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new Canadian gold coins - worth investing?


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I understand the rarity is very important when it comes to investing in gold coins.

 

So I was thinking if I just choose those gold coins of mintage < 2500, ideally <500, e.g. 14-Karat Gold $300 Coin - Nova Scotia Coat of Arms - Mintage: 500 (2011) on this page http://www.mint.ca/s...coins-cat120004 Does it make more sense?

 

BTW, I was thinking of collecting and investing at the same time...

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Welcome to the forum! First of all before buying coins for investment please do yourself a favor and pick up a few books on the subject written by those who have made it successfully in the coin business. For example one book to read would be "Collecting Rare Coins for Profit" by Q. David Bowers. While a little dated I would consider what he has to say in the book. There are others I am sure and the other people on the forum here will chime in with some others.

 

14 Karat coins---I personally would pass---I would go for the .9999 pure or better as they would be easier to resell (my opinion only) no matter that they were a limited edition.

 

Start out slowly----Collect what interests you and remember if an "investment" doesn't pan out it will become part of your "collection"!

 

Ben Franklin is attributed with saying "Mind your collection carefully, and the investment will take care of itself!"

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It has been my experience that there are two basic ways of collecting coins, you can collect for fun or you can collect for profit. Collecting for fun is self explanatory, collecting for profit takes a little bit more research.

The idea is to purchase a coin at as low a price as possible and sell at a higher price thus ensuring a profit, collecting coins with as low a mintage as you can is one way for example, I purchased 9 copies of the Queen Mum when it came out in 2004, I paid $49.99 each for them, I sold 8 of them for between $300.00 and $400.00 each and I have one left.

What I am trying to say is, it makes no difference if it is gold/ silver or bronze, it all comes down to supply and demand, remember when it comes to a collectable it is only worth what another collector is willing to pay for it.

FYI. the mintage on the Queen Mum coin was 9,996 I believe.

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Buy it if you like it. As Roger says, you might end up with it for the long run.

 

Keep in mind that the higher the price, the fewer people (collectors or otherwise) there are who would be potentially interested.

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The general trend with most modern commemorative mint issues is that the values drop off similar to driving a new car off the lot. People lose interest in the coins that aren't the brand new ones that the mint offers and does a very good job of promoting.

 

Typically these mints sell coins to collectors at 2-3 times the intrinsic value of the gold/silver they contain. There is nothing wrong with this, collectors gonna collect!

 

As for "investing", there is the strictly bullion way of buying things like gold and silver maples. And then there is speculating on newly issued mint products. Yes, some of them do end up selling for multiples over the issue price. But the vast majority do not. I would recommend buying the Charlton Standard Catalog of Canadian Coins and just browsing at the HUNDREDS mint issued collector coins they have minted in the past couple decades. Most you've probably never even heard of because they are no longer advertised by the mint. Now log onto ebay and search a few of them to see actual completed sales. 9 times out of 10 you'll see that they now sell for less (even before fees) than their issue price.

 

Most of the time when one of these commems sells for more than the issue price, it's due to a large increase in the silver/gold spot price. Take the 1976-1986 22 karat (1/2 oz pure gold content) $100 gold series. Bullion/melt value on the 1/2 oz coins is currently about $860. The issue price on these was $150-$430 depending on the price of gold when they were minted. Great profit margin! Not..

 

Let's use the 1984 22karat gold (1/2 oz of gold content) example. It was issued at $325. The price of gold at the start of 1984 was $370 per OUNCE. The average price in 1984 was around $360/oz. Buying two "collector coins" containing a total of 1 oz of gold would have cost $650, 76% above the spot price. To buy that same 1 oz of gold bullion in the form of two 1/2 oz .9999 fine maples would have cost around $425. Today the coins are basically worth the same, melt value. The pure gold maples actually sell at a higher premium now, but let's just ignore that. The collector coin guy made a profit of $1070, the bullion buyer made a profit of $1295.

 

Rant over :)

 

There is nothing wrong with collecting because you like the coins. There are tons of coins worth more than their bullion value (both moderns and classic coins). But do your own due diligence before speculating on coins, especially modern mint issues. In my opinion it is worth the effort to learn how to grade and evaluate classic non-modern/packaged coins. For me at least, it's often far more rewarding and profitable than trying to look into my crystal ball to see which new issue might do well in the future.

 

PS- Don't be fooled by artificially low mintages of modern coins. Sure they might only make a few thousand of a certain coin type that year. But there's dozens of issues, and dozens if not hundreds of other world mints doing the same thing. The net result is a huge and constant supply of modern coins. Mintages can matter, but usually only for classic circulation coins where the amount of surviving coins due to loss/damage/etc is part of the equation.

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^ I think we've got ourselves a post of the week nomination!

 

As for the last paragraph, I remember hockey cards in the late 90s - some companies started putting out several different sets a year, each with about 10 or so insert subsets. And this was with several companies. Soon, it was no longer possible to collect a full set of anything, let alone collect all of any one year's issues of your favourite player. What happens then? Collectors give up and the market crashes.

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^ I think we've got ourselves a post of the week nomination!

 

As for the last paragraph, I remember hockey cards in the late 90s - some companies started putting out several different sets a year, each with about 10 or so insert subsets. And this was with several companies. Soon, it was no longer possible to collect a full set of anything, let alone collect all of any one year's issues of your favourite player. What happens then? Collectors give up and the market crashes.

 

Thanks :)

 

The point about the hockey cards is a very good one. There are reasons why coin collecting has been around for ages, while other collectibles come and go. IMO it's a combination of intrinsic value, history, habit (long history of people saving coins and making collections), fixed supply (even declining, as pieces are lost/damaged/etc), and probably a number of other things too that aren't popping into my head at the moment.

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