HOW AND WHY

TO INVEST
IN GOLD
COINS

?
GUIDE
FOR
BEGINNERS
“Back in the real world, gold is trading at about $1,400 an
ounce, up from less than $500 five years ago. That’s a 23%
annualised return, far outstripping the gains on stocks (1.1%)
or bonds (6.1%). Fear is driving a lot of the rise.”
Bill Bonner, The Daily Reckoning

© Studio McG 2
For LINGOLD.com
 ?
THE GUIDE

Why invest in Gold

in the 21st Century
Gold is not like other any banks of the river Pactolus during the reign

other metal. of King Croesus (ruler of Lydia 560-546

Some well known expressions such BC). Gold coins have not been used as
as « the Midas Touch »,"Rich as common currency for a number of years
Croesus" or "Worth its weight in Gold" with most of the world ceasing to use gold
which are linked to the history of gold. as currency by 1933. However, the US did
not completely uncouple the dollar from the

G
value of gold until 1971 when it left the
old has been used for decoration ―Gold Standard‖ .
or for transactions between men for The main central banks still consider
almost 6 millennia. Gold has never stopped gold to be ―THE‖ ultimate refuge in the
being in demand due to its rarity, its beauty event of a crisis and continue to hold tens
and its physical properties which make it an of thousands of tons of it as ingots and
exceptional metal: gold does not corrode, coins. Today gold is quoted on all the
does not oxidise and does not tarnish world’s main stock markets.
(3,500 years later Tutankhamen’s mask is still Whether you are in China, Europe, India,
just as shiny as the day it was made!) Russia, the Middle East or the USA, you
But there is more, gold has record electrical will always find someone to buy or sell gold
conductivity (this means it is especially useful at a price that is the same all around the
in electronics). world. It's unique!
It is also a very ductile metal (one ounce of Did you know ?
gold - about 31 g - can produce an 8 km long
That gold coins were thought to have healing powers. In
wire). Gold is very reflective with little absorp- England people suffering from Scrofula “King’s Evil”, a
tion of infra-red radiation. What else? Univer- form of unsightly tuberculosis, were cured by being
sally accepted, high value by weight, divisible, touched by the monarch. This developed into crossing the
interchangeable, difficult to counterfeit, easily sore of the sick person with a Gold Angel, which was a
recognised, rare but found all over Earth, de- currency piece that portrayed the Archangel Michael

sirable, with a stable and intrinsic value. Such slaying the dragon. This was good overcoming evil and
the gold itself stood for purity. The Angel which became
characteristics make gold the sole designated
known as a “touching piece” was then worn around the
champion to become a currency or at least
neck until cured. The practice peaked with Charles II
a safe value that is universally recognised.
touching over 100,000 people; but it was discovered that
Consequently, the first true gold coins started
a good number of people were not sick but were attracted
to appear in Persia in the 6th century BC on the by the gold. It was a considerable drain on Royal Coffers.
3
 Gold as an investment
Great growth potential.

Supply is falling, Demand is growing.

Demand is currently much higher than the
supply. Production has been falling regular-
ly since 2000. South Africa is at its lowest
production level since 1922 and Australia
at its lowest for 13 years. Many mines are
now closed. Why not open new mines?
Opening new seams is very expensive and
takes 7 to 10 years. The growing difference
between supply and demand has been
met, so far, by sales made by central
banks. But is there still a lot of gold left to
sell in Fort Knox?
At the same time, the needs continue to
grow. India has been responsible for 30%
Tutankhamen’s mask of Gold is 3500 yrs old
of the global consumption on its own and
has enjoyed record growth for several
years with China catching up quickly since
Did you know? retail gold investment has been allowed
and regulations for its gold market became
All the gold produced by man so far would fit
more flexible. The Shanghai Gold Ex-
into a 20 m cube. If it had to be shared out
change reports that China purchased 45
amongst the Earth's population, everyone
would get 24 g, equivalent to 3 gold metric tonnes in 2009 and over 230 metric
sovereigns. Gold is obviously a rare metal! tonnes in 2010. Given the current con-
sumption and the reserves not yet mined, it
_____________________________________ leaves only 30 years of reserves at most.

