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Saturday, March 31, 2007

Gold Coins

Gold coins, next to silver, are one of the oldest forms of money known. The first recorded history of gold coins were those introduced by King Croesus of Lydia around 560 BC.

It is only recently, around 1933, that gold coins have stopped being used as currency. Despite this, many of the coins these days are still legal tender in the country in which they are struck.

There are many different types of gold coins and many countries produce gold coins for collectors and as an investment for people interesting in protecting themselves from variations and pressures economically

Gold coins are very popular among people who are keen to "hedge" against inflation or a store assets. The South African government introduced the Krugerrand in 1967 to cater to this very market. This was a boom to the American collector as, at that time, it was illegal for any US citizen to own gold, but owning coins of legal tender (which the Krugerrand was in South African) was not illegal. This enabled a US citizen to effectively own gold. At exactly one troy ounce. The Krugerrand was the first modern, low premium (i.e. priced only slightly above the bullion value of the gold) gold coin. Gold coins are also produced in fractions of an ounce – typically half ounce, quarter ounce, and one-tenth ounce and , recently one twentieth of an ounce. Generally speaking, gold coins do not carry a meaningful face value, as their value is determined by their troy weight and the current market price of the precious metal. Where a face value is minted on the coin, it is invariably done for legal or other reasons and it is nearly always significantly less than the actual value of the coin.

These days one can buy gold coins from most countries. The design on the coins tend to remain constant, at least on one side where a particular individual is represented. In the UK it is the Queen, In the USA, usually a president. Almost all are proof coins. This means they have been struck a number of times to give that beautiful sheen and gloss that proof coins have. Such coins should not be touched by the naked hand. If one intends to handle gold coins, especially proof ones, then very soft gloves should be used but it is advised not to handle gold coins by hand at all actually.

When you buy gold coins they should come sealed in their own transparent plastic bubble. Always check to ensure the bubble has not been tampered with and is completely sealed. The coin should not be removed from the bubble at all as this can affect not just the surface of the coin but the value as well.

The value of a gold coin is determined by a number of factors, the condition of the coin, the rarity, its age and how many were minted. As an example just 5 years ago a very rare $20 1933 Double Eagle gold coin was sold at auction for over 7.5 million dollars.

Gold coins can also be very beautiful and many people will collect them for their beauty alone.

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