Gold Coins – A Top Collectible and Investment Form

Gold coins have many advantages over gold bars and they have proven themselves as an investment form suited to times of crisis.

Gold coins have been minted as a form of currency since the 6th century BC. They were considered to be a versatile means of exchange due to their handy size which made them easy to get around. Their era as a means of payment ended in the 20th century, however, following the outbreak of the Second World War. Today, gold coins are produced exclusively for the collector and investment markets. They remain very popular across the globe. Indeed, these shiny pieces of gold are also suitable as gifts for special occasions. It is part of the pleasant Swiss tradition that children receive a gold Vreneli for their birthday, their first communion or for their confirmation. The Vreneli is a popular, historical gold coin issued by the Swiss Mint (formerly known as the Swiss Federal Mint).

The Vreneli is made of 90 per cent gold and includes a 10 per cent proportion of copper alloy. This creates an attractive reddish shimmer and makes the otherwise delicate gold surface more resistant to scratches and other mechanical damage. This Swiss gold coin was minted between 1897 and 1949 in an edition consisting of almost 62 million pieces. The 20-franc piece was the main one that was produced.

Several 20 Franc Vreneli gold coins side by side with one another
The widespread 20 Swiss Franc Vreneli gold coin.
© Björn Wylezich – stock.adobe.com

The Importance of Fineness and Embossing Quality

Many modern, internationally minted coins – such as the Australian Kangaroo (AUS), the China Panda (CHN), the Maple Leaf (CAN) or the Vienna Philharmonic (AUT) – are now made from pure gold. Their fineness is 999.9 / 1000 and, in rare cases, even 99,999 thousandths. Accordingly, their price is based on the current gold price. Nevertheless, most of them are considered legal tender in their respective country of origin. This is indicated by the nominal value that is embossed on them. However, the material value of a coin will exceed its nominal one by a multiple. Their commonly elaborate motifs, their associated collector’s value, as well as the law of supply and demand, often mean that their value results in a premium that is one to three percentage points above the standard gold price.

Another decisive factor for the valuation of a gold coin is its embossing or minting quality. This will impact on a coin’s degree of preservation. Circulated coins, like Vreneli, are valued according to their current condition, which can be classified as anything between ‘excellent’ to ‘poorly preserved’. The better the embossing of a coin is preserved, so the higher its numismatic value will be. Freshly minted collector coins, on the other hand, are often produced today with the highest minting quality with a polished plate. In this process, stamps and discs are polished before minting. As a result, the matt motifs appear particularly shiny. In the case of investment coins, on the other hand, the standard qualities of ‘mint state’ or ‘uncirculated’ are predominantly used. Since classic bullion coins are often produced in large numbers, most mints do without the more complex production processes.

Popular Gold Coins and Common Units

Gold coins are divided into denominations of ounces, grams or nominal denominations. Units of 5, 2, 1, 1/2, 1/4, 1/10 or 1/20 ounces are often in demand. The Troy ounce (1 oz), which is the equivalent of 31.1034768 grams, is the standard measure of all things and is preferred by most gold investors. In addition, special editions always turn up, such as the ‘smallest gold coin in the world’. This coin has a diameter of just under three millimetres and weighs only 0.063 grams. It was issued in 2020 by the Swiss Mint with a face value of 1/4 of a Swiss Franc at 1/500 gold ounces. Its face side shows a miniature of the well-known tongue portrait of Albert Einstein, something which can only be seen under a magnifying glass.

Various bullion coins side by side
Some of the most types of popular investment coins.
© Matt Light – stock.adobe.com

Below is a list of the most popular gold coins for investors and collectors and their circulation figures in denominations of 1 ounce / 30 grams:

Gold coin Country Fineness 1990 Edition 2000 Edition 2010 Edition Current edition
American Eagle USA 916.7 373’210 433’319 1’125’000 817’500 (2016)
Aus. Kangaroo AUS 999.9 300’000 65’556 152’229 188’921 (2018)
China Panda CHN 999 54’000 29’005 101’000 < 1’000’000 (2019)
Krugerrand ZAF 916.6 391’393 613’870 613’870 833’261 (2013)
Libertad MEX 999.0 109’193 (1991) 2’730 4’000 2’050 (2018)
Lunar Series I, II AUS 999.9 16’593 (1996) 30’000 30’000 30’000 (2019)
Maple Leaf CAN 999.9 815’000 86’000 1’036’832 1’050’564 (2013)
V. Philharmonic AUT 999.9 484’500 245’700 501’951 318’334 (2018)

 
Note: Many mints are now no longer specify exact numbers in circulation and only publish the ounces produced annually per precious metal.