On April 5, 1933, President Roosevelt declares Gold’s potential progression

unlawful possession of gold for U.S. citizens, Since gold was disconnected from the US
and ordered them to return coins, ingots and Dol lar in 1971, it has seen phenomenal
gold certificates to the Federal Reserve before growth from $ 35 per ounce in 1971 to $
1 May 1933, priced at $ 20.67 / oz. This law 850 per ounce on January 21st 1980. As
remained in force in the U.S. until 1975. people lost confidence in the US Dollar,
they decided to make massive exchanges
of it for gold during this period. This led to
the US Dollar losing half of its value on the
4
currency markets.
 Historic Correction 2000—2010 2010
$1400+
2011
$1500+
$2000+

?
Without knowing the dollar, Voltaire had al- Lynch forecast a Gold price beyond $1500 an
ready analysed the subject a few centuries ounce in 2011. Gold experts believe there is
earlier: “a paper money based only on trust- still massive potential and according to
ing the government that prints it will always them, the price of an ounce of gold could
end up at its intrinsic value, which is zero.” increase by $ 100 to $ 150 per year.
The foreign central banks - particularly the
What is gold’s growth potential in current cir- Chinese - are looking to diversify out of the US
cumstances? Dollar and other fiat currencies.
If we adjust the 1980 value ($ 850 per ounce) to Chinese Foreign Exchange reserves are huge
take account of inflation, an ounce of gold would from their export trade but have lost value
cost about $ 2200. The room for growth is because of currency devaluations. To prevent
therefore significant and all the analysts are erosion of their wealth, the Chinese have
in agreement on this. Certainly, the 1980 quietly and gradually been replacing these re-
record level was followed by a strong fall but the serves with hoards of Gold. They believe Gold
economic circumstances at the time were very is a more reliable and stable protection of their
different to those we are currently experiencing. wealth.
At present, the price has been increasing
almost continuously since 2002, the demand Your account with LinGold.com.

is real! With an annual increase of between $100 and $150

There have been periods of heavy correction an oz. in gold. If you have 20 gold coins such as

followed by consolidation and then the ever sovereigns in your LinGold members account you

upwards trend. Historic patterns over the last would add $250 to $350 per year over running
costs. In addition to estimates on rising gold prices
10 years indicate that the price of Gold contin-
you should also add the multiplier effect of
ues to rise to record highs breaking through the
―speculative‖ premium due to the finite number of
$1400 an ounce barrier in Q4 2010. Many Ana-
5
gold coins and the increasing demand for purchase.
lysts, including the Bank of America-Merrill
 10 Indicators that suggest a
significant and durable
increase in the price of
gold.
7 - Economic crisis has raised awareness
amongst savers that monetary investment dy-
namics are risky and there has been a loss of
confidence in traditional investment products.
Pension Funds are a clear example of the hard-
1 - Between 2000 and today the price of gold has
ship and heartbreak caused by unfulfilled ―paper
outperformed all of the other indices. It has more
promises‖ after a lifetime of investment. HSBC
than quintupled over that period without having
was cited for taking 80% in charges from a final
reached half of 1980 levels (given the adjustment for
pension fund. This has triggered a reflex to buy
inflation).
physical gold, seen as a more reliable invest-
2 - The companies, operating mines have found it
ment, which, because you own it, will always be
more difficult to extract gold deposits profitably and
there when you need it.
have closed mines. Global production has stagnat-
8 - Since 2002, the dollar has continued to lose
ed. Since it takes between 7 to10 years for new de-
its value against most currencies. The effects of
posits to become operational, demand will remain
successive rounds of Quantitative Easing
stronger than supply.
(printing more paper money) has further weak-
3 - Gold progresses when the real interest rates are
ened the dollar. The US National debt is over
low. Now, we are in a period when interest rates are
$14 Trillion so it suits the Federal Reserve to
low or very low and this is predicted to continue for
create a weak Dollar because it actually reduces
some years to come
the size of the debt which is measured in dol-
4 - Since 2004, the Washington agreement limited
lars. Gold is perceived as ―anti-dollar‖ par excel-
sales of gold from central banks and that agreement
lence. Gold is always strong when the dollar is
was extended in 2009 limiting sales to a combined
weak.
400 tonnes pa. Therefore, a massive injection of
9 - The downside to the dollar causes a me-
gold from central banks will not occur.
chanical increase in the price of gold. To counter
5 - Demand continues to increase, particularly in
the effects of Economic crisis, the Fed must
industry and jewellery. Both areas represent around
keep interest rates low thus the dollar will re-
70% of global demand with an annual increase of 5
main weak. Current trends show economic crisis
to 8%.
is here for the long haul and if anything the situ-
6 - Gold remains a safe haven and the number of
ation may get worse.
investors purchasing of gold has increased dramati-
10 - Gold is the ultimate protection of wealth
cally. Disconnected from the performances of stocks
and value against the effects of both inflation
and bonds, it has become a tool for the diversifica-
and deflation.
tion of the portfolios of pension funds and profes-
―Gold is not an investment, it doesn’t earn any-
sional investors. A real bonus is that unlike tradition- thing. It’s a security blanket when monetary
al investments, physical gold investment gives own- markers disappear. Which is the biggest risk:
having gold or not having gold? Not having it of
ership of a tangible asset rather than a speculative course.” - Simone Wapler, Chief Editor,
spread bet on paper which is inevitably linked to the MoneyWeek, France

