Have you seen 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, many people are looking for a quick buck and gold clad coins are just another way for someone to scam you out of your money.
Gold clad is a fancy way of saying gold plated. Gold clad coins are nothing more than regular coins with some worthless substance as coating. Essentially, gold clad coins are made 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 give you a sad look. Perhaps, if you are very lucky, you will receive the $5 they are actually worth. Most gold buyers won't even accept them. If they do, you will probably spend more in gas to get there. Indeed, gold clad coins are so worthless that they can’t even be melted down because the refining costs would be higher than the value of the gold that is actually in the coins.
Avoid The Scam
If you have not seen any advertisements for gold clad coins, they tend to go something like this:
Empathy: The advert will talk about the rubbish economy and how broke we all are. Opportunity: It will go on to explain how these gold clad coins commemorate some event and what a fool you would be to miss out. Bait and Switch: The commercials usually tell you a true story about a real gold coin that increased in value and is now highly sought after. Then they will tell you that their gold clad coin looks like the real coin they just mentioned and could increase in value too. Veneer of Authenticity: The advert will then announce that these coins are officially licensed without any proof whatsoever in many cases. Scarcity: You will be told that it is a limited edition set of gold clad coins and that there are only 10,000 left or some randomly made up figure. Value: They will suggest that the coin is worth $9 but you can have it for $5 or [insert random figure here]. You are also informed that buying in bulk gets you a discount. Justified Cynicism Hopefully, you will pick up the cynicism in my writing which suggests that gold clad coins are a horrible investment. In fact, they are not 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 have 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 $1,300 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 will not be getting real gold for cheap and if you do!
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, do not 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 are worth.