Gold bullion coins: the best in the world

What are investment coins

Bullion coins are made from high quality precious metals. In Russia - from gold and silver, in other countries - also from platinum. Technically, these are small gold and silver bars that are a way to store money.

The price of coins changes daily - it depends on the value of the metal from which they are made. At these prices they are bought from banks or organizations that engage in buying and selling.

Investment coins have a simple design: denomination, year of issue, fineness and metal content, thematic symbols. The obverse and reverse depict a coat of arms, historical figure, animal, mythical character or other symbols of the country. For example, in Russia - St. George the Victorious, in the USA - a golden eagle, a bison, in Armenia - Noah's Ark, in China - a panda.

Investors buy coins, hoping to sell them profitably in the future. Especially if the price of metal starts to rise. “They are produced by the mints of St. Petersburg and Moscow,” says Venera Shaidullina, associate professor at the Financial University under the Government of the Russian Federation.

Krugerrand

Country: South Africa

Issued by: South African Mint

Start of production: July 3, 1967

Sample: 916.7 (22 carats)

Obverse

The obverse of the coin features an image of Paul Kruger and the inscription “South Africa” in Afrikaans and English.

Reverse

The reverse of the Kruger features the symbol of South Africa - the running springbok (African antelope), the name of the coin, the year of issue, the inscription "Pure Gold" in Afrikaans and English and the content of pure gold in ounces.

The Krugerrand or simply Krugerr is a unique coin that marked the beginning of the era of investment coins and became the standard for them. Inspired by the success of the South African Krugerrand, other countries began issuing their own bullion coins and some of them gained worldwide success and recognition.

The uniqueness of the Krugerrand lies not only in the fact that it was the first and has played a significant role in the global gold market for more than 50 years. But the fact that it does not have a face value, unlike other coins, makes the South American coin a bullion coin. That's why Krueger isn't on the IRA list.

The Krugerrand has a beautiful reddish hue, this is due to the addition of copper to give the coin strength. The Krugerrand comes in four varieties: 1 oz, 1/2 oz, 1/4 oz and 1⁄10 oz fine gold. The coin is named after Paul Kruger (1825-1904), a South African politician and president.

What are investment coins?

The two main types are gold and silver. Gold is better for investment, as gold rises in price faster than silver.

Coins come in different weights and qualities. The global standard is 1 ounce (31.1 grams). In Russia they also mint quarter-ounce coins (7.89 grams).

Coins may be new or previously circulated. For example, the royal chervonets of the era of Nicholas II still have the status of investment. New ones are assigned the quality “Excellent condition” or “AC” (from English UNC, Uncirculated).

There are also coins in “Proof” quality (improved quality), when the surface is made mirrored, inlaid, etc. “Most often, the Central Bank mints commemorative coins in this capacity,” says Alexey Vyazovsky, vice president.

When to buy?

Like any market asset, investment coins bring the greatest profit if you buy them when the value of the metal falls and sell them when the price peaks. But only investors with extensive experience can guess these parameters. Therefore, if you have free funds, buy investment coins at any opportunity. By carefully monitoring the state of affairs on the exchanges, it is quite possible to understand the general trend in the price of a particular metal.

For example, according to data for the first quarter of 2021, an ounce of palladium on exchanges was quoted more expensive than an ounce of gold, and an ounce of platinum was one and a half times cheaper. But there were periods when the opposite situation developed. Therefore, at this period of time, investors preferred to sell palladium and buy platinum as an undervalued asset that could show explosive growth in the future. “We don't need to be smarter than everyone else. We must be more disciplined than others,” advises the world's most famous investor, Warren Buffett.

Differences between commemorative and bullion coins

Minting: Investment - regular (uncirculated) AC quality. They have simple embossing without complex elements, minor damage is allowed. Memorables – improved (proof) quality.

Circulation: Investment papers are produced in large quantities, tens and hundreds of thousands. Therefore, they are not valued by collectors. Commemorative items are produced in limited quantities: from several hundred, rarely more than 25,000. They are immediately interesting to collectors, and over time their price increases. Selling price: The real price of an investment coin is equal to the metal exchange rate. Rarely does it have a collectible value added to it - unless it is from a small batch, is old, or was released by a no longer existing state. A commemorative coin can only be sold at a real price to a collector.

“Commemorative items are minted in small series. Their price is influenced by supply and demand, and not by stock exchange quotes for the metal. The price of a commemorative gold coin can rise even when the price of gold on the stock exchange falls” - Alexey Vyazovsky.

Are gold or silver coins more profitable to buy?

Beginners in investing often cannot decide which coins are more profitable - silver or gold. Silver is cheaper, but gold is more stable, easier to store, and offers higher returns over the long term.

When comparing the two metals, silver loses for 3 reasons:

1. Its price growth is unstable, worse predicted and significantly lower compared to gold.
2. The invested funds will bring a significant profit only in the case when a batch with a significant total mass of metal is purchased.
3. Silver products are more demanding in terms of storage conditions. They quickly oxidize, lose their shine and turn black, which automatically reduces their value.

