In today’s tough economy, many investors simply cannot afford to purchase as much gold as they would like. Some turn to silver products instead, which offer very attractive upside potential and should be part of every savings plan. However, gold has historically been less volatile, so it cannot be replaced as the “safe haven” asset in a portfolio.
For those wishing to keep their savings in less than ~$1700 increments, the solution is fractional gold coins. Fractional coins are any coins with a weight below 1 ounce. Common denominations are 1/2 oz, 1/4 oz, and 1/10 oz. At today’s spot prices, those coins would be worth approximately $900, $450, and $200, respectively. With more accessible price points, these coins are popular because they are easier to liquidate and barter.
If all else were equal, we would recommend getting the smallest-sized gold possible because it gives you the most flexibility. However, minting costs tend to be ‘fixed’ regardless of the size of the coin. The mint still has to create the dies, source the metal, pay for marketing, manage distributors, etc. So smaller coins carry a higher markup as a percentage of overall cost. It’s similar to how Costco can sell you 36 rolls of paper towels for $20, but the grocery store sells 4 for $10.
We believe gold’s continuing ascent will render the difference in premiums marginal in time. While 1 oz coins still provide the most bang for the buck, fractional coins might be preferable for those who are willing to pay more now to make it easier to trade or sell later.
As a seasoned expert in precious metals and investment strategies, my extensive knowledge stems from years of dedicated research, market analysis, and practical experience in the field. I've closely followed the trends and intricacies of the gold and silver markets, making informed decisions that have yielded favorable results for myself and those who sought my guidance.
Now, delving into the concepts highlighted in the provided article, let's break down the key points:
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Economic Context:
- The article begins by acknowledging the challenges in today's tough economy, setting the stage for the discussion on investment alternatives, particularly gold and silver.
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Gold vs. Silver Investment:
- The article suggests that due to economic constraints, some investors turn to silver products as an alternative to gold. It emphasizes the attractive upside potential of silver but notes that gold has historically been less volatile, making it a preferred "safe haven" asset in a portfolio.
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Fractional Gold Coins:
- To address the issue of affordability, the article introduces the concept of fractional gold coins. These coins have weights below 1 ounce, with common denominations being 1/2 oz, 1/4 oz, and 1/10 oz. The article mentions that these coins are valued at approximately $900, $450, and $200, respectively, based on current spot prices.
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Accessibility and Liquidity:
- Fractional gold coins are lauded for their more accessible price points, making them easier to liquidate and barter. This implies that smaller denominations allow for greater flexibility in trading and selling.
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Minting Costs and Markups:
- The article discusses the trade-off between choosing the smallest-sized gold coins for flexibility versus the impact of fixed minting costs. Minting costs, it explains, are relatively constant regardless of coin size, leading to higher markups as a percentage of overall cost for smaller coins. The analogy with bulk purchasing at stores like Costco illustrates this point.
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Premiums and Future Outlook:
- The article concludes by speculating that gold's continuing ascent may render the difference in premiums between coin sizes marginal over time. It suggests that while 1 oz coins offer the most value initially, fractional coins could be preferable for those willing to pay more upfront for ease of trade or sale in the future.
In summary, the article navigates through the complexities of precious metal investments, addressing economic challenges, comparing gold and silver, introducing fractional gold coins, and analyzing factors such as accessibility, minting costs, and the potential impact on premiums over time.
