People wonder whether they should buy 24-karats gold coins or 22-karat gold. Which one is a better value?
24k gold is the popular standard that most people recognize as pure and ideal. The Canadian Maple Leaf, Austrian Philharmonic, Chinese Panda and the US Buffalo are all 24k gold coins. While the 24k American Gold Buffalo coin, for example, is a favorite among many, US Mint production figures reveal that the American Gold Eagle, a 22k gold coin, is actually in higher demand.
Many people have never heard of 22k gold. It means the gold content is only 90%, whereas with 24k gold, the gold content is 99.99%. This doesn’t mean there’s any less gold in it, however. A 24k gold coin contains 1oz of gold in it. Pure gold is sensitive, brittle and malleable. Because of this, pure gold coins are kept in capsules to protect them from wear and tear.
A 22k gold coin also contains 1oz of gold in it, it’s just fortified with copper and a trace of silver to make the coin stronger and not so easily damaged. Krugerrands, British sovereigns, pre-1933 gold coins and the American Gold Eagle are all 22k gold coins.
In the United States, 22k gold coins and 24k gold coins buy and sell for more or less the same price. The American Gold Buffalo coin generally has higher premiums and the American Gold Eagle can give you back a higher premium when you sell it back to a local dealership. Differences in purity are only taken into serious consideration when looking to purchase gold coins outside of the US. Tax implications are the same in the US but they vary from one country to the next. In Canada, for example, gold coins with a purity rating below 99.5% are considered taxable “scrap gold,” whereas pure 24k gold is not taxed. So while the 22k American Gold Eagle is the most popular coin in the United States, this is not the case in other countries.
The best thing is to have some of both in your portfolio.
Deciding between one or the other comes down to three factors: (1) the demand and popularity of the coin, (2) the prices and premiums with all tax implications considered and (3) preference.
At the end of the day, there isn’t a huge difference between 24k gold coins and 22k gold coins, so you can simply go with what you personally prefer, based on your own taste. What products are drawing you in the most? What do you have your heart set on?