Wednesday 21 April 2021

Found my gold coins

As mentioned previously, I've set up an online depository account with Perth Mint and will be purchasing $100 (-$0.50 transaction fee) of gold bullion each month which will be stored in their 'unallocated' holding. This will slowly add some 'precious metals' to my overall asset allocation and have no storage or insurance costs.

I thought I already had some gold coins that I purchased many years ago (I used to also have some gold and silver cast bars, but I had sold them off last time the bullion prices spiked up), so today I went on a 'treasure hunt' (actually I just looked around for the key to my electronic floor safe, as the battery for the electronic keypad was flat) to locate my gold coin 'collection'. Once I had the safe open I did a quick inventory of the various gold 'proof' and 'uncirculated' coins and put them into a spreadsheet to calculate their gold content (either .9999 or .916/22-carat) and gold value based on the current 'spot' price. Turns out I have about 9.9 troy ounces of gold (worth about A$22,800). A few of the proof coins are quite limited mintages, so might be worth more than their gold content alone.

The problem with having gold coins as an investment includes:

1. Insurance - my home contents insurance has a cap on the amount of miscellaneous 'collectibles' that are covered (eg. $5,000), and some insurance policies also only count currency "no longer in circulation" as a 'collectible'. Not sure where that leaves a 1980 uncirculated gold coin that has a 'face value' of $200 and is, technically, legal tender. Getting itemized cover for the coin collection would be expensive and difficult - aside from having to pay a higher annual premium for my home contents insurance policy, if a 'valuation' is required this can also cost quite a lot. For an 'investment' that often only appreciates in line with inflation, any holding costs can make them a poor investment over time.

2. Liquidity/trading costs - while it is fun to look up approximate valuations for specific coins by year and estimated quality, getting a professional appraisal can be expensive (for example Jaggards in Sydney charges $110 per hour, with a one hour minimum fee. And when it comes time to sell, a dealer will often pay significantly below the appraised value (they have to make a profit as a retailer). Selling at auction can be a bit of a 'lucky dip' in terms of what price may be realized, and there are associated costs which may be in the order of 20%-30%.

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