Hi, I am new to this and seeking some advice with buying coins. I have been thinking about dipping my toe in the water and buying some Perth mint gold coins. I was looking at possibly buying some 1/10 perth mint lunar coins, I notice they have quite the premium on them. Is the premium recoverable if sold down the track ? or should I go for the larger fractional or 1 oz coins with the lower premium. I feel the smaller coins may be easier to sell down the track but I am worried the gold price would have to increase significantly to recover the premium. Any thoughts you have are appreciated.
The smaller the Au coin/bar is, the more the premium is due to the liquidity of the size compared to the larger sizes. Recovering the premium? If the coins/bars are generic then the premium is recoverable based on the Au price. If the items are lunars etc it depends on not only the Au price when selling but the design, as these have been increasingly difficult to recoup premium due to current market sentiment for these types of items. As you start to stack Au, you will find out what type of stacker you are pretty quick.... A stacker which likes a series and pays a premium for it as a collector, or a stacker who doesn't see the reasoning for the premium as gold is gold so anything close to spot is best.
In my view this question depends on how much cash you are intending to convert to metal. If you are looking to buy one or two fractional coins, don't sweat a $30 premium. By year end you'll be near parity. If you are about to drop 100k on gold, it would be crazy to buy it all in 1/10. Get yourself a comfortable amount of fractionals and get low premium stuff for the rest. If you network well on the forum and with dealers, you can get fractionals at spot or close enough. I have 10oz of gold with nothing bigger than a $200 coin and most 1/10 or smaller. My cost average is $1800/Oz AUD. The key is to know when the premium is too much. Dealer premiums around 12% are the max I'd pay and 5% for private sale. You can find 1/10oz for spot +$30 once or twice a week on the forums and the threads don't last more than 30 seconds, where as larger pieces at spot sit for weeks. The market is basically telling you what to buy and what to pay. Edit to add: the cost of me having my stack as fractionals rather than low premium worked out to roughly a loss of 1/10oz of gold. If I were to add fractionals now I would be paying an extra 1/10 for every fractional ounce from a dealer or 1/20 for every fractional ounce via private sale. Time will tell if this will be wise or expensive in the long run, but I am switching to low premium accumulation now that I'm happy with the amount of fractional I have.