out of control debt cycle blighting world economies.

An economist’s viewpoint : .If only 4% of the capital invested in shares and bonds converged on the gold market
6 of
to find a safe value during a crisis, this would be $3,840 billion which is equivalent to a demand for 91,500 tonnes at a price
$1500 per ounce. And suddenly, the demand could deplete or even exceed the whole of the world's gold stocks. What really
matters for gold in the coming years is the relationship between the demand for investment and the global stocks.
 ?
THE GUIDE

W hy & how to buy gold coins

« What form of Gold should I buy? » Buy gold coins.
A great investment in a tangible asset that you
There are different mechanisms for
investing in gold : own which is also considered as ―Investment
Gold‖. Premiums can be low at purchase and
Buy shares in a gold mine.
medium at sale (during normal trading) and the
However, this is still a stock market investment
price is directly linked to the spot price of gold.
and the price of a specific gold mine is not always
The advantage in coins is the additional
correlated with the price of gold. Depending in
leveage from the ―premium‖ associated with a
which mines you buy, there can be large upward
coin. In periods of high demand such as a crisis
or downward changes. Investing in gold mines
this premium can increase dramatically, thus
should be reserved for experienced investors who
increasing the value of investment significantly.
understand the risks they are taking.
Gold coins are the best method of
Buy ―paper‖ gold as certificates or ETFs
investment in physical gold.
(Exchange Traded Funds).
You are possibly going through this material
This type of investment is widely publicised but
because you have the intention or interest to
relies on your confidence in the ability of these
buy or sell gold coins. .
―paper promises‖ to pay out. Your investment is
There is no coin that can be considered to be
not a real, tangible asset that you own.
the safest gold coin to buy. It is all a matter of
Buy physical gold bullion.
personal taste and often the country in which
A good investment in a tangible asset that you
you live that dictates your choice; a number of
own which is also considered as ―Investment
people may very well prefer the American
Gold‖. It may be ―allocated‖ so you know exactly
Eagles while some people on the other hand
which gold belongs to you or ―unallocated‖ which
would prefer sovereigns. The French would
means you own an anonymous weight of anony-
almost always opt for the Napoleon.
mous gold bars. Allocated gold is better because
There are many different types of gold coins
every item is referenced, visible and directly
available throughout the world such as South
attributed to ONE owner. Unallocated gold could
African Krugerrands, American Eagles,
be resold to several owners. The price of bullion is
Australian Nuggets and UK sovereigns, Chinese
dynamic with the spot price and has a low
Pandas and Canadian Maple Leafs. When you
premium at purchase and sale but beware of ex-
start collecting gold coins, the American Eagles
cessive premiums on smaller ingots (30-50% typi-
or Gold Sovereigns are the most readily
cal).
available which makes them the best gold coins
to start with.
Bullion is good but there is something even
Some of the coins above are bullion coins
better:
7
 THE GUIDE

