minute.

[Xan]

Wait, so are they "materially cheaper" or is the difference "minuscule"?

[SomeDude]

Wait, so are they "materially cheaper" or is the difference "minuscule"?

Both. If you re-read the quotes you'll see Vinny's question was basically "how often are some coins materially cheaper than others"? The correct answer is the one i gave, 365 days of the year.

He then asked if that meant the gold coin market is inefficient. The answer to that is in my opinion, no. As an example i cited the miniscule difference between so-called cheap vs. Expensive common bullion coins.

There are a lot more gold coin options than common bullion coins though and many of them are materially more expensive than others, they are numismatic or semi numismatic. A good example is a mexican libertad which i can't find under $3k right now even though it's just a 1oz gold coin. I only looked for 5 min but still. So its materially more than say, eagles and ALWAYS is, but that doesn't mean the market is inefficient. Libertads are special because of their beauty and low mintage.

[Kriegsspiel]

Good old topic. I do it the same as Pkg man and buy something if it's on sale. I have Eagles, Maples, and Kruggerands.

[SomeDude]

Good old topic. I do it the same as Pkg man and buy something if it's on sale. I have Eagles, Maples, and Kruggerands.

Those are my three main along with a few Britannia and buffalos.

I look for whatever is cheaper but will pay up 1%-2% for US coins.