The Benefits of Gold Coins

More than almost any other product, gold coins have repeatedly proven their worth as a crisis-proof investment over the past few decades. Indeed, they are characterised with many advantages over gold bars. By contrast to angular blocks of gold, round gold pieces have no serial numbers which, with a few exceptions, means that they are, therefore, untraceable. This makes them ideal for anonymous purchases. Furthermore, bullion coins are also usually issued without any certification, something that means that they can be held in a more space-saving manner, for example in an off-bank safe deposit box.

Due to their rich and sometimes very elaborate motifs, gold coins can be sold again at any time with ease. They are a sought-after trading commodity for private investors, precious metal traders or banks. This is especially so when it comes to well-known and popular issues such as African Wildlife, the American Eagle, the Britannia, the Lunar series or the Queen’s Beasts. In production, gold coins are somewhat more complex than gold bars due to their designs. Again, this is reflected in their comparatively higher purchase prices.

Unlike silver coins, the purchase of gold coins is exempt from sale tax with only a few exceptions. For this to apply, the coins must not have been minted before the 19th century and must be able to be used as legal tender in the country of issue. In addition, they should have a gold purity of at least 900/1000. Consequently, medals are excluded, largely because they often consist only of a gold alloy and have no face value.

Gold coins are available in different packages. Depending on the edition, they might be individually sealed in film or encapsulated transparently. Bullion coins are often made available in plastic tubes of 10, 20 or 25 coins. So-called master boxes, which contain several tubes, are also available for larger investments.

Counterfeit and Security Features

No wonder that counterfeit goods and forgeries are not far from gold coins when so much value is at stake. In the past, imitations used to be easily spotted, even by laypersons, but today they are so professionally fashioned that even experts have to use special methods and devices to uncover them. For example, counterfeits of the Krugerrand gold coin appear again and again that are hardly distinguishable from the original. The well-known motif with the springbok is faithfully reproduced on them. These replicas are mostly made of the transition metal, tungsten, which has a similar weight to gold. Less common are coins that are made of brass. To make matters worse, these forgeries are often covered with a wafer-thin gold plating to give them an authentic feel.

Many coin makers are now starting to integrate tiny laser engravings or privy marks into their gold coins. These serve to protect against counterfeiting and can only be copied with considerable effort. For example, since 2013, the reverse of the Maple Leaf gold coin has had an additional miniature maple leaf with the corresponding year as a security feature.

Image of a Maple Leaf with laser engraving
The Maple Leaf has been laser engraved since 2013.
© steheap – stock.adobe.com

Interesting facts about gold coins in summary:

  • Up until the start of the Second World War, gold coins were still used as a means of payment.
  • Today’s gold coins are produced for the global collector and investment markets.
  • Gold Vreneli and Helvetia are popular Swiss coins that are often given away on special occasions.
  • Fineness, embossing quality, motif design and demand all determine the asking price.
  • Gold coins have many advantages compared to gold bars, in terms of both sale and storage.
  • The Maple Leaf, the Krugerrand and the Vienna Philharmonic are among the highest circulating bullion coins of all.
  • Nowadays, counterfeit coins are hardly recognizable from real ones. Therefore, many mints adorn their coins with individual security labels.
Picture of the front and back of a 20 franc Vreneli gold coin from Switzerland
A 20 Swiss Franc Vreneli gold coin.
© Mrtolc – stock.adobe.com
Image of the front and back of a Krugerrand
The Krugerrand is one of the most common gold coins.
© hanohiki – stock.adobe.com
Image of the front and back of a Vienna Philharmonic gold coin
Vienna Philharmonic Gold coin.
© Xandi – stock.adobe.com