Watch Out for Illiquid Collectibles from Royal Mint
The British Royal Mint has released coins commemorating the birth of Princess Charlotte that cost far more than the value of the metal they contain.
These are certainly beautiful, high-quality coins. However, investors should be aware that they are not paying bullion prices for these limited-edition products. More importantly, there is no guarantee that coins like these will hold their collectible value in the future.
The Royal Mint has released several different coins in this collection. Let’s just look at one, which is named the “2015 Royal Birth Celebration Sovereign Struck on Day” coin:
- List Price: £500, which is just over $770.
- Weight: 7.988 grams of 22-karat gold. This is actually 7.317 grams of pure, 24-karat gold, which is about 23.5% of a full troy ounce.
- Cost Per Ounce: At today’s spot price of $1,190 per ounce, these coins are being sold for $3,272 per ounce of gold.
- Total Markup Over Spot: Nearly 275%.
The Telegraph reported this story and explains why the Royal Mint charges so much:
Royal Mint claims the metal content is only part of the worth of the coin to buyers. The design and quality and detail of the “print”, as well as the limit of each edition, are all important to the total worth, it maintains. ‘Proof’ coins are the highest quality the Mint produces.
The Royal Mint explained: ‘The dies used to strike Proof coins are all hand-finished to ensure imperfections are removed before they are used to strike a coin. Proof coins will be struck up to six times, at a lower speed and with less pressure than other finishes to ensure a smoother, sharper finish and to preserve the finer details of the design…’”
These are all fine reasons for a well-educated collector to buy these products. But if you’re looking to use gold has a long-term safe haven investment, coins like these are just too risky.
As Daniel Marburger told The Telegraph, “If for some reason the owner needed to sell quickly, they could only count in being able to fetch the value of the gold or silver. That could be a lot less than the sum paid.”
This is not to say that the Royal Mint does not produce some excellent gold and silver bullion investment products. The classic British Sovereign is a very well-priced bullion investment, which SchiffGold can safely recommend to interested investors. To learn more, give us a call at 1-888-GOLD-160.
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