Although gold prices came under significant pressure in November 2011, the demand for gold appears robust for those Trading Gold Coins. Gold prices retreated to around $1,800 per ounce, at the time, against the backdrop of the ongoing sovereign debt crisis in Europe, coupled with the interbank liquidity crisis. With this, investors and institutions converted gold to cash. Despite this scenario, the demand for physical gold continued, with investors seeking to purchase gold following the correction in the price of the yellow metal.

According to the World Gold Council report for the third quarter of 2011, the demand for gold from central banks hit a 40-year high, boosted by “a slew of new entrants…wishing to bolster gold holdings”. With the shaken faith in sovereign debt as well as currencies continuing to erode, central banks are turning towards physical gold. With the appeal of other assets eroding, the options for reserve holdings have narrowed to assets like gold, given the yellow metal’s global appeal and liquidity.

In a news report published on November 17, Peter Grant of USAGOLD.com said, “…gold continues to serve in its long standing role as solid and dependable reserve asset when just about everything else is being called into question. For the individual saver and investor, gold performs a similar duty as a reliable alternative means of saving and a critical hedge of the more traditional asset classes.”

With gold prices being so volatile, which provides several opportunities to purchase and sell the yellow metal, it has become increasingly important for investors to have some knowledge of the gold market before making an investment.

4 Common Errors Committed While Trading Gold Coins

While gold coins have become a popular purchase option, there are several mistakes that beginners tend to make when entering the precious metals market. Here are a few of the most common ones:

1. Overly influenced by others: Many beginners tend to follow what other traders are doing. This typically happens when there is a sudden dip or rise in gold prices. In such a scenario it is often advised to identify the entire timeline of your gold investment strategy and to always remember why you want to acquire gold. Since the investment horizon and the purpose of investment may differ, it is not a good idea to follow the market.
2. Paying more for gold: People trading gold for the first time often end up paying more. The most critical things to keep in mind are:
   • Do not pay anything more than 5% of the wholesale price of gold, if you are investing in gold bullion. The price of gold bullion depends largely on the spot gold price.
   • Gold bullion coins are mostly minted and markedup 4% and the margin of the retailer ranges between 1% and 5%.
   • Premiums can rise by 75% or more.
3. Putting all your eggs in one basket: It is not a good idea to put all your funds into one option, no matter how sound that option appears to be. A diversified portfolio minimizes risks.
4. Choosing the gold trading company in a hurry: The most important factor that will determine your success with gold investment is the gold trading company you choose to purchase gold coins from. Research well and opt for a company that has a good track record and an untarnished reputation.

It is easier to trade gold coins once you are aware of the opportunities and risks. When dealing with a gold trading company, ensure that the person advising you understands your investment goals and objectives clearly. Always evaluate the recommendations being made and keep reading and learning about the gold market and the various types of gold coins available when trading gold coins.