whose value is only the gold content. Others

such as older Sovereigns and Napoleons are
semi numismatic and can attract a premium
over their gold value due to supply and demand.
( investors should be aware of the premium that
can be made on Sovereigns, Krugerrands and
Napoleons in times of crisis).
Diversification should be the main concern of
someone who is interested in buying gold coins.
The experts agree that in the current circum-
stances about 5 to 15% of a portfolio or
wealth should be held as gold. So, given this,
Elizabeth II Sovereign obverse
why not invest in gold coins? Paradoxically, gold
coins are the most modern 'insurance‖ invest-
ment because of gold's potential, the leverage
effect provided by the premium, a more and
more favourable fiscal treatment and because of
their universal recognition.
What's more, buying gold coins is an action
that has 'meaning'. Gold coins have a past.
Their patina and every little mark are there to
remind you of it. They are not ―just a bit of pre-
cious metal‖ with a hallmark and a number like
an ingot. They have been used, they have
crossed the centuries, they have been passed
on or given by parents or grand-parents. You
have possibly received them when you were
younger and may have even sold them during a Marianne Coq 1912 — reverse

difficult period or to buy your first car.

Did you know?

How powerful gold coins are in a time of crisis. The premium and need for secure storage
is illustrated in France during WWII :
In 1942, at the height of the German occupation of France, Napoleons fetched 5,000 FRF on the
black market whilst they had been quoted at about 100 FRF in 1939. Owning and selling about
two hundred 20 FRF Napoleons was enough to allow a family to survive the war without difficulty,
at least from a financial point of view... but you had to own the two hundred coins! In practice, the
occupying forces considered that owning more than 5 grams of gold (a 20 FRF Napoleon weighs
a bit more than 6 grams) was a crime, punishable by imprisonment in a concentration camp. To8
get round this interdiction, people used every available means to try and move their gold coins to
Switzerland to avoid their savings from being confiscated.
The internet did not exist, nor paperless electronic banking , nor LinGold.com.
 ?
THE GUIDE

Which coins to Buy?

Buying gold coins is the best way See the glossary at the end of the guide for
further information on the principle of the
to invest in gold to secure your fu-
premium: the main determining criteria
ture, provide security for loved for realising that a gold coin has
ones or to simply diversify your advantages over other forms of physical

investments. gold investments because of the potential

for additional value besides the price of
But which coins should you buy?
gold. It is essential that you focus on buying
coins that have a premium that is as low as

F
irstly, you must think like an
possible where their price is as near to the
investor and not like a collector
price calculated from their weight of gold. By
or a numismatist (specialist). This
doing this, you keep all the potential increase
means that you must only consider coins
in its value, from the price of gold and from
that are classified as the investment
the premium, both of which can increase
gold. This is completely regulated by the
over time.
European tax authorities.
Investment gold includes gold coins where
A coin is a real testament to our past.
the purity (proportion of gold or Fineness*) is
These gold coins are usually as small as
greater than 900 thousandths, that were
the pound coin and use all of the
minted after 1800, that were legal tender in
numismatist's vocabulary to describe
the issuing country and where the sales price
them and indicate their quality. The
does not exceed the value of their gold
glossary at the end of this guide contains
content by more than 180%.
the most important elements but there are
This 180% is the premium that was men-
several very good books if you want to go
tioned earlier. The current premium on
further.
Napoleons, Pesos, Sovereigns and
Krugerrand is low. The premium has a
leverage or multiplier effect on your gold
investment over the long term.

To Calculate the PREMIUM of a Gold Coin

PREMIUM (%) = ACTUAL PRICE OF COIN — GOLD CONTENT PRICE x 100 %

GOLD CONTENT PRICE
9
 THE GUIDE
Gold coins that are interesting
as an investment:
This section does not include any
coin where we consider its current
premium to be too high.

1. The British Sovereign

The British Gold Sovereign is perhaps the
World’s most famous gold coin and is the
most widely traded semi–numismatic gold
coin. The Sovereign is 22 Carat and is a
highly collectable investment coin. Intro-
duced in Britain in 1489 at the request of
King Henry VII, the modern version first ap-
peared in 1817 featuring the now iconic im-
age of St George slaying the dragon en-
graved on the reverse. Today’s sovereign
contains 0.235421 ounces or 7.322 grams of
Even though there is no scientific method
for evaluating the quality of gold coins,
there is a scoring scale based on objec-
tive (quality of a detail) and subjective
(overall appearance) criteria. This means
that a quality ―Fair‖ coin has a generally mod-
erate quality, reserved for the foundry, whilst
an FDC (Fleur de Coin) coin is as new, with-
out any mark or wear with all of its mint
sheen. See the glossary for the intermediate
quality conditions. Buying a slightly used coin
or a coin with patina is not a problem when Sovereign 1886
buying for investment purposes. What is im-
portant is that it must not have lost any mate- gold and is sought after the world over. Thus
rial, i.e. its weight in gold when it is bought is the Gold Sovereign is ―about― one-quarter of
the same as its original weight and that its an ounce of pure gold. A ―Half Sovereign―
quality means that, over time, it will acquire a has also been issued since 1817 and con-
rarity premium. tains one-half the gold content of the ―full
Sovereign‖. These coins are legal tender

