Investing in Gold (Including the Gold Buffalo Coin)

We here at 57Gold are precious-metals dealers, so you know we field a plenty of phone calls during any given week from people who’re interested in investing in gold.  Some of these eager buyers already know what they want, and it’s near impossible to try to explain the pitfalls of investing in things like plastic-case coins or trinket gold.

Plenty of people ask about the Gold Buffalo coin, mainly because so many other dealers and investors talk about it. The Gold Buffalo coin was first minted in 2006, and it’s the first 24k (99.9% pure) coin that the government has offered to the public.

The Gold Buffalo coin has a face value of $50. However, these coins move on the market for more than that, largely due to their purity and enormous popularity. When they were first introduced in 2006, the mint price of the proof for the Gold Buffalo coin was $800.  By 2011 the mint price for the Gold Buffalo proof coin sat at $2010.  You can bet that price move has attracted the attention of those who’re interested in investing in gold.

People who’re interested in investing in gold also call us about plastic-case coins.  That’s because other dealers are pushing these plastic-case coins on gold investors, making them sound a lot more valuable than they are.  These case coins might include the Gold Buffalo coin or any number of other popular coins.

Let me tell you right now – if you’re interested in investing in gold, skip the plastic-case coins (including the Gold Buffalo coin). That’s because you’re paying way too much for the case. The gold would need to make a huge leap in value just so you can break even. If you’re serious about investing in gold, look elsewhere.

People who start investing in gold are also often lured by the words “gold bullion.” They imagine being able to buy gold at the spot price and then reselling it later for huge profits. But this gold bullion is often what I refer to as trinket gold, and any dreams of investing in gold quickly become a nightmare when you try to sell the gold back.

You think your favorite precious metals dealer is going to buy back trinket gold? Not a chance. Dealers have plenty of customers who’re investing in gold and selling gold above the spot price – so dealers don’t have much use for trinket gold. They’re likely to direct you to the nearest refinery, where you’ll have to fill out a ton of forms, lose your privacy and probably lose some money too. (But don’t feel sorry for the refinery owners – take a look at the employee parking lot and you’ll know what I mean.)

So what’s the bottom line for those who’re serious about investing in gold? Skip anything where there’s an overabundance of production (like American Eagles) and anything that’s easily available in a plastic case. Instead, look to more scarce items like proof coins (including the Gold Buffalo coin) and keep a long-term mindset. After all, you’re investing in gold… not playing the lottery.



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