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Gold American Eagle vs. Canadian Maple Leaf vs. Other Gold Coins

Precious metals such as gold and silver have many attractions from an investment point of view.

Both metals are viewed as a long-term store of value. They are durable, portable, and easily valued. As a result, civilizations across the world have used both gold and silver to protect their wealth for thousands of years.

Gold and silver also offer excellent portfolio diversification benefits. Their price movements are uncorrelated to the movements of other asset prices, such as shares and property. Adding precious metals to an investment portfolio can increase the diversification of the portfolio and reduce the overall portfolio risk.

Furthermore, precious metals offer protection against financial system risk. Gold in particular is viewed as a “safe haven” asset. This means that during times of financial uncertainty or stock market panic, investors often buy large amounts of gold, pushing its price up.

However, gold and silver each have unique investment features. If you are considering adding precious metals to your portfolio, it’s important to understand the difference between the two metals.

Gold vs. Silver as an Investment

While both gold and silver can make excellent long-term investments, gold is usually the better investment for the average investor. There are several reasons why.

First, gold has a much larger liquid market. This means that gold investments are very easy to buy and sell.

Second, the price of gold is less volatile than that of silver. Silver’s price movements are more magnified than gold’s due to its industrial demand. From an investment point of view, smaller price movements are better.

Third, gold’s price is mainly driven by investment and jewelry demand. In contrast, because silver is used in a variety of industrial applications, its price is linked to economic activity. This means that during economic downturns, silver’s price may fall more than gold’s.

As such, gold is a much more suitable precious metal than silver bullion for the majority of investors. But what is the best way to buy gold then?

Gold Coins­—The Best Type of Gold for Private Investors

While there are many ways that investors can get exposure to gold, the most effective way to invest in gold is to buy gold coins. There are several reasons gold coins trump other types of gold.

For starters, gold coins are very liquid. They can be bought in small quantities. This means that they are very easy to buy and sell.

Gold coins are also very recognizable. Popular gold coins such as the American Eagle and the Canadian Maple Leaf are recognizable all over the world. Again, this makes them easy to trade.

Another advantage of gold coins is that they have a strong resale value. Although coins such as the American Eagle and the Maple Leaf will come with a higher premium than gold bars, they will also sell at a higher price.

Generally, the roundtrip cost of a coin is lower than that of bullion bars. This is especially true when there are shortages of bullion like after the 2008 financial crisis. This is a key benefit of investing in coins as opposed to gold bars.

However, investors should note that there’s no one-size-fits-all coin out there. Some gold coins are popular all over the world. Others are less recognizable outside certain countries. Therefore, the best gold coin for a US investor is not always the best coin for a European or Chinese investor.

With that in mind, here’s a look at the best gold coins investors can buy.

Gold American Eagle Coins

The American Eagle gold coin is the most popular gold coin in North America and a very popular coin across the entire world. First issued in 1986, this beautiful coin represents a convenient and cost-effective way to add gold to any investment portfolio.

The American Eagle coin is available in four sizes: one ounce, one-half ounce, one-quarter ounce, and one-tenth ounce. The coin is made from 22-carat gold, meaning that it is 91.7% pure gold. Although it holds its value very well, note that it’s not the purest gold coin on this list.

The upside of 22-carat coins is that they are less prone to scratches and other physical damage. That is to say, 22-carat is not necessarily a negative attribute but rather a matter of preference.

A key advantage of the American Eagle is that it is backed by the United States government. It’s considered legal tender in the US. It has a face value of $50 US dollars, though it’s currently worth much more than that. Another big advantage is that it can also be added to an Individual Retirement Account (IRA).

The American Eagle is the most traded gold coin in North America. Spreads between the buy price and the sell price are generally very narrow. As a result, the Eagle is an excellent choice for US gold investors.

Pros:

  • Legal tender in the US
  • Backed by the US government
  • The most liquid coin in the US
  • A narrow bid-ask spread
  • Different sized coins available
  • More durable

Cons:

  • 22-carat gold, which is not the purest form of gold

Canadian Maple Leaf Coins

The Canadian Maple Leaf gold coin is another very popular coin amongst precious metal investors. It is one of most popular gold coins in the world. The Maple Leaf is recognized and regarded very highly internationally. First introduced in 1979, this coin is issued by the Government of Canada and produced by the Royal Canadian Mint. It features the iconic maple leaf on its reverse side, a symbol synonymous with Canada.

The Maple Leaf is a 24-carat gold coin, meaning that it has a very high gold content. It contains virtually no other base metals. One drawback of this is that it easily shows handling marks. It is available in one ounce, one-half ounce, one-quarter ounce, one-tenth ounce, and one-twentieth ounce denominations.

Like the American Eagle, the Maple Leaf is also considered legal tender. The one-ounce sized coin has a face value of $50 Canadian dollars. However, like the Eagle, each coin is currently worth much more than that. This is because the value of the gold bullion in the coin is much greater than the face value.

The Maple Leaf is a beautiful coin that is easily recognizable. It is widely regarded as the most international gold coin. It is both highly liquid and easy to trade in most locations throughout the world.

There is high demand for the Maple Leaf in countries such as India and Asia. This means that the Maple Leaf is not only an excellent gold coin for North American and Canadian investors, but for gold investors all across the world.

The Maple Leaf coin also offers excellent value. It is usually the most competitively valued sovereign coin in North America.

Pros:

  • Popular all across the world
  • High purity 24-carat gold
  • Legal tender in Canada
  • Competitively valued
  • Different sized coins available

Cons:

  • Easily shows handling marks

Gold Buffalo Coins

Another gold coin that is always in high demand is the Gold Buffalo.