10
 THE GUIDE
greatly. It was minted from 1802 to 1914 (then
in the UK so do not attract either VAT or Capi- re-minted during the fifties and sixties). There
tal Gains Tax. are numerous types all of which have a
2. The Britannia diameter of 21 mm and weigh 6.45 g but some
Britannias were introduced in 1987, in four are of no interest to investors because the
weights from one ounce to fractional sizes of half premium is already very high (Bonaparte,
ounce, quarter ounce, and tenth ounce with a Napoleon I, Louis Philippe, …). They are best
left to numismatists.
The coins to use as investments are more
generally the Cérès, Napoleon III bare head
or laurel head, the 3rd Republic Geniuses
and the Marianne Cockerels ―Dieu Protège
la France‖ or even ―Liberté, Egalité,
Fraternité‖. These coins were minted in large
quantities and are currently easily found and
have a premium that is virtually zero. They cost
their weight in gold. During the eighties, they
purity of 91.7%. Britannias must rank amongst were worth between 1.5 and 2 times their
the most world's most beautiful bullion coins and weight in gold due to the high level of demand.
the 1oz coin has a very low premium over gold
content. These coins as legal tender in the UK 4. South African Krugerrand
so do not attract either VAT or Capital Gains The Krugerrand has been minted in South
Tax. Africa since 1967 and is the reference coin for
3. Gold French 20 Francs ― Napoleon‖ investors throughout the world. Its premium is
The Napoleon is ―THE‖ gold coin that is the almost zero and its fineness in gold (proportion
spirit of the French. This coin is not well known of gold) is 916.67% which is the same as a
except in France but is one of the world's most sovereign.
saved coins, mainly by the French who treasure
it

Napoléon III Laurel Head 1864

11
 THE GUIDE

―CONFEDERATIO HELVETICA‖.
Initially it was minted to weigh an ounce but
This type was issued form 1886 to 1896 inclu-
was also made in 1/2, 1/4 and 1/10 ounce
sive. The second type known as Vreneli or
coins from 1980.
sometimes Helvetia and commonly known
5. American Gold Eagle
as Swiss 20 Francs is undoubtedly one of the
In 1986, the United States began striking gold
world’s most dignified and classically designed
Swiss gold coins. The obverse of the Swiss
Helvetia depicts ―Vreneli,‖ the charming ―Swiss
Miss‖ of folk lore, wearing flowers and facing
left, framed against the majestic Alps. The
name ―Helvetia‖ dates back to Roman times
when it was the term for the original inhabitants
of what is now Switzerland. Swiss gold coins,
like these Helvetias, are cherished worldwide
for their fine gold content and excellent minting.

Did you know?

bullion coins to compete with other world It became illegal for UK residents to continue to
bullion coins. The value of these coins was hold more than four gold coins dated after 1817,
intended to be tied directly to their metal value, or to buy any gold coins unless they obtained a
although in some cases (where mintages were collectors licence from the Bank of England.

low) a premium has developed. over their face This was implemented by a 1966 amendment to

value. The obverse follows the artistic design the Exchange Control Act, 1947. Dealers also
had to obtain a dealers licence. It came at a
created by Augustus Saint-Gaudens for the
time when British coins was blooming in antici-
$20 Gold Double Eagles issued from 1907-
pation of decimalisation in 1971 and the premi-
1933. The US government guarantees the
um on a sovereign was 40%. The licensing had
gold content, weight, and purity (91.67%) and
the effect of stifling the market.
can be purchased in 1oz, 1/2oz and 1/4 oz The Exchange Control Act was removed in
weights 1971, and for two years the market started to
In 2009 the US mint issued the ultra high relief recover, at the same time as a rocketing gold
―St Gaudens‖ Double Gold Eagle made of price, until VAT was applied to gold coins in

