How To Value Gold Investment Coins

In another hub, Why You Should Buy American Gold Eagle Bullion Coins, I made the case for investing in pure gold coins as a hedge against inflation. The United States is expanding the money supply.

I price gold coins using the following formula: Price of Gold * (Rarity + Grade + Popularity) * Quality * Oz Weight. This is the general formula I use to see if a modern gold coin is worth buying or selling. This formula will not work for extremely old or rare coins.

• The Price of Gold is the current market value of an ounce of gold. (i.e. $984)
• Rarity is how hard it is to find the coin. The minimum value is .33 for rarity. The value can be as high as .5 for really hard to find coins, but I mostly put this around .35.
• Grade is the condition of the coin. The minimum value is 0 and the maximum is .5.
• Popularity is a value from .33 to .5 based on how popular the coin is.
• Quality is the percentage of actual gold.
• Oz Weight is the weight of the coin in Ounces.

So for a 2006 Buffalo Gold Proof Coin I would have the following formula:

Price of Gold ($984) * (Rarity (.33) + Grade (.33) + Popularity (.35)) * Quality (.9999) * Troy Oz Weight (1)

984 * (.33 + .33 + .35) * .9999 * 1 = $993.74

So I wouldn’t want to buy a 2006 Buffalo Gold Proof Coin for more than $993.74 and I wouldn’t sell the coin for less than $993.74. Obviously this price is going to change daily with the price of gold. And as a backup you can get pricing from the US Mint to see what they are selling the coins for to get a ballpark figure.

Since the prices of gold changes every day, before you are going to buy any coins check what the market is doing.  Obviously when the market is going down, it is a good time to buy.  If the market is going up, it is a good time to sell.  There has been a lot of volatility in the gold market lately and we have seen swings of over $100 over two to three week periods.  Just know what the market is doing and time your buys as you see fit.

With the demand for gold coins as high as I can remember, there has been about a 1% to 2% premium placed on the American Eagle and Golden Buffalo coins.  Visit several coin shops in your area and you should be able to find one that will have reasonable prices.  From my experience, the coin dealers that are advertising that they buy old gold jewelry tend to be the higher priced shops.  If all else fails, you can always buy from the US Mint.