How to determine the value of investment coins

In Russia the formula is simple. The price is the sum of the world price of gold or silver multiplied by the dollar/ruble exchange rate. Plus mint and dealer markup (+5-6%)

To calculate the value of a coin, you need to know its weight and circulation. This information can be viewed on the Central Bank website. The larger the mass and the smaller the circulation, the more expensive it is.

Let's calculate the price using the example of the Sable silver coin.

“Sable” is made of 925/1000 silver. This is indicated by the Ag 925 mark on the coin on the left. This means that it contains 92.5% silver.

The weight of chemically pure valuable metal is 31.1 grams of the total weight - one ounce. This is also confirmed by the number “31.1”, which is printed on the coin.

The circulation of "Sable" is very large - 1,000,000 pieces. Therefore, the coin does not yet have a collectible value. Its price is affected only by the exchange rate of silver.

As of January 10, 2021, the cost of one gram of silver at the Central Bank exchange rate is 36.25 rubles. Accordingly, the price of metal in Sobol is 1,127.37 rubles. The rest is the markup of the manufacturer and seller of the coin.

It is better to look at the prices of commemorative coins in the Fcoins.ru catalog. If you are not an expert, it is difficult to determine the cost yourself.

Coins issued for the 2014 Sochi Olympics

Minted in quantities from 100 to 300 thousand. Fifty-ruble ones weigh 0.25 ounces, and hundred-ruble ones weigh 0.5 ounces. Produced from 2011 to 2013.

On the one hand, a small circulation guarantees an increase in value not only due to the metal, but also to the rarity of the samples; on the other hand, the price of these banknotes will be inflated already upon purchase. Therefore, the profitability of investing in items with Olympic symbols depends on the price at which they are offered.

How to make money on investment coins

Buying this asset as a way to invest money is close to buying precious metals. But coins are easier to store and transport than, for example, bullion.

To make money, you need to sell coins for more than you bought them. The main strategy is to buy for long-term storage, at least 5 years.

It is more profitable to invest in gold coins:

• First, the gold rate increases faster than the silver rate. Silver is a vulnerable metal during economic crises.

• Secondly, gold retains its presentation better, while silver oxidizes in air. Over time, patina appears on silver coins - a film of different shades.

“When selling coins, the price is affected by their condition,” says Vladimir Maslennikov, vice president of the investment company QBF. Even minor damage or greasy stains will lead to a discount. In jars they are sold in capsules or tubes, which are not recommended to be opened.

Investment coins are a long-term investment tool. Precious metals slowly but always increase in price. They bring tangible profitability in no less than three years. Taking coins for a period of 1-2 years is not advisable. There is no guarantee that the value will rise even to such a level as to recoup the costs of the transaction.

Dynamics of the gold rate over five years. Yield 21.72%.

Dynamics of the silver rate over five years. Yield 15.14%

An exception is if investment coins were purchased during a period of sharp decline in prices for precious metals, followed by an increase in value. Overall, this is an asset with low liquidity and high growth potential in the long term.

According to Venera Shaidullina, “the price of gold coins, on average, increases by 5-10% every year. This is one of the most stable and low-risk assets.”

A rare option for making money is selling investment coins to collectors. If their circulation is small, then the asset may have additional collectible value. Numismatists are often interested in coins that are thematically related to sports or animals. For example, now there is a demand for banknotes issued for the Olympics in Sochi.

The price of collectible coins is increasing more than the price of investment coins, but it is difficult to predict the growth. Collectibles are also more difficult to sell than investment ones: financial institutions buy them in accordance with the cost of the metal from which they are made. You can make profit on collectible coins only on the numismatic market, but this requires connections and knowledge.

“It is worth investing in coins regularly, with every major income. Analysts recommend investing up to a quarter of your investment portfolio in precious metals,” says Alexey Vyazovsky.

General information

Even within the framework of this blog, I have already written quite a lot about investment options. Today I want to focus on the topic of investing in precious coins. This method is not so common, since it is more conservative, but it also has its significant advantages.

Let me remind you of the important rules of investing:

• We invest only our own funds, no loans from friends, credits, and even less applications to microfinance organizations. Only your own free funds.
• The money you invest should not be your last, set aside for an important business or purchase, or vitally necessary. You must understand that if you lose them now, you will be able to live in peace without compromising your quality of life.
• There is no guarantee that your investment will be profitable. Even if you invest in stable and reliable government bonds or bank deposits, there is no guarantee that this will actually be the case.

• Before investing your own money in a particular instrument, you should carefully study it and evaluate the possible risks and potential profitability. As a rule, risks are proportional to projected income. The higher the profitability, the greater the risks. But there are exceptions to this rule.
• In order to make a decision on investing money in a particular financial instrument, it is important to evaluate it according to the following key characteristics - possible risks, projected profitability, payback periods, minimum investment amount, advantages and disadvantages of investing for yourself.
• The available amount for investment must be distributed over several different instruments, that is, risks must be diversified. Investing your entire capital in one instrument is a rather risky step, which can lead to the loss of everything at once, especially if you have chosen a rather risky instrument with a high return.