24-carat gold. Pure 24-carat gold is much 1973. This once again placed a serious obstacle

more malleable than 22-karat or 90% gold in the way of buying gold coins and all but
stopped the importation of new bullion coins
coins, making it better material for striking the
such as Kruggerands.
ultra high relief.
In January 2000 ―Investment Gold‖ was de-
6.The Swiss 20 F Vreneli or Helvetia
clared VAT free in the European Union and sub-
There are two different types of Swiss 20 franc sequently, coins of legal tender in the UK such
coins. The first type with a laureate head of as Sovereigns and Britannias no longer attract-
Liberty, wearing a coronet bearing the word ed Capital Gains Tax making them the ideal in-
vestment. 12
―LIBERTAS‖, with the inscription
 ?
THE GUIDE

How to Buy and Store your coins

The first thoughts on where to buy There are many warnings posted of fake coins

gold coins would be to go to a bank being sold through these sites. It is worth read-
ing some of these stories from the easily
or a dealer, or go to an auction site
recognisable to the subtle forgery. As for the
such as ― eBay‖ if you like an ad- price, even if the bid starts very low, they all
venture...! end up at the market price, or greater. Finally,
once you add the cost of postage you will end
Today, why are these are not the
up paying 5-10% extra, without any guarantee
best choices ? of quality.
The Banks. In these three cases, there arises two issues;
The general experience of buying coins fom a first one of discretion, anonymity and
bank is long and tedious. Selling gold is no security—people know you have bought gold,
longer a core business and banks prefer to of- and secondly what are you going to do with
fer you more traditional paper investments that your valuable asset. Once purchased where do
they specialise in because of the margins they you store your gold safely? The majority of
make and because they like to take your cash bank branches will not offer you any secure
so they can use it to create more credit. Talk to storage as strong rooms are very few and far
your banker and you will probably here: "You between and the availability of smaller boxes is
are the first to ask me, I will need to find the extremely rare and therefore relatively expen-
appropriate information". It will take three or sive when available.
four weeks to obtain your coins ! It remains, then, that the solution is to keep
Dealers. your coins at home in a strong box acceptable
Often they are specialist or numismatic dealers for insurance purposes. In which case you
interested purely in retail buying and selling. must be prepared for a significant cost to
Therefore they need to move quickly for cash protect your gold investment which can be
flow and will not always carry the stock to somewhat self-defeating.
meet your requirements. Their margins depend Finally, you must remember that your rationale
on higher sales prices and lower buy back pric- for of investing in gold was at some point it
es. Their commission rates are not always ap- would be resold. Who will buy your gold and
parent and their market is mainly collectors ra- for what price? There is the high risk of selling
ther than investors. through an auction site, not to mention the high
Auction sites like ―eBay‖ for example. commission charges. You will need to prove
Sales are exclusively between individuals. You authenticity and professional verification
have no verifiable guarantee of the quality of carries a charge, thus devaluing your
your purchase. investment. 13
 THE GUIDE

Banks will almost certainly refuse to buy your recommend when buying gold coins to leave
coins because again it’s no longer part of them in specialised custody. Thus, you avoid
their everyday business. As for dealers, they this loss of value (your coins remain in the vault
will use every argument to reduce premium from where they were kept at the time of pur-
and pay below the gold value so you will be chase). Indeed, an intermediary organisation
will guarantee the integrity of your
gold coins and hold accurate
records of what you have with dates
of purchase.
These records are prejudicial to tax
authorities and accepted by them as
evidence where appropriate.
The organisation that specialises
in buying, selling and storing
gold coins is LinGold.com.

The Demand for Gold

The demand for gold has risen
disappointed on price. In effect, The instant sharply in recent years as economies struggle
you take possession of your coins, they to pull out of worst recession in most peoples
have left the professional system, and living memory, growth remains low and
subsequently your investment will suffer currencies face increasing volatility. There is a
an automatic loss of 4 – 10% of value. worldwide surge towards gold investment and
For gold investments, many investment thus demand is high and sometimes difficult to
advisors and specialist magazines match.

