Clarity about secondary market gold bullion coins

[Guest]

Hi,

I think I’m getting myself confused about the secondary market of gold bullion.

I want to invest in gold bullion as part of my long-term financial plan. I’m not interested in collecting proof coins (I might buy the odd one just for me), just investing in bullion coins.

Is the secondary market exactly what it says; a market for those that only want to buy gold bullion to invest in and are not interested in the condition of the coins?

For example, a 24ct 1oz gold Britannia bullion coin has some tarnish/slight wear and is being sold as secondary market from a reputable dealer - as long as it contains the 999.9 fineness gold content, it can be sold at whatever the spot price is?

Thanks in advance!

C60

[5huggy]

The secondary gold market describes the exchange of gold or silver on a second-hand basis. It involves buying or selling gold products from or to a party other than the original vendor when the product first exchanged hands in pristine condition.

Not from MINT -but "SECOND" hand

[Guest]

Ah I see - that makes sense now.

In regards to the condition of the coin when I decide to sell it on at a later date - does the condition of the coin affect the price? Obviously I want to make sure the coins are kept well in plastic cases for storage, but if they were handled or had some signs of wear, would that alter the price or is it just based on their spot price?

[Balvenie]

Standard bullion coins are made almost entirely from precious metals. They are made of refined gold and are viewed as an investment, rather than a collector coin. The value of the coins is based on their gold content.
Numismatic coins refer to rare coins. The value of these coins is based on how rare they are and on their condition, and so can cost much higher than bullion coins. This coin category also includes proof coin sets.

[sixgun]

2 hours ago, C60 said:

Ah I see - that makes sense now.

In regards to the condition of the coin when I decide to sell it on at a later date - does the condition of the coin affect the price? Obviously I want to make sure the coins are kept well in plastic cases for storage, but if they were handled or had some signs of wear, would that alter the price or is it just based on their spot price?

Yes - people are more willing to pay more for a coin in good condition - they will pay a higher premium over the value of the metal. Get yourself a few pairs of cotton gloves - don't handle coins especially if they are silver. If you do handle with bare hands don't touch the faces of the coin.

[Nick1368]

Don't go anywhere near proof, numismatic or even semi numismatic coins, buy second hand bullion coins.

let's say you wanna buy a 1oz Gold Britannia, try to find the cheapest Britannia coin out there, doesn't matter how many finger prints or scratches you see on it or how ugly it looks, any 1oz Britannia has 31.1034 Grams of 999.9 Fine gold in it and when it comes to sell, all dealers pay almost %99 of spot for it.

like I said just try to find a genuine coin with the lowest premium possible, then you don't need to be worried about handling it with gloves or anything like that, you can handle it with bare hands and have a good look at it whenever you like, because you bought it as bullion and you are going to sell it as bullion.

 

[Guest]

9 hours ago, Nick1368 said:

Don't go anywhere near proof, numismatic or even semi numismatic coins, buy second hand bullion coins.

let's say you wanna buy a 1oz Gold Britannia, try to find the cheapest Britannia coin out there, doesn't matter how many finger prints or scratches you see on it or how ugly it looks, any 1oz Britannia has 31.1034 Grams of 999.9 Fine gold in it and when it comes to sell, all dealers pay almost %99 of spot for it.

like I said just try to find a genuine coin with the lowest premium possible, then you don't need to be worried about handling it with gloves or anything like that, you can handle it with bare hands and have a good look at it whenever you like, because you bought it as bullion and you are going to sell it as bullion.

 

Thanks @Nick1368- I had read elsewhere that this was the case, as long as the bullion contains the right amount of gold, then it doesn’t matter its condition as it’s just bullion. Thanks for clarifying that!

[Pete]

11 hours ago, Nick1368 said:

Don't go anywhere near proof, numismatic or even semi numismatic coins, buy second hand bullion coins.

let's say you wanna buy a 1oz Gold Britannia, try to find the cheapest Britannia coin out there, doesn't matter how many finger prints or scratches you see on it or how ugly it looks, any 1oz Britannia has 31.1034 Grams of 999.9 Fine gold in it and when it comes to sell, all dealers pay almost %99 of spot for it.

like I said just try to find a genuine coin with the lowest premium possible, then you don't need to be worried about handling it with gloves or anything like that, you can handle it with bare hands and have a good look at it whenever you like, because you bought it as bullion and you are going to sell it as bullion.

 

I from personal experience agree wholeheartedly with Nick1368
I sold a significant quantity of FDC ( that's the best condition and would earn the top grade ) proof gold coins and boxed coin sets last year.
Most of my buyers weren't interested in the boxes or the certificates and I have dozens of empty boxes that I would like to get rid of.
When I contacted some bullion dealers to try and get a better price they were offering me to buy similar sets they wanted to shift at spot + 5%.
The price I got for most of these proofs was very close to spot and those that I took to Hatton Garden Metals I received about 97% of spot.
When I purchased these lovely coins and sets I was paying between 15% and 20% over spot.
Lesson learned and I am staying clear of proofs and special editions at grossly inflated prices.
There will always be the odd coin that bucks the trend but that's for someone else to buy.

As Nick1368 also says the condition is unimportant if there are scratches or dings on the coin selling to a trader.
You will likely get a marginally higher price selling a 24ct coin over a 22ct equivalent even containing the same weight of fine gold.

[Guest]

Thanks @Pete for reinforcing what Nick said.

I gone ahead and purchase some gold bullion - lowest price I could find for 1oz Gold Britannia, 2 Gold Half sovereigns and 1 Gold Sovereign from a reputable dealer (I did some research before buying to ensure the dealer was reputable).

I did see a £2 DNA Gold Proof coin, but that would have exceeded my budget at the moment, so I've made a note of it for the future - I know I said I wouldn't buy proofs, but as an electrochemist, it caught my eye to have :D

Anyhow, thanks for all your advice - it was worthwhile signing up here!! ^_^

 

[Roy]

The secret is to buy semi-numismatic or popular series coins at bullion prices.