This coin was introduced by the US Mint in 2006 and was America’s first ever one-ounce 24-carat gold coin. It was introduced to compete with other high-purity gold coins such as the Maple Leaf.

The Buffalo comes in several different sizes, ranging from one ounce to one-tenth ounce. The one-ounce coin has a legal tender value of $50 US dollars.

A very attractive coin, the Gold Buffalo features a buffalo on its reverse, modeled after “Black Diamond,” a buffalo in New York City’s Central Park Zoo in the early 1900s.

Given its beauty, high purity, and limited production, this coin is always sought after by both collectors and investors. As such, it’s an excellent choice from an investment perspective.

While the Buffalo is a popular coin across the world, it is not quite as well known as the American Eagle at an international level. Therefore, it is best suited to US investors.

Pros:

  • High purity 24-carat gold
  • A very attractive coin
  • Different sized coins available

Cons:

  • Not as well recognized as the American Eagle

Austrian Philharmonic Coins

Within Europe, the Austrian Philharmonic gold coin is a highly popular gold coin for investment. Also known as the “Vienna Philharmonic,” this coin has been in production since 1989. It is produced by the Austrian Mint in Vienna.

Like the Maple Leaf and the Buffalo, the coin is 24-carat gold, meaning that it is extremely pure. It comes in five sizes, ranging from one ounce to one-twenty-fifth ounce.

Denominated in euros, one-ounce coins produced after 2002 have a face value of 100 euros. The coin is considered legal tender in Austria.

The Philharmonic is widely accepted across both Europe and North America. It’s less popular across some parts of Asia, however. Within the US, the coin is not as popular as the Eagle or the Maple Leaf.

Overall, this coin is an excellent gold coin for both European gold investors and international gold investors.

Pros:

  • High purity 24-carat gold
  • Widely accepted across Europe and North America
  • Different sized coins available

Cons:

  • Not as popular as the American Eagle or the Maple Leaf

South African Krugerrand Coins

The South African Krugerrand coin is another sovereign worth looking at from an investment perspective.

Produced since 1967, the Krugerrand was the first gold coin introduced in the modern era, specifically for use as an investment tool.

Before the introduction of the Maple Leaf and the American Eagle, this coin was the most popular gold coin in the world amongst investors. While its popularity has declined a little in the last few decades, it is still one of the most common gold coins around the world today. It is also highly liquid, although not as liquid as the American Eagle within North America.

Like the American Eagle coin, the Krugerrand is made from 22-carat gold, so it is 91.7% pure. It comes in four sizes, ranging from one-ounce to one-tenth ounce.

This is a good coin to own from an international perspective. Because it was the first gold coin to be produced, it remains a popular choice among gold investors today.

Pros:

  • A very common gold coin across the world
  • The first gold coin used as an investment tool
  • 50-year history
  • Different sized coins available
  • More durable than 24-carat gold

Cons:

  • Not as liquid as the American Eagle within North America
  • Not the purest form of gold

A Word of Caution on Numismatic Coins

When buying gold coins as an investment, investors should stick to the most popular, liquid sovereign coins such as the American Eagle, the Canadian Maple Leaf, and the other gold coins mentioned above.

These coins are instantly recognizable, can be valued easily, and therefore are easy to buy and sell. This makes them excellent coins for investment purposes.

The English Britannia, Australian Kangaroo, and Chinese Panda can be acceptable alternatives if competitively priced at the time of purchase. Just be aware that these are much less liquid coins, especially in North America.

Other coins, such as numismatic coins, should generally be avoided unless you are looking at acquiring rare numismatic coins and you are able to assess the rarity and quality of these coins.

These are rare coins that are considered to be collectible not liquid investments. They do not offer the same investment benefits of coins such as the Eagle and the Maple Leaf. They are valued mainly for their rarity and less for their actual gold value.

Collecting these types of coins could be compared to collecting art. You need to have a very strong understanding of the market, and work with extremely reputable dealers, to profit from these coins.  

Similarly, other types of coins such as semi-numismatic, special edition, or commemorative coins are best avoided. These types of coins are often sold at higher premiums than standard gold coins.

However, when it comes to selling these coins, the premiums usually disappear. Therefore, they are not recommended as investments.

It’s important to find a reputable bullion dealer when investing in gold coins. There are unscrupulous dealers out there that will try to persuade you to buy numismatics and other collectible coins.

These coins won’t retain their value over time. It’s worth finding a reputable dealer to ensure you invest with confidence.

What Size Coin Should You Buy?

For most investors, the best-sized gold coin to buy is a one-ounce coin. This size is the most common and the most liquid. It generally offers the best bang for your buck.

Some investors like smaller, fractional gold coins because they can split the sales into smaller amounts. The advantage here is that they can make it easier to sell the exact amount of gold you want.

However, there are several disadvantages of smaller coins. Smaller coins often have high premiums. Therefore, they do not offer the best value. For example, 10 one-tenth ounce gold coins will cost an investor a lot more than a single one-ounce coin.

One reason smaller coins have larger premiums is due to the relative cost of minting compared to the value of the metal in the coin. This also applies to silver coins. While the US and Canadian mints can keep prices competitive, larger coins generally offer better value.

Gold dealers will also charge much higher bid-ask spreads on smaller coins. For example, the spread on a one ounce American Eagle may be 3%–5%. In comparison, the spread on a one-tenth ounce Eagle could be as much as 10%–15%. This makes them less suitable as investments.

Therefore, it’s generally sensible to stick to one-ounce coins when buying gold coins as an investment.

 

 

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