Some Beneficial Tax Implications

VAT—From January 1st 2000 the VAT rate on ―Investment Gold‖ in the European Union
was harmonised and given a zero rating thus making it exempt.
What is investment Gold?
 Gold of a purity not less than 995 thousands in a form of a bar or wafer, of a weight
excepted by bullion markets
 A gold coin minted after 1800 , a purity not less than 900/1000, that is, or has been
legal tender in country of origin, is sold at a price not exceeding 180% of the market
value of the gold content it contains.
Capital Gains Tax– coins of legal tender are sometimes treated differently. For instance, in
the UK any sterling gold coins considered as legal tender, including Sovereigns and Bri-
tannias, are totally exempt from Capital Gains Tax (CGT). Therefore an excellent in-
vestment because the profits are tax free! 14
The surge in investors is creating LinGold.com is a interface, backed with exper-
shortages in mints across the world as tise, for buying, selling and storing gold coins
they struggle to meet demand : for investment.
The mints around the world have in- LinGold.com offers storage of your coins in
creased production to help satisfy this state of the art Swiss Vaults.
demand Worldwide coin sales have LinGold.com streamlines transactions and
increased rapidly during the last 2 enables the process of buying and selling coins
years. to be conducted in real time, 24 hrs a day, 7
According to the World Gold Council days a week, from the comfort of your compu-
evidence suggests a continued in- ter, from anywhere in the world. Investment po-
crease in the demand for coins due to tential is kept at a maximum because the coins
the economic instability and flourishing do not have to move from the vault, between
retail markets such as China and India buyer and seller, thus avoiding risks to their se-
The price of Gold has risen over 600% curity, unnecessary transport costs and additio-
in the last 10 years. Record highs nal insurance.
were reached at the end of 2010 and LinGold.com offers a service to protect your
the $1400 an ounce barrier was wealth in gold and therefore protect your future.
breeched. The Bank of America-Merrill Real physical gold investment is like ―fire insu-
Lynch and many expert analysts and rance‖ for your personal wealth or savings - you
investors predict at least $1500 an are a lot wiser to buy it before the event. Most
ounce for 2011. economic forecasts remain extremely gloomy
However, it is always worth remem- for the years to come because we are living in
bering that gold will sometimes go an age of unprecedented world debt, rising
down as well as up just as it has at the unemployment, minimal growth and increasing
start of 2011. Gold is not a quick bet or economic tensions.
short-term gamble and corrections, as When the bubble bursts where do you want
they are referred to, may occur but in your savings to be and in which currency? A
the bigger picture gold will always be a failed bank, in a failed economy, in a paper
safe refuge for protecting wealth. investment that may have gone under with
This early year lull will not last and the no hope of retrieving your funds because
price of gold will rise again, consistent- they are directly or indirectly affected by the
ly for some time to come. It also repre- debt spiral, in a failed currency? … or in a
sents an excellent opportunity to buy tangible personal asset like real physical
in to the market at a time when the gold that you own?
price is right and premiums modest. During the great confiscation of Gold in
Gold will continue to be a good 1933 Americans who could, moved their
investment for some time to come gold to Vaults in neutral Switzerland. House
given the current state of the World’s robberies are one of the few statistics to rise
15
economies! during economic crisis.
 GLOSSARY
Proof : Proof coins are specially pro-
duced to a much higher standard of
Carat : The carat (symbol ct) is a finish. Originally, proofs were intended
measure of purity of the precious metal. as pre-production samples. Proof coins
In this context the carat represents are now made in larger numbers for
1/24th of the total mass of the alloy. For sale to collectors
example 21 carats signifies that out of
24grams of an alloy 21 grams is pure Date : A coin's date is the date it was
gold. 24 carat gold is pure gold. Gold is issued. Sometimes coins were re-
often alloyed with other metals to provide struck with a date that is different to the
the hardness strength and colour re- initial issue date (e.g.: the 1925 Sover-
quired. eign was re-minted in 1949-1951).

Coin Grading : When collecting coins Face Value : This is the legal value of
it is vital to understand the recognised the coin when it was issued. The face
standard British system of grading. Other value is usually shown on the coin's re-
countries have there own systems. The verse.
condition is the principal factor in estab-
lishing the value of the coin. Mintage : The total number of exam-
ple made of a particular coin.
The standard grades are described as
follows: Mint Mark : A symbol engraved on a
coin that identifies the mint in which it
FDC (Fleur de Coin) : Normally on- was made and/or the engraver and/or
ly applied to proof coins. Literally means
"Fleur-de-Coin", absolutely perfect, with- Mint mark on a Marianne Coq 1909
out any marks, wear or blemishes. Magnified 180 times

UNC (Uncirculated) : A coin that

has never been circulated, although
may show signs of contact with other
coins during minting

EF ( Extremely Fine) : Showing few

signs of circulation but on closer inspec-
tion will show signs of minor friction on
the highest surface.

