Does the Purity of a Gold Coin Affect Its Value?

 

Sell Gold Coins

American Gold Eagle Coin

 

As gold coin dealers, we’re frequently asked if the purity of a gold coin affects its value.  While millions of government and privately minted gold coins consisting of various purities have been produced throughout the years, for the purposes of this article, we’re going to highlight some of the most common gold coins that we see in our day to day dealings.  We’ll address in order of purity the demand and value of some of the most recognizable gold coins beginning with 90% (21.6k) gold coins and working our way up to .999 fine, or 24k gold coins.  You might be surprised to find that there’s not necessarily a direct correlation between the coin’s purity and its value.

90% Gold Coins

Prior to the issuance of South African gold krugerrands in 1967, the standard purity for gold coins was 90%.  Two of the most recognized and sought after gold coins by U.S. investors and collectors are the $20 Liberty Head gold coin and $20 St. Gaudens double eagle.  Both of these coins are 90% pure, and actually weigh in at a bit less than one troy ounce, with an actual gold weight of .9675 troy ounces.

From a global perspective, many of the most recognizable gold coins worldwide are 90% pure, including British gold sovereigns, Swiss gold francs and French gold francs.  Still to this day, the United States produces commemorative gold coins with 90% gold content.

All of the above referenced gold coins are in high demand and sell at a premium over the spot price of gold, but due to the rich history and demand for pre-1933 gold coins in the U.S., $20 Liberty Head and $20 St. Gaudens double eagles sell at a slight premium over the other offerings.

91.6% Gold Coins

Coins that are 91.6% pure are commonly referred to as 22k gold coins.  South African gold krugerrands and American gold eagles, both 22k gold coins, are two of the most recognizable and coveted gold coins the world over.  As mentioned previously, the production of gold krugerrands began in 1967.  Due to the length of production, gold krugerrands are the highest produced modern gold coins in existence.  While plenty of American gold eagles have also been produced, the U.S. Mint didn’t begin minting these coins until 1986.

While it’s widely believed that a 22k gold coin doesn’t contain the same gold content as a 24k gold coin, that’s not the case.   In fact, the amount of pure gold in a one ounce 22k gold coin is exactly the same as a 24k gold coin.  Since the gold content of both coins is the same, other alloys, such as copper and silver, are mixed with gold in the production of 22k gold coins to offset the slightly lower purity.  This is primarily done to make the coins more durable.  As you would expect, 22k gold coins weigh slightly more than 24k gold coins.  For example, a one ounce American gold eagle weighs 33.93 grams, while a one ounce gold maple leaf weighs 31.1 grams. 

As far as the value of 22k gold coins go, American gold eagles and South African gold krugerrands typically sell at higher premiums than most other government issued gold coins, including 24k gold coins.

99.9% Gold Coins

The purest gold coins available in the marketplace are 99.9% pure gold coins, which are more commonly referred to as 24k gold coins.  As mentioned above, 24k gold coins are more prone to damage than its 90% and 91.6% pure counterparts, and therefore, need to be carefully preserved and stored.  Several countries produce 24k gold coins, including Australia, Austria and China, but the two most popular 24k gold coins are American gold buffaloes and Canadian maple leaf gold coins.  Both coins contain .9999 fine gold.  Some previously issued Canadian gold maple leafs contain five “9’s,” which means that they’re .99999 fine gold, but an additional “9” has very little to no impact on the coin’s value.

While the production of American gold buffaloes didn’t begin until 2006, they’re a highly popular gold coin, both in the United States and overseas.  Premiums for these coins are typically on par with American gold eagles, but because American gold eagles have been in existence longer, individuals are typically willing to pay a slightly higher premium for American gold eagles.  Premiums for Canadian maple leafs are on par with South African gold krugerrands, and depending on which area of the country you may live and the ethnicity of its residents, it’s not uncommon for one coin or the other to be slightly more popular.

In summary, there appears to be very little, if any, correlation between a coin’s value and its purity. Rather, the price is driven by familiarity and demand in the marketplace.  One’s goal should be to purchase coins that are not only recognizable, but that are also highly liquid in the event the need arises to sell gold coins in the future.  Some cultures and ethnicities place a high emphasis on the purity of gold, so if you happen to live in or around one of these areas, 24k gold coins may be in slightly higher demand.  Regardless of your personal preference, you can’t go wrong with any of the gold coin offerings that we’ve highlighted above.

Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Tony frequently writes on various economic and numismatic related topics affecting the coin and bullion markets and has been published on some of the industry’s leading websites, including Coin Week, the American Numismatic Association, Coin Collector, Coinflation and Coin Auctions Help, just to name a few. Visit Atlanta Gold & Coin’s website at http://atlantagoldandcoin.com to obtain additional information on the products, services and educational resources offered by his company. Tony can be reached at sales@atlantagoldandcoin.com or at 404-236-9744. Be sure to "like" Atlanta Gold & Coin Buyers on Facebook , follow them on Twitter, or subscribe to their RSS feed to receive the latest news, tips and expert advice on old, rare, collectible and bullion coins.