Gold coins keep strength of value over the mil­len­nia

Pre­cious metal is one of the old­est stores of riches

The National - News - Business - - Focus -

Early this month, a hoard of gold coins was dis­cov­ered in the Nether­lands, buried around 460BC – about the time the Ro­man Em­pire was about to be over­run by bar­bar­ians.

Arche­ol­o­gists be­lieve the 42 coins were hid­den to keep them safe – an easy guess, as gold has con­tin­u­ally been used as por­ta­ble value since the be­gin­ning of recorded his­tory.

Gold coins are one of the old­est known stores of riches. It has been this way ever since hu­mans be­gan putting value on items of rar­ity. Around 1000BC, peo­ple liv­ing in the re­gion stretch­ing from the Mid­dle East to In­dia be­gan fash­ion­ing medal­lions from the shiny yel­low stuff they found in riverbed mud.

To­day, gold coins are sought by in­vestors and col­lec­tors alike.

Apart from the Kruger­rand that is pro­duced by the South African mint, the United States, Canada and the United Kingdom are among the most pro­lific is­suers of gold coins.

One of the most suc­cess­ful is the 1 ounce Buf­falo coin fash­ioned by the US mint in 2006. Al­most 250,000 have been sold, ac­cord­ing to Nu­mis­matic News. Like many coins in cir­cu­la­tion, its price is tied to the value of gold it­self and the Buf­falo is cur­rently trad­ing in the US$1,600 range.

Not all coins are in­vest­ment grade but they re­main pop­u­lar purely for their art­work and nov­elty. A 1915 Aus­trian gold ducat can be snatched up on eBay for un­der $200, for in­stance.

Given the al­lure of gold, fraud is a huge risk for the un­wary. So much so that the at­tor­ney gen­eral of Texas, Ken Pax­ton, re­cently is­sued an alert warn­ing buy­ers not to re­spond to cold-call­ers of­fer­ing them “deals” on coins.

“If coins you bought as an in­vest­ment would have to dou­ble or triple in value be­fore any gain could be re­alised, you may have been a vic­tim of fraud,” Mr Pax­ton said.

Buy­ers should al­ways do re­search to pick rep­utable deal­ers. In­vest­ment grade coins are sold at a price linked to the spot price of gold. Deal­ers make their money off the trade through the “spread” – adding a few points to the price to a buyer, or re­mov­ing a few points rel­a­tive to the price of gold for a seller.

Most gold coins are not 100 per cent pure. Cop­per usu­ally makes up 2 to 3 per cent of its weight to har­den the coins and help make them scratch re­sis­tant.

Euro­peans are among the most en­thu­si­as­tic buy­ers of coins but, as with many eco­nomic trends, it is the Chi­nese who are shak­ing things up. The World Gold Coun­cil says de­mand for gold coins and bars in China grew by 30 per cent in the first quar­ter of this year. More than 105 tonnes of the metal in to­tal made its way to China in the same pe­riod. And Bloomberg re­ports that China is on track to im­port 1,000 tonnes of gold this year, up by 55 per cent from the 647 tonnes im­ported in 2016. It seems the pulling power of gold has not lost any of its strength.

Cour­tesy: Mu­seum Het Valkhof

A hoard of 42 gold coins was found in the Nether­lands ear­lier this month, dat­ing back to 460BC.

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