How to Determine the Value of a Gold Coin

Proof coin and Mint-State Coin

A cheap and an easy way to invest in gold is to buy gold coins. They are much easier to buy than gold bars, and they are easier to re-sell than jewelries. However, determining the value of the coin might be a little bit harder than determining the value of a gold bar or jewelry.

There are four things that make the price of the coin: gold content, liquidity, grade and rarity. The latter two interests coin collectors more than any other. Other gold buyers like pawn shops or local jewelers will take the coin just for its gold content. Therefore, there are two types of coins, collector coins and bullion coins. However, selling the right gold coin to the right buyer could fetch a much better price.

Gold Content

Most of the value of the gold coin comes from how much gold in it. That’s what determines the minimum price of a gold coin. Gold coins usually ranges from 21k to pure 24k gold.

To determine the karat for instance, the American Eagle One Ounce coin weights 33.931 grams, and contains 91.67% of gold. So, the amount of gold (91.67%) x 24 (100% pure gold karat) / 100 = 22.008k. Therefore, the American Eagle coin is a 22k gold, and contains 31.104 grams gold, which is one troy ounce of pure gold.

Another example is the Canadian Gold Maple Leaf 1 ounce coin. It weighs 31.15 grams, and contains 99.99% of gold. It’s an obvious a 24k pure gold, which makes the gold content of the coin also one troy ounce. For the gold content of the British Sovereign gold coins, they are 22k coins that weigh 7.988052 g. So, the gold content should be 22/24 (the karat) x 7.988 (the total weight of the coin) = 7.322381 gm. That’s the amount of gold in the coin and that’s its minimum value.

Most of the traditional gold buyers take these coins for just the gold in them to either recycle it into jewelry or resell as it is. They don’t care much about its condition or rarity as much as they care about the gold content and the alloy used.

Liquidity

Normally, anyone would buy a coin that can be resold later. Who wants a coin that no one wants or trust? As for investors and collectors alike, the coin liquidity is essential unless you intend to keep it for yourself.

The most famous and trusted gold coins over the world are the American Eagle, the South African Krugerrand, the Canadian Maple Leaf, the Austrian Philharmonic, Chinese Panda and the Australian Kangaroo gold coin. All these gold coins are available in the 1 ounce weight and its fractions.

There are other worldwide popular coins of other weights such as the British Sovereign and Britannia, U.S. liberty and Indian gold coins, Swiss Franc, French Angel and Rooster francs, Mexican gold peso and Austrian corona. However, there are more popular local coins that can be sold or purchased easily from a local shop. These local coins will be hard to sell overseas, but it can be sold faster and with better prices than the popular coins.

The point is, studying the local market before purchasing is essential, as some of the best deals of purchasing or selling are next door. However, there are these well-known coins than could be sold almost instantly overseas or online with a fair price.

Coin Grading and Rarity

Coin grading is one of the most important aspects of coin collection and determining the value of the coin. It focuses on the condition and the rarity of the piece to determine the value. That’s one aspect you should consider if you are interested in entering the collectors market. Here, it’s advisable to have a professional opinion.

There are several scales of grading coins according to its condition. One of the most popular scales is Sheldon’s scale. It runs from 0 to 70, where 0 is a piece of metal that can be once a coin and 70 is a perfect one. The price of the coin for collectors depends on RARITY and CONDITION. Therefore, you might find a coin of poor quality sells more than a prefect mint-state one, because it’s the best condition for that type of coin or it’s a unique one.

Here are some of the most common grades of gold coins:

  • Poor (PO1): A piece of metal that can be identified as coin and might be badly corroded.
  • About Good (AG3): Heavily worn coin with readable letters and worn design.
  • Good (G to G6): Worn design and slightly worn rims.
  • Very Good (VG to VG10): Worn with the design and date clear, but slight details shows.
  • Fine (F to F15): Moderately worn, and all the major details are visible.
  • Very Fine (VF to VF35): Major details are virtually complete and visible.
  • Extra Fine (EF to EF45): overall sharpness and light wear. The mint’s lust might still present.
  • About Uncirculated (AU to AU58): little wear on the highest point of the coin while almost half the mint luster remains.
  • Proof Coins (1 to PR70): They are coins struck for collectors, and they are not meant to be circulated in the first place.
  • Mint State (MS60 to MS70): The perfect coin as it was minted, with the luster and no traces of wear. It should have an eye appeal.

And here is Sheldon’s rarity scale for coins:

  • R1: Common and available.
  • R2: Less common and available at limited quantity.
  • R3: Scarce and difficult to find in auctions.
  • R4: Very scarce and may not be found at larger auctions.
  • R5: Rare where it’s unlikely for more than 5 to be at show or an auction a year.
  • R6: Very rare and it’s almost never seen.
  • R7: Prohibitively rare and one might be offered for sale every few years.
  • R8: Unique or nearly so.

To sum up, choosing the gold coin to buy might not be such the simple task you thought it is. There is a difference between the price and the value, and it’s better to know the value of your coin to consider the price. That’s why the American Eagle gold 1 ounce coin is sold from the mint with 2 different prices. Considering your goal before buying to choose the best one suited for you.

  • Kelly Rogers

    Which of these gold coins are easier to buy? Is the American Eagle gold coin not 24 karat? If so, then it is better to buy Canadian Maple Leaf gold coins since they have 24 karats. Am I right in my assessment?