For centuries now, humans across the world have used gold as a medium of exchange due to various reasons. For instance, besides being scarce, gold is a good store of value. However, despite this, the value of gold generally changes over time due to external forces. For instance, the prices of gold increased during COVID-19 because the American dollar recorded a significant decline in value, thanks to the pandemic-induced recession. This means that if you collect gold coins, their value will likely change over time due to certain factors. In general, the factors that determine gold coin value include:
Demand and Supply
Like other products in the market, the demand and supply of gold coins go up and down. In case of high demand, the value of these coins automatically goes up, attracting higher selling prices, and vice versa. On the other hand, an increase in the supply of the coins causes them to decline in value. To give you an idea, the demand and supply of gold in the U.S. soared during the pandemic, increasing the selling price of gold.
Inflation
Typically, high inflation causes the dollar to decline in value. As such, investors will opt to store their wealth in the form of gold to protect its value. This, in turn, causes the value of gold coins to go high due to the increased demand.
Age of the Gold Coin
Gold coins are not only used for investment purposes, but also numismatics. When used for numismatic purposes, the value of a gold coin will largely depend on the year of minting. For instance, the American Double Eagle is a gold coin minted between 1849 and 1933. Considering its old age, it is usually sold at a higher price than newer ones.
Rarity
Every minting year, a different number of gold coins are minted. When fewer gold coins are minted, their value becomes high considering their rarity. In other words, readily available gold coins will have a lower value.
Condition
Over time, the condition can deteriorate, especially if they change hands often, or are not properly stored. As such, older coins that retain their look will have a high value, particularly when sold for numismatic purposes.
Conclusion
Some of of the factors that determine the value of a gold coin value include its condition, rarity, age, inflation, and the market forces of demand and supply. While the value may fluctuate from time to time, gold remains one of the most precious metals on earth.
