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Do you know the difference between face value and intrinsic value? When buying gold coins it is vitally important that the investor understand this issue. Consider something like the gold American Eagles. These are actual, workable currency with face values ranging from fifty dollars down to five dollars each, but they are worth a great deal more than the sums imprinted on them.

Why? This is the difference between face value and intrinsic value. The face values would give the one ounce coin a currency rate of fifty dollars. This fifty dollars would be available for use at any point in the present or the future, regardless of the value of gold on the world markets. The one ounce of gold, however, makes that coin worth hundreds or thousands of dollars depending upon the market price of gold.

Why would gold coins such as this be of use in an investment scheme? There is an old adage or warning about putting all of your eggs into one basket. Generally this is because an accident to the basket would destroy all of the eggs, and this symbolizes the financial ruin of someone who puts all of their assets into a single holding or investment area. This means that someone who wants to structure their holdings in a way that absolutely ensures they will have some sort of money should the bottom fall out of the world markets will look to such assets as gold coins.

Let’s just pose a “what if”; what if gold lost all of its market value? Someone with bullion would have a very lovely paperweight, but would not have any actual wealth from that bullion. On the other hand, the investor with the gold coins that are minted into currency would have at least the cash or face value of the coins available to them. While this is a small comfort for such a significant loss, it is also a rarity in the world of investment as there are few options that provide the investor with any sort of protection against total loss.

This is the reason that most investors turn to gold or gold coins. Generally, gold is going to only increase in value and should be considered a somewhat long term investment. The primary reason that many commit capital to gold coins is their easily portability and storage as well as their fluidity. While bullion or bars are a good choice for the long term investor, it is much easier to sell coins in controlled amounts rather than eliminating hundreds of ounces of gold through the sale of bars and bullion.

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