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Fractional gold bullion coins are a very important component of every gold coin portfolio. Most major gold bullion coins including gold eagles, Krugerrands, gold maple leafs, and Philharmonics are offered in the following fractional varieties: 1/2 ounce, 1/4 ounce, and 1/10 ounce. It's really exciting to now see some 1/20 ounce bullion coins as well. One of the most popular 1/20 ounce gold coins is the maple leaf.
Two Fractional Krugerrands and Three Fractional American Eagles
The image to the left contains five fractional gold bullion coins. The top row contains two Krugerrands, a 1/2 ounce one and a 1/10 ounce one. The second row contains a 1/4 ounce gold American eagle and two 1/10 ounce gold eagles. Also of note in this image are the protective plastic sleeves around each coin. It's important for gold investors to take pride in their collection. Even if you are only investing in gold for its metal value and are not interested in numismatic upside, it's a great idea to take good care of your coins so they are easily accepted when it comes time to sell. Some buyers are picky about the condition of their bullion coins. Something as simple as these plastic sleeves, usually available for free when you purchase coins at your local coin shop, will go a long way in protecting your coins.
Why Own Fractional Gold Coins?
Most gold bullion coin investors focus on owning one ounce bullion coins. One ounce coins contain the lowest markup over spot gold price and are very easy to find. I definitely agree that the once ounce coins should make up the foundation of all bullion portfolios. However, fractional gold coins also have a very important role in all bullion portfolios. There are two huge benefits to fractional gold coins. First is the disaster scenario. If our economy breaks down and we need to use bullion coins to pay for goods and services, the fractional coins will come in extremely helpful. One ounce coins are currently trading around $850 per coin. This is way too high to pay for smaller purchases. Fractional gold coins break your wealth into smaller denominations which may be used to make purchases.
The second large benefit to owning fractional coins, and the one more interesting to me, is an investment case of supply and demand. It is much harder to find fractional coins. As the price of gold continues to rise, I expect demand to quickly outpace supply of the fractional coins. The average investor will not want to buy a one ounce coin worth thousands of dollars. They will want to purchase smaller coins. Since there is not enough supply, these fractional coins will make a great investment and their markup over spot gold will continue to rise.
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