Buying Small Gold Coins: Pros and Cons
Posted on August 19, 2022
Everyone with an interest in gold coins knows they come in multiple denominations. Gold Eagle, Canadian Maple Leaf, Austrian Philharmonic... They all have the "standard" 1oz weights and so-called “fractional” gold coins. The lighter a coin gets, the more deserving it is of the incremental label – and yes, they do get very, very small!
From the truly tiny 1 gram coins all the way up to the far more common 1/10 oz weights, there’s a pretty wide range of small gold coins in our inventory. Fractional gold coins lighter than an ounce have their benefits and drawbacks, along with a customer base that might differ slightly from the heavier cousins.
So let’s explore the advantages and disadvantages of these lightweights, for those readers who want to buy small gold coins.
Small gold coins: The good
Price and affordability
The first and obvious thing to like about small gold coins is their price. Spot gold is trading around $1,800, and we know that premiums on gold coins tend to land at upwards of 10%. With a 1/10oz American Gold Eagle, you can get a miniature but full-fledged version of the U.S. Mint's flagship gold coin for less than $300. While you have made a tradeoff in weight, no sacrifices are made when it comes to product quality or identity.
Rarity and collectability
As it happens, the U.S. Mint produces fewer of these lighter coins than the standard one-ounce American eagles. When you get to 1/10oz, you're looking at less than half of the mintage number annually (most years). This makes lighter coins rarer and certainly more difficult to find with a good premium.
Small coins are very popular among numismatists looking for any kind of complete collection. Together with their rarity, this possibly makes them even more sought-after than the 1oz varieties.
Small gold coins are better for barter
And while the premium somewhat negates this, there's no denying that a 1/10oz coin is much easier to use for the purpose of bartering than a full ounce of gold. Remember, in bartering situations, there’s no convenient way to make change. Want to buy a goat with a 1 oz American eagle? You’re faced with either grossly overpaying, or walking home with an entire tribe of goats you didn’t want.
In fact, in the days before Goldbacks, small gold coins were by far the most popular tiny-but-mighty trade good in the prepper’s bugout bag. (I have half a dozen of them myself for exactly this reason.) You can make a strong argument that silver coins are better for this purpose, and you’re probably right if we’re talking about swapping coins for food. However, if you want to tote significant value, those ounces of silver are going to add up quickly…
At today’s prices, a 1/10 oz gold coin has the same melt value as 9 oz of silver. With gold, you can cram a king’s ransom into a backpack. With silver, you’re going to need a hand truck.
Nothing beats gold’s prestige
The entire periodic table of elements contains exactly two metals that have color: gold and copper. (The rest, from beryllium to tungsten, are variations of shiny gray.) Gold is, uniquely, buttery yellow. As such, it’s instantly recognizable and universally valued. Like music, gold is fluent in the the universal language that transcends culture and even history.
Fun fact: When British and American commandos infiltrated North Africa during Operation Torch in World War II, they carried money belts stuffed with British gold sovereigns and St. Gauden double eagles because they knew, even though they couldn’t communicate with the Berber nomads or the Sahrawi hill folk, they’d instantly recognize gold as money. These soldiers literally bet their lives on gold’s universal recognition and reputation as a store of value. (Spoiler alert: It worked. Allied forces led by British and American commanders drove the Nazis out of North Africa, aided by the well-compensated locals.)
Obviously, small gold coins have a lot going for them!
But not everything…
The downsides of small gold coins
Alas, the advantages of small gold coins aren’t without drawbacks. Here are the major considerations you should take into account before you buy small gold coins.
Higher premiums over spot price
The most obvious downside you’ll note when you buy small gold coins is their higher premiums per ounce over spot price.
While the premiums aren't that high compared to heavier coins, they're applied on an individual basis. For that reason, an ounce of gold in 1/10 oz coins costs quite a bit more than in a single 1oz coin. Here’s how the math works:
1 oz American eagle gold coin: premium/oz $179 x 1 = $179 total premium
1/10 oz American eagle gold coin: premium/oz $100 x 10 = $1,000 total premium
Why? Well, it costs a mint pretty much the same amount to make any size of coin (the primary variable is how much gold goes into it). So smaller coins have higher premiums on a per-ounce basis, even when premiums are lower per coin (as in our example).
Design is more difficult to appreciate
While we mentioned that there isn't a tradeoff in product quality, it's easy to see how a smaller coin carries less detail. In more precise terms, all of the detail is there, but it's harder to see. If design is your priority, a 1/10oz coin or even a 1/4oz one might come off as lackluster compared to the larger mintages.
On the other hand, this compactness allows the coin to be placed on various kinds of jewelry. How's that for a piece of gold jewelry that doesn't fall off in price stupendously as soon as you've worn it?
Often more difficult to find for sale
The rarity and comparative scarcity of mintage can also make smaller coins harder to find. This is especially true for smaller varieties of top coins from foreign mints. (A lot of the most affordable small gold coins never get exported simply because local demand is so high.)
Here, coin collectors will sometimes have to search far and wide to find the specific coin they need to complete their collections.
Most popular small gold coins
Based on this year’s BullionMax sales, the hottest small gold coins are, by far, the 1/10 oz gold American eagle. Affordable, recognizable, iconic and as popular as ever.
Runner-up is the 1/10 oz Canadian gold maple leaf. These are challenging to keep in stock – like I mentioned before, most of them get snatched up by Canadian goldbugs before they make it across the border.
Regardless of your particular reasons for choosing small gold coins over their big brothers, we strive to keep the most popular picks in stock. And a look at BullionMax prices will show you we keep premiums as small as the coins themselves.