Where to buy investment coins

Investment coins are purchased from banks, pawn shops, online stores or from coin dealers. To purchase from a bank or other financial institution, you need a passport.

The bank is the safest place to buy. But due to the fact that this is not a core activity, the transaction commission may be higher than that of a coin dealer.

A modern option is to purchase on the website. But in this case, proceed carefully: study the reviews, make sure that the transaction will be transparent and legal. In a secure location, upon sale, the buyer is given a certificate of authenticity. True, this is not a 100% guarantee, because the coin does not have a number.

Services for those who want to buy a coin:

• Online store "Transstroybank" - a catalog of 400+ Russian investment coins.

• "Derzhava" is a non-banking company that sells investment and commemorative coins of the Russian Empire, the USSR, the Russian Federation and other countries.

• Troy Standard is a St. Petersburg company that helps private investors diversify their portfolio with investment coins.

• "Sberbank".

Investments in gold with the help of Sberbank

Since 2008, the price of gold has doubled, which emphasizes the reliability of this investment method.
Article navigation

• How to invest money in gold at Sberbank
• Commemorative and investment coins
• Ingots
• Unallocated metal accounts (OMS)
• What type of deposit is better to choose?
• Is it profitable to invest in gold at Sberbank?
• Operations with gold in Sberbank
• How to buy
• How to sell
• Conclusion

A significant portion of Russians open deposits with Sberbank. Depositing gold in the country's main financial institution provides a high degree of confidence in the safety of funds.

Find out how to make money on a metal deposit at the Savings Bank of Russia from this article. Also, read about comparative characteristics of other types of investing.

How to sell investment coins

The same companies that we mentioned as platforms for purchase are engaged in the purchase. For example, Transstroybank is ready to buy gold “St. George the Victorious” for 24,600 rubles.

If the coin has additional numismatic value, the best place to sell it would be online collector's auctions: "Rarity", "Conros", "Numismatic". The product can be displayed on Avito or Yula, but due to the non-target audience, you may have to wait a long time for the buyer.

“Before selling a coin, check what price is offered in different sources and make an assessment. It is important to take into account that when you take the coin to a pawnshop, the price will be the lowest, since the pawnshop takes it as scrap. That is, the metal is simply assessed, other factors are not taken into account” - Venera Shaidullina.

Read: Why invest in Russian blue chip stocks

Operations with gold in Sberbank

The country's largest financial institution creates the most convenient conditions for its clients to purchase gold in all its forms: coins, bars and compulsory medical insurance. It is simple to carry out transactions with precious metals: if only there was money.

How to buy

To open a deposit, you need to come to a Sberbank branch with your passport and inform the manager of your desire. The client will be provided with a standard contract for review. You need to read it carefully so that there are no surprises later. Here are the nuances you should pay special attention to:

1. Gold is purchased at an inflated price.
2. The account holder must be at least 14 years old, but the person will have the right to dispose of the asset on the day he or she comes of age.
3. It is possible to register a metal deposit for another person (son, daughter, grandson, etc.)
4. It is allowed to have several gold accounts opened for one person.
5. The rules provide for the possibility of transferring compulsory medical insurance to another person.

It's even easier to buy coins and bars. To do this, you need to take your passport (identity card) with you and have a sufficient amount in your account or in cash. A citizen has the opportunity, at his discretion, to leave the purchased physical metal in the bank for safekeeping or take it with him. Yes, it is better to choose a coin in advance and find out if it is available.

The precious metal product is accompanied by a sales receipt and a certificate. It is strongly recommended that you save these documents. Firstly, you will need them when selling a bar or coin. Secondly, numbers and other characteristics are duplicated in the accompanying papers, which simplifies their identification in case of theft. It is better to store certificates at home separately from physical gold.

How to sell

One literary character said that before climbing somewhere, it is useful to think through escape routes. How you can sell gold to Sberbank is written on the official website of the financial institution. The holder of the precious metal must:

• make sure there is no damage that could affect the weight of the product;
• attach the manufacturer's certificate;
• take your passport with you.

You can find out at what price the bank buys gold (in this case, bullion) in advance by making inquiries using this link.

With coins the situation is both more complicated and simpler. They are accepted by the financial institution at the cost indicated in the catalog, which theoretically takes into account the numismatic value of the specimen. At the same time, Russian legislation does not regulate the turnover between collectors in any way, and they can sometimes pay more. Unlike trade in bullion, these transactions are not prosecuted under the Criminal Code of the Russian Federation, but are associated with other risks. For example, the buyer may turn out to be a fraudster.

It is safer to hand over a gold coin on the terms under which Sberbank accepts them, attaching a check and a certificate.

You can withdraw funds from the gold compulsory medical insurance partially or completely close the account. With the money received, the client has the right to purchase a metal product or take the amount in rubles at any time.