Have you been seeing the commercials on TV for gold clad coins? Steer cleer of this trap! It is no secret that many people have made lots of money buying and selling gold lately. Unfortunately, it seems as if the number of people that are willing to be taken to the cleaners always skyrockets in times of global economic crisis. Everyone is looking for a quick buck to ease the recession and gold clad coins are one of the most common offerings that will relieve you of your hard earned cash in return for something that is practically worthless.
What Gold Clad Really Means
Gold clad coins are nothing more than regular coins with some worthless substance as coating. Gold clad actually refers to a technology that involves the bonding of two (or more) different metals with the idea being to improve its characteristics. Essentially, gold clad coins are when gold is bonded to another cheap metal. In layman’s terms, the ‘gold’ you are receiving is practically worthless.
Take 20 gold clad quarters to a shop that buys gold and the person behind the counter will laugh at you. Perhaps you will receive the $5 they are actually worth but it’s hardly worth the humiliation. Indeed, gold clad coins are so worthless that they can’t even be melted down because the refining costs would be far higher than the value of the gold that’s actually in the coins.
What To Watch Out For
If you’ve yet to see any advertisements for gold plated coins, they tend to go something like this: (Note how they use all the slick marketing techniques that are known to appeal to a person’s emotions rather than the logical side of the brain)
Hopefully, you will pick up the cynicism in my writing which suggests that gold clad coins are a horrible investment. In fact, they aren’t an investment at all. They are the gold equivalent of a pyramid scheme. Often, these coins will cost $4-5 dollars each but they will be gold-clad quarters. Companies selling these monstrosities try and con you into thinking that there is 24 carat gold plating on the kind when there is nothing of the sort. If you buy a set of 50 $1 gold clad coins for $300 for example, congratulations! You’ve just spent $300 on something that is worth…. $50!
The Real Deal
The laughable thing about many of these gold clad coin commercials is that they make fun of those who spend a small fortune on genuine 24 carat gold coins with a purity level of 99.999%. Such coins may set you back as much as $3,000 but at least you have something of genuine value that acts as a hedge against inflation. With gold worth more than $1,300 an ounce right now, you won’t be getting real gold for cheap and if you do, it’s not real gold!
Krugerrand gold coins are among the most popular actual gold coins on the market. You will have to pay a premium for these coins but keep it below 4%. Basically, if gold is $1,300 an ounce, don’t pay more than $1,350 for a one ounce 24 carat gold Krugerrand coin of 99.99%+ purity.
Buying real gold coins with certificates of authenticity (very important) may seem steep but at least you get what you pay for. With gold clad coins, all you get are some pieces of inexpensive metal and you pay many times more than what they’re worth. You’ll also feel incredibly foolish in the bargain.