VF (Very Fine) : A coin that has little

use showing signs of wear on the higher the workshop director. From 1871 to
surfaces but still sharp 1932 the British Sovereign was minted
outside of the UK and the branch mint
F (Fine) : A coin that has been in cir- mark on later dates can be found above
culation and shows signs of wear, but the centre of the date. In France, since
with all the legends and date clearly visi- 1879, the French Mint Director's mark
ble. has been the horn of plenty. This sym-
bol, which is made more difficult to
Fair : Extensively warn but design and achieve by being as miniscule and as
legends still visible detailed as possible, is the main ele-
ment used to identify counterfeit coins.
Poor : A coin very warn and only just
recognisable 16
 GLOSSARY

Mint Sheen: The satin appearance of EU this limit is set to 80%)

new coins caused by micro-irregularities
on the surface. This sheen disappears Conservation : a quality coin that has
quickly when it is first handled. A coin no trace of being handled will retain all
that still has its mint sheen is a coin that its premium. Poor conservation condi-
has never entered circulation. tions (contact with fingers, scratches,
wearing...) results in a reduction of 4 -
Ounce : or Troy once (symbols oz t) 10% and can lead to a negative premi-
weigh 31.10345 g. : The troy ounce is um. When this happens the coins are
used when trading precious metals such melted down and sold for the price of
as gold and silver their precious metal

Collectors : some coins are rarer due

Obverse : The side with the principal to them being minted in small numbers
engraved motif, usually a portrait and in or because they have special character-
the UK is commonly called « heads » istics related to numismatic rarity crite-
when a coin is tossed. The reverse is the ria. In certain years where very few
other side. coins were minted a sovereign can cost
several thousand pounds depending on
Premium : This is the difference the its rarity and its condition. This value is
value of the precious metal contained in therefore completely unrelated to the
the coin and the price paid for the coin. value of the coin's gold content.
The premium of a coin depends on a
number of factors :  Geographical Location : gold coins
are not equally popular in every country
Production : The smaller the coins and generally speaking coins that were
and the harder they are to produce, the currency of a country are more pop-
the more chance there is that they ular in that country e.g.: Napoleons are
will have a high premium, this princi- very popular in France but are much
ple explains why the smaller half sov- less well known in China or the USA
ereign have a higher premium. The and people there prefer to buy local
quality of a proof coin usually de- coins. The exception is the Sovereign
mands a higher premium which is the most popular in the UK but
also has an international reputation.
Speculation : the premium changes
to reflect supply and demand. In a Purity: Gold's purity is usually expressed
period where more coins are being
in parts per thousand. e.g.: 995 or nine hun-
sold than are being bought, the pre-
dred and ninety five is 995/1000 pure or
mium is zero or slightly negative (in
99.5 % pure gold. 995 is the highest purity
this situation, coins of moderate qual-
at which gold can be made for normal pur-
ity are often melted down). When
poses but for ultra-high technology applica-
there is high demand or excess spec-
tions, it is now possible to produce metals
ulation, the premium resulting from
that are 99.9999 % pure. The gold sover-
this speculation climbs sharply. The
eign is 917/1000
premium is therefore a very good in-
dicator of the balance between sup-
ply and demand, the latter's potential Reverse : The side of the coin opposite
and also what actions should be tak- the Obverse. This side usually contains the
en. A negative, zero or slightly posi- date.
tive premium should stimulate pur-
chases whilst a high premium of Type : Principal motif on a coin enabling
should lead to selling ( in the UK if numismatists to identify the issue
the premium exceeded 180% then
VAT would apply. In the rest of the 17
THE GUIDE

Links to Investment coins:

The British Sovereign
The British Britannia
The French Napoleon
The South African Krugerrand
The American Eagle Saint-Gaudens $10
The American Eagle Saint-Gaudens $20
The American Eagle Longacre’s Liberty $20
The Canadian Maple Leaf
The Austrian/Vienna Philharmonic
The Australian Nugget/ Kangaroo
The Chinese Panda
The Swiss 20 Franc Helvetia
The Russian Rouble

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