What You Need to Know Before Buying Gold Bullion Coins

With the gold prices soaring at record highs and the U.S. economy in turmoil, smart investors are turning to gold to hedge against the falling U.S. dollar. Some would think solid gold bars are the most reliable and cost effective method of owning gold. However, gold coins actually are better option in terms of protecting against deflation and financial uncertainties.

Gold coins typically cost slightly more than their gold content value (spot price), because a small premium or markup (4% to 10%) would be added for minting and distribution cost. But gold coins are easier to trade and manage than gold bars because of the smaller denominations and sizes. In addition , gold coin is classified as a collectible, which means that profits are not taxed as capital gains but as ordinary income. Long-term capital gains are taxed at a 15% rate for those in the 15% bracket, but gold investments can be taxed at rates of up to 39.6%. Those considering putting their money into gold coins should consider what these rates might do to their returns.



There are two main types of gold coins: bullion coins and collectible coins. Gold Bullion coin is favorite among gold investors, because its value comes primarily from the worth of gold content itself rather than from a face value. Gold bullion coins are priced and sold according to the weight of gold the coin contains, plus the additional premium mentioned earlier. Some of the most popular gold Bullion coins today are American gold Buffalo coin, 1oz Krugerrand gold coin and Mexican 50 Peso gold coin.