Of all the precious metals, gold is the most popular as an investment. Investors generally buy gold as a hedge or safe haven against any economic, political, social or currency-based crises. These crises include investment market declines, inflation, war and social unrest. Investors also buy gold coin during times of a bull market in an attempt to gain financially.
Investors generally buy gold for two main reasons: to financially gain from increasing gold prices, and/or as a hedge or safe haven against any economic, political, social or currency-based crises. Investment in gold can be done directly through buy bullion or coin ownership, or indirectly through gold exchange-traded funds, certificates, accounts, spread betting, derivatives or shares.
While obsolete gold coins are primarily collected for their numismatic value, gold bullion coins today derive their value from the metal content — and as such are viewed by some investors as a “hedge” against inflation or a store of value. South Africa introduced the Krugerrand in 1967 to cater to this market; this was the reason for its convenient and memorable gold content — exactly one troy ounce. It was the first modern, low-premium bullion gold coin. Bullion coins are also produced in fractions of an ounce – typically half ounce, quarter ounce, and one-tenth ounce. Bullion coins sometimes carry a face value as legal tender, The face value is minted on the coin, and it is done so in order to bestow legal tender status on a coin, which generally makes it easier to import or export across national borders. However, their real value is measured as dictated by their troy weight, the current market price of the precious metal contained, and the prevailing premium that market wishes to pay for those particular bullion coins. The face value is always significantly less than the bullion value of the coin. Legal tender bullion coins are a separate entity to bullion gold. One enjoys legal tender status, the latter is merely a raw commodity. Gold has an international currency code of XAU under ISO 4217. ISO 4217 includes codes not only for currencies, but also for precious metals and certain other entities used in international finance, e.g. Special Drawing Rights.
Gold bullion coins usually come in 1 oz, 1/2 oz, 1/4 oz, 1/10 and 1/20 oz. sizes. Most countries have one design that remains constant each year; others have variations each year, and in most cases each coin is dated. A 1/10th oz bullion coin is about the same size as a U.S. dime. A 1 oz. gold bullion coin is about the size of a U.S. half dollar.
A gold coin is a coin made mostly or entirely of gold. Gold has been used for coins practically since the invention of coinage, originally because of gold’s intrinsic value. In modern times, most gold coins are intended either to be sold to collectors, or to be used as bullion coins — coins whose nominal value is irrelevant and which serve primarily as a method of investing in gold.