Gold has been used as a means of payment for thousands of years. The first forms of gold use in the form of coins appear in the 7th century in Lydia, today’s Turkey. These coins looked more like golden balls with representations of animals and rulers of the region.
Over the course of 2,600 years, along with the development of technology, gold coins also developed. These have become more and more sophisticated, with representations full of details, but also with security elements against forgery.
Today’s investment coins are much more difficult to counterfeit than those of a hundred years ago. From stone presses, we reached laser engraving. At the same time, the concentration of pure gold in coins reached the highest possible values.
But, first of all, let’s see how we define investment gold coins.
Definition of investment gold coins
There is a set of international regulations that stipulate which currencies are considered investment products, and which are not. For a currency to be an investment instrument, it must:
- To be produced after 1800
- To be made of at least 90% pure gold
- To have been or to be a legal means of payment in the issuing country
- Not to have a final price 80% higher than the price of the contained gold
These measures have a logic behind them. Coins produced before the year 1800 are considered to be part of the historical treasury of the issuing country, and their trading is done only on the basis of certain documents.
The minimum pure gold content of 90% is established due to a European standard in the second half of the 19th century. We are talking about the period of existence of the Latin Monetary Union, a precursor of the euro zone. Within this union, states such as France, Switzerland, Italy, etc., have decided on a standard for the coins produced with the aim of facilitating transactions between states. Thus, millions of coins were created in Europe with a gold content of 90%, representing 21.6 carats.
If the price of a gold coin exceeds by more than 80% the price of the contained gold, then the seller is forced to apply the value added tax as well. Investment gold is not subject to VAT in the European Union. Therefore, the currency would no longer closely follow the international price of gold, so it can no longer be an investment product.
But these coins are also divided into two categories.
1. Historical gold coins
In the case of historical gold coins, we are mainly talking about coins that were used in everyday transactions. About a hundred years ago, gold coins were used to buy various goods and services.
However, there are also gold coins considered to be historical, although they are produced nowadays. We are talking about the South African Krugerrand and American Eagle coins. The reason why these are considered historical coins lies in their pure gold content. Unlike modern coins, these are made of 22 karat gold, or 91.7% purity.
2. Modern gold coins
Modern gold coins are made of pure 24 karat gold. Most often this is described as gold with the title .9999 or .99999, the latter being the purest gold we can produce. We will never see gold described as 100% pure, because, being a difficult metal to extract and refine, there will always be a percentage of impurities.
Modern coins, being 24 carats, require much more attention, compared to historical coins. They are delivered in plastic capsules or in tubes (if we are talking about orders of dozens of coins), precisely to protect them from possible scratches or damage.
Certificates of authenticity, a myth
When it comes to the certification of gold coins, it is important to remember that only the mint that produced the coin in question has the right to issue documents to certify authenticity. No merchant that has gold coins for sale is not authorized to offer such certificates.
At the same time, it is important to note that the coins do not have a serial number. Thus, a document cannot be attributed to a currency, since there is no certainty that that document would attest to the respective currency.
For these reasons, the international standard provides for the verification of coins according to their physical characteristics. In other words, it is recommended to check the weight, thickness, diameter and details on any purchased coin.
All these features can be found on the mint’s website, and they must match exactly, especially in the case of modern coins. The historical ones, having a past in which they were used, allow small deviations from the catalog characteristics.
The only coins that present a certificate are those of the Canadian Maple Leaf gold coin, “Call of the Wild” series.
Tags: gold investment coins
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