Coin collecting is a centuries-old pastime, said to have first emerged among the privileged class in Europe during the Renaissance. Popes, monarchs, and emperors took up the pursuit in the 14th Century, leading to it being referred to as the “Hobby of Kings.” As is the case with anything the rich and famous do, whether in belief, fashion, or activity, the general population takes notice and imitates. So, coin collecting became trendy over the years and the more rational-minded applied and shared ideas about the study, cataloguing, and care of coins. Numismatics was born. By the 20th Century, clubs and associations popped up around the world and, in a clever reprise of its beginnings, coin collecting became known as the “King of Hobbies.” People around the world expend varying amounts of time and money on coins for fun and profit.
Coin collecting usually begins, if not inherited from a friend or family member, with personal interest. Virtually all people in the developed world have the experience of change jingling in a pocket by the time they reach adulthood and, for some, this stimulates admiration for the beauty that all mints strive to incorporate in their coinage. The appreciation may be of national pride, the representation of a person, animal, or landscape, or the qualities of the coin itself. But gold coins went out of circulation (for spending purposes) long ago, so seeking out and acquiring collectibles (and hoarding or stacking them) is the definitive step toward becoming a dedicated numismatist.
A gold coin holds two distinct types of value: the market value of its precious metal content, and its collectible worth, usually reflected as the premium over spot price of gold, and determined by its scarcity, quality, and condition, as well as many other factors that affect its desirability. A particular piece’s condition can be professionally ascertained through a process called grading.
There are several types of collections or ways that collectors choose their specializations, if any. One may focus on a certain country (usually one’s own) or part of the world, a period in history, ancient or rare coins, animal, entertainment, or military themed series of coins, or perhaps odd or flawed pieces. A significant percentage of numismatists make sure to have the newest coins issued each year, while others simply collect gold coins that they like. This is surely the motivation of any pastime: personal enjoyment.
With economic storm clouds looming on the world horizon (or, to some, much closer than that), some leading wealth protection advisors are pointing to gold as an instrument that is not merely a solid option, but an indispensable part of one’s investment or savings portfolio. The recognition and acceptance of this approach is to move from being a casual or serious hobbyist to being a gold coin investor or hoarder, one who accumulates gold coins for potential long-term profit and wealth protection.
The prime target, the “gold standard” if you will, for the investor is gold bullion coins, sold individually or in tubes or rolls of ten. Most commonly offered with gold content of 1 troy ounce (but also in fractions of multiples), gold bullion coins are valued by the current market price plus the premium accorded to them. The most important contributors to investment success is knowledge (know what you are buying and when to buy or sell) and dealing with a reputable gold broker. This final point cannot be over-emphasized. Counterfeiting is an unfortunate reality in the world of gold coins.
Also worthy of mention in the investment category is the gold round. Gold rounds are produced by non-governmental mints, often as coin replicas which have no legal tender status. They do carry a small premium to cover the cost of design and manufacture, but it will always be lower than those attached to legal and collectible coins. This premium will never rise. The round’s investment value is in its precious metal content. Its strengths are as an inflation hedge and in its liquidity, the ease with which one may quickly sell and recover capital and, hopefully, capture profit.