5 Tips to Gold Coin Investment

As gold has exploded in value recently, gold coin prices have followed. Since they are now so expensive, you need to use care when making your purchases. While your local coin dealer used to be the only game in town, the internet now provides you the opportunity to get better prices on many coins, but gives you a few more things to think about when buying your gold coins.

1. When you are shelling out big money for your gold coin, the reliability of the dealer is a major concern. For a store, you can check with the local Better Business Bureau to see if there are any outstanding complaints. If the dealer is a member of the Professional Numismatists Guild (PNG), that is a good sign. If you are buying through an EBay auction, make sure to check the seller's feedback rating first. If it's very low, or there are many negatives, think twice (and a third time) before spending a large sum with them. Some Ebayer's will buy or sell a number of very inexpensive items to build up their ratings, then jump in selling big ticket items. So if you see their previous transactions all seem to be $5-$10 items and they are all of a sudden selling $1500 coins, watch out. Before bidding on large ticket items, ask if the seller will agree to use Escrow.com. They act as a middleman in the transaction and the money doesn’t pass to the seller until the buyer is satisfied with the item. There is a fee, which the buyer would be expected to pay, but it's well worth it when big money is changing hands.

2. If you are buying collectible gold coin, a big issue is grading. The seller's idea of an MS65 may not be the same as yours. There can be a huge difference in price between an MS64 and an MS65 and the grading difference isn't always very obvious. Buy only certified gold coins that have been graded by one of the third party grading services and you will have peace of mind. Make sure that you only accept the major services (ANACS, NCG, PCGS, NCS, ICG) grading, there are some lesser known grading services whose grading may be suspect. Make sure that the grading wasn't done too long ago. Coin grading standards have changed over time and what was an MS65 five or ten years ago, might only be an MS63 or 64 today.

3. If you are purchasing a non-certified coin, make sure you will be allowed to return any coin if you are not satisfied. This should apply to both on-line and off-line dealers. You want to have the option to return it if your grading service returns a lower grade than you bought it at.

4. Buy the scarcest coin in the best condition that you can afford. Many collectible gold coins sell near the melt price of gold because there are more than enough around to cover demand. This is especially true in the lower grades. When gold increases or decreases in value, these coins will follow by a like percentage. But the higher the grade, the lower the population and demand will push up the price rather than just following the price of gold.

5. You can't call the tops and bottoms of the coin market any more than you can do it in the stock market. Make your investments regularly. Dollar cost averaging will do better for you in the long run than trying to call the turns.

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