Gold Coins—Will Trade for Food?

Gold coins and gold in general are in the news these days. Everyone's talking about how likely it is that sovereign debt will bring down large parts of the global economy, and how quantitative easing will make many currencies worthless as hyperinflation sets in.

If that's the case, then gold is sure to appreciate to even higher prices. But those high prices make it hard for anyone holding gold coins to barter them for needed items.

Compare them to junk silver, dimes, quarters and half dollars from years past. As the price of silver follows gold's price, a silver dime might very well be traded for a loaf of bread or a quart of milk.

You could try doing that with the smallest of the gold coins, but you likely wouldn't receive $190 or more in change for that bread or milk!

Gold Coins as Investments

Since we've ruled out the survival factor when it comes to gold, the only real strategy left is to buy and hold these coins for longer term appreciation, which equates to asset protection. To be on the safe side though, you'll have to get out just before the top, or when your nerves can't take it any longer.

And save even more wear and tear on yourself by ignoring the daily/weekly/monthly fluctuations. Okay, don't ignore them, but don't upset yourself because you just bought at $1,395 an ounce and your 5 ounces are now at $1,265.

Your Gold Coin Options

Unlike silver coins, whose most common sizes are one troy ounce and larger, gold coins come in one ounce and four sizes smaller than one ounce...

  • one ounce
  • one-half (1/2) ounce
  • one-quarter (1/4) ounce
  • one-tenth (1/10) ounce
  • one-twentieth (1/20) ounce

There is one notable exception... Canada has minted a 100 kilogram (3,215 troy ounce) gold coin with a face value of $1 million CAD. If you have well over $4 million available, you may want that coin, although it may be difficult to sell if you ever need to.

Gold is running about 50 times the price of silver, and its premium follows the same pattern for the ounce coin. The premium on a Gold American Eagle is at least $50 for bullion coins (depending on how many you buy at one time). It's even higher for collectible coins.

Premiums for the smaller coins are considerably higher—$35 or so for the half ounce coin, about $25 for the quarter ounce coin, and as much as $35 for the tenth ounce coin (that amounts to a $350 premium for the equivalent of a one ounce gold coin).

The one ounce coins are obviously the better deal, but not everyone can afford over $1,200 (at today's prices) to purchase one. You'll have to decide what you can afford. If you can afford a tenth ounce coin a month, you may want to wait and buy a half ounce coin every five months.

Coins Available for Purchase

Several countries produce gold bullion coins. These include the US, Canada, Australia, Austria, China, Mexico and South Africa.

Gold Coins—The Right Investment for You?

With the price of gold at near all-time highs, these coins are very popular, especially since you can purchase most of them in many different weights. Their high value make them even more portable than silver coins, although they may be harder to use in case of emergency or other need.



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