Modern investors have more choices than at any time in history, and becoming an informed gold coin buyer can not only be an enjoyable hobby, but also save you some money as well.
Regardless of if you buy krugerrands online or from your friendly neighborhood dealer, you need to know how to determine krugerrand value on your own- don't just take a seller's word. Bullion gold coins are struck to be used as an investment medium in gold.
The majority of the coin's value comes from its gold content, or purity. Krugerrands are 22 carats, because they are alloyed with copper to make them more durable. If a kruger was 24 carats, or pure gold, it could be easily dented, and even scratched with something as soft as your fingernail. By adding copper (1/12 of volume), the Rand Refinery creates a more durable coin with the kruger's distinctive dark golden hue.
The coin is actually heavier than the denomination marked on it- for example a 1 oz gold krugerrand has one full ounce of gold and is heavier still by the added copper content. This ensures that buyers get what they want- a convenient, standardized method of buying gold. Your first task in determining how much a krugerrand is worth is to determine that value of that gold.
If you do a Google search on "Gold Spot Price" you will turn up a number of real time quotes for gold. Once you know the gold price, you can go on to determine what the premium for the coin is, and if it's a good investment.
Your next step is to determine what the current price for the size of krugerrand you are shopping for is. (A quick side note- premiums on the fractal krugerrands are higher. So if you are planning on buying five 1/10 oz gold krugerrands, you might want to consider just buying a 1/2 oz krugerrand instead, you can save a little money).
You can let your fingers do the walking- call a few local coin dealers and see what prices they are selling krugers for. Another convenient way to get an idea of what the krugerrand price is to go to eBay. You'll need to have an eBay account to do this- for some strange reason they won't let you see completed auctions without it.
If you don't have an account just sign up- they're free. Once you have your account and you have logged in, type the size of kruger you are looking for into the search box. On the left hand side, toward the middle of the page, you'll see search options. Be sure to click the tic box next to completed listing, and then search.
Completed auctions will show the listing price bolded in green. This is price that buyers are paying on the open market, and it's a good indicator of the current value of a standard, circulated krugerrand. Uncirculated or proof krugerrands will bring an additional premium due to their special nature (For example a proof is usually hand loaded on the presses, and double struck on specially polished blanks).
Okay, now you know your krugerrand value- let's talk about advantages of dealers versus buying online. When you purchase from a dealer, you are getting their expertise in addition to coin itself. You are less likely to get a fake krugerrand from a dealer, because they are in the business of dealing gold and it is in their own interest to protect their reputation.
Also, because they are experienced in dealing with gold coins (especially if you have a dealer who specializes in krugerrands), they are more likely to able to spot a fake than an amateur investor. A dealer is also a good bet if you want to buy a krugerrand for its numismatic value- or collectability.
So if you want a proof krugerrand, which is more valuable because of the special preparation and limited mintage numbers, a knowledgeable dealer is a good choice for getting good information and a fair price. There are some disadvantages. You may not have a dealer in your town- so there could be travel. Some dealers prefer to buy and sell in bulk, so they may not want to sell you a single coin.
Finally some dealers do charge a higher price than what you could get online. Speaking of buying krugerrands online, there are a few advantages to take note of. When you buy online, you have access to hundreds of coins- more than any dealer could reasonably stock. It's also very convenient- you can buy a coin from a collector in New York while sitting at your kitchen table in Texas.
In some cases if you're quick and bid at the right time, you can get a lower price than you would pay at a dealer. The down side of buying krugerrands online includes a greater chance of getting a counterfeit krugerrand. If you buy using Paypal you are protected up to $2000, but if you buy a lot of krugers exceeding $2000 you may be at risk.
You can also mitigate risk by buying from sellers with a large number of sales and a good feedback score. Finally selling krugerrands on ebay isn't free. As of this writing, it costs about $70 to sell a krugerrand. While the seller pays these fees, they are passed on to the buyers in terms of higher prices.
So what is the right answer- should you buy from a dealer or buy online? We recommend a hybrid approach. Find a dealer who sells online. This way you minimize risk, and you get all the conveniences of an online purchase. I
n absence of a dealer listing you like, do your research, determine the current krugerrand price, and check the quotes from both dealers and online, and then make your decision. If you decide to buy krugerrands online versus buying from a dealer, just make sure to do your research first!
