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Gold is a popular investment for new investors and seasoned experts alike. However, it comes in so many forms that new investors may not know what type of gold to buy. One investment option is fractional gold coins.
If you’re unfamiliar with gold investments, you may wonder: what is a fractional gold coin? Oxford Gold Group is here to explain what fractional gold coins are, how they may benefit your portfolio, and where you can buy them.
Fractional Gold Coins: What Are They?
To start answering the question “What is a fractional gold coin?”, we must first explain how investors can purchase gold.
Many experts choose gold because it is one of the most stable investments. Investors may purchase gold in many forms, including:
Within each form are different sizes or values. Sellers and investors measure gold and other precious metals in a unit called troy ounces. One troy ounce is equal to about 31.1034768 grams. Investors can purchase gold coins by size: one-ounce, one-half ounce, one-quarter ounce, and one-tenth-ounce gold coins.
Generally, one ounce is the standard size for a gold coin. Fractional gold coins are any gold coins that weigh less than one troy ounce. They are more affordable and accessible than larger gold items and can be smart investments for a variety of reasons. Like any investment, however, investing in fractional gold coins also comes with risks, which we will discuss later.
Sizes and Denominations of Gold Coins
The standard sizes of fractional gold coins include:
- 1/10 oz gold coins
- 1/4 oz gold coins
- 1/2 oz gold coins
- 5-gram gold
- 10-gram gold
Examples of Fractional Gold Coins
Size, mint, and design are the main factors to consider when purchasing gold coins. For example, US mint coins come from a bureau of the Department of the Treasury. The Treasury is responsible for the production and management of coins in the United States.
Similarly, Perth Mint gold coins come from Australia’s official bullion producers, and Royal Mint coins come from the United Kingdom.
Fractional gold coins have various designs that may also influence the value and cost of the coin.
Examples of UK fractional gold coins include:
- Gold Britannia 1/2oz, 1/4oz, 1/10oz
- Gold Half Sovereign, Gold Quarter Sovereign
- Gold Queen’s Beasts 1/4oz
- Gold Tudor Beasts 1/4oz
- Gold Lunar 1/4oz, 1/10oz
Here at Oxford Gold Group, we offer the following fractional gold coins:
- 2013 Gold Canadian Polar Bear, ¼ oz
- 2014 Gold Canadian Polar Bear, ¼ oz
- 2015 Gold Canadian Polar Bear, ¼ oz
- 2018 Guinea “Rose Crown”, ¼ oz
- 2020 North American Eagle, 1/10 oz
- 2022 British Royal Mint Gold Standard, 1/10
- 2021 The Perth Mint Australian Spotted Eagle Ray, ¼ oz
Advantages of Fractional Gold Coins
Buying fractional gold coins offers unique advantages. Both new and experienced investors can benefit from this savvy investment move.
Cost-Effectiveness of Fractional Gold
Fractional gold isn’t as valuable as a full ounce of gold, but that means these coins are less expensive. If you’re an investor looking for an inexpensive way to diversify your portfolio, fractional gold coins could be a good choice.
A full-ounce gold coin can cost thousands of dollars. On the other hand, fractional gold coins are a fraction of the price. You can purchase fractional gold coins for under $1,000 in some cases.
The price difference allows investors to buy gold coins more often, rather than needing to save up for larger investments.
Flexibility in Portfolio Building
Investing is all about the big picture. You want to select diverse investments, like stocks, precious metals, ETFs, and more, to create a stable portfolio that will yield returns. Purchasing fractional gold coins makes your portfolio more flexible since you can buy and trade them easily without risking the value of your portfolio.
Liquidity and Trading Advantages
Fractional gold coins also have liquidity and trading advantages. First of all, they are easy to buy. Many gold sellers offer fractional gold coins, and they are easy to sell or trade.
Gold is one of the most liquid investments in general. It’s even easier to liquidate assets with a smaller amount of gold, such as fractional gold coins. Rather than liquidating thousands of dollars worth of gold, you can liquidate a fractional gold coin for an extra couple hundred dollars in your pocket.
Safety and Security Advantages
In a post-COVID world, we’re adjusting to an economic decline. There’s a spike in inflation, and the values of the dollar, pound, and euro are all declining.
While the value of gold fluctuates, inflation does not affect it in the same way as other currencies. Owning fractional gold coins is a security measure for economic collapse, giving you something to barter and trade with.
Owning fractional gold allows you to trade and sell the gold easily, whereas moving large amounts is more difficult.
Ideal for Developing a Collection
Some people are interested in developing a coin collection. While coin collecting is fulfilling, it can be expensive. Fractional gold coins are less expensive than one-ounce bullion coins, so collectors can grow their collections without breaking the bank.
Disadvantages of Fractional Gold Coins
The perfect investment doesn’t exist; they all have their flaws — and fractional gold coins are no exception. Before you make any investment, be aware of the risks.
Higher Markup Prices
Fractional gold coins have higher markup prices, or premiums, than other coins or bars. The markup price is the difference between the value of a product and its sale price, which allows the seller to earn a profit. For example, if the value of a gold coin (spot price) is $800, and you buy it for $920, the markup premium is 15%.
Sellers place higher markup prices on fractional gold coins because manufacturing costs are higher than the value of coins less than one troy ounce. To make up for this, they’ll add higher premiums.
The dealer, type of coin, and market conditions also influence markup prices. Generally, you can invest less than $1,000 in fractional gold coins.
Susceptibility to Loss
Fractional gold coins are one of the smallest forms of gold you can own. Their size automatically makes them a risk for loss. Ensure you store your coins securely, whether with a third-party custodian or in a personal safe.
Market Volatility
Like all forms of gold, fractional gold coins are subject to market volatility. The spot price of gold changes frequently, so investors should always be aware of market conditions when investing in, selling, or trading gold.
Investment Potential of Fractional Gold Coins
Knowing the answer to “What is a fractional gold coin?” is the first step; knowing its investment potential is the second.
Investing in fractional gold coins can be a solid investment strategy, as it has many advantages. However, it depends on your personal financial goals and existing portfolio. While the markup prices may discourage you at first, remember to weigh all of the risks and benefits equally.
Ultimately, this is a choice each investor must make for themselves.
Where Can You Buy Fractional Gold Coins?
When you buy gold, always verify the seller’s reliability before going through with the transaction. Never be afraid to ask questions and evaluate the quality of the coin. For example, you could ask how long they’ve been in business. The longer their track record, the better.
Oxford Gold Group is your reliable gold seller. We offer a variety of gold forms, including fractional gold coins.
Secure Your Future With Oxford Gold Group
Oxford Gold Group is an industry leader in precious metals. We believe in helping our clients use precious metal investing to strengthen their investment portfolios.
Now that you know the answer to “What is a fractional gold coin?” you can make the right investment decision for you. If you’re interested in precious metal investments such as fractional gold coins or IRS-approved gold for a gold IRA, contact us at 833-600-GOLD today.
