Brand New vs Secondary Market gold coins explained

When browsing online bullion dealer’s websites, you may encounter the term “Best Value”, “Brand New” or “Secondary Market” when it comes to gold bullion coins. But what are the differences? In this article, we explore the differences between these terms, and what are the best options for you.

 

Illustrated example

To illustrate the difference between a gold bullion coin terminology, let’s illustrate with shoes.

If you go to a shoes shop, you can browse the different pairs of Adidas shoes on display in the shelves.

• Brand New would correspond to a pair of Adidas Stan Smith bought directly from an Adidas factory
• Secondary Market would correspond to a pair of a pair of Adidas that has been used already, that the shop has bought.
• Best Value would correspond to a pair of Adidas that has the lowest price in the gamma (eg: cheaper version of the Adidas Stan Smith, like the originals, compared to the superstan model)

In the case of shoes, we would say Second-Hand. When it comes to gold coins, we talk about Secondary-Market gold.

This is because gold bullion coins do not have a second-hand value, because their price is directly based in their gold content.

 

Understand secondary market gold

What is the secondary gold market?

Before to understand the secondary market, it is important to understand the difference with the primary market.

• In the primary market, gold bullion products (bars and coins) are bought directly from manufacturers (Mints like the Royal Mint).
• In the secondary market, gold bullion products are exchanged directly between individuals or professionals.

Therefore, buying gold from the secondary market involves buying and selling to a party other than the original vendor (where the product was first manufactured and sold in brand new condition).

As a result, you might find various synonyms online when it comes to where the gold comes from. In general, brand new coin refers to a coin that is purchased directly from the mint, and has never circulated (or be own by an investor or collector). On the other hand, pre-owned is synonymous with secondary-market gold. It might have been owned by one or more individuals before hand.

 

Source	Bullion Coin referred as	Description
Manufacturer (Primary Market)	Brand New Uncirculated	The coin has been bought directly from the Mint.
Other Individual (Secondary Market)	Secondary Market Pre-Owned	The coin has been bought back from a private individual.

 

Who buy gold from the secondary market?

Anyone buy gold from the secondary market, including:

• People looking for bargain (buy cheap gold bars and coins)
• People looking to buy at lower premium (above the gold spot price).
• First-time investors looking for a cheaper way to invest in gold bullion.
• Large and experienced investors looking to purchase large amounts in the most cost-effective way.
• Collectors looking to find old or rare gold coins (however, these coins might not necessarily be available in perfect conditions, because they’ve been around for really long and have changed hands many times).

 

 

Brand new vs Secondary Market: do they have the same value?

This might be the first question that came up to your mind. Think of it like a car that you buy in second-hand from an individual vs a car that you buy directly from the manufacturer.

The car in brand new condition will last probably really long, and you will be sure of the quality, since it comes out directly from the manufacturing plant. However, you will pay a really expensive price upfront.

On the other hand, a second-hand car might have been used, will probably last less longer. However, it still serves the same utility (commuting). You will then pay much cheaper the car in second-hand than brand new.

Gold is a precious metal that serves as an investment and a store of value. Therefore, it does not have a utility strictly speaking.

“gold is gold, no matter where it comes from…”

In fact because gold is a precious metal, it has an intrinsic value that do not change no matter where it was sourced, refined or transformed (in bar or coin).

Some fine gold coins like Maple Leafs or Britannia might have some sign of wears when they come from the secondary market. However, their value is not affected: they are still worth 1oz of fine gold.

 

Benefits to buy gold from the Secondary Market

Regardless of the condition of the products you buy in the secondary market, the fine gold content of the products remain the same. Buying gold from the secondary market offer more opportunities and flexibility to investors. This include:

• Buying at a cheaper price for the same fine gold content.
• Possibly find old and rare gold coins. In fact, such coins that hold a numismatic value will tend to be only available in the secondary market.

 

Disadvantages to buy gold from the secondary market

We have to remain critical in order to assess if buying gold from the secondary market is the right option for you.

Gold coins from the secondary market have circulated and not in mint condition (However, their intrinsic value remain the same). For those looking for coins in the best condition possible, the secondary gold market might not always be the best option. In this case, it is recommended to buy the newly minted version of the coins, such as the brand new sovereign or britannia.

Finally, the secondary gold market can leave inexperienced buyers open to scams. As with most valuable items, you’ll come across dishonest traders who sell imitations or counterfeit products that do not hold the same bullion value that the gold bullion available for sale online or over the counter.

At Gerrards, we do not recommend to buy gold online directly from the secondary market if you are not sure about what to buy. A lot of customers had bad experience of buying gold coins online on auction or second-hand website, thinking they were buying genuine items. Our advice is to buy bullion bars or coins from the secondary market only from reputable dealers, with reviews and feedbacks on their products. This will ensure the quality and authenticity of the product you will buy and receive.

 

In Summary

Buying gold coins brand new or from the secondary market is a matter of choice or personal objectives. You can find a checklist below that will help you make your decision.

At Gerrards, we aim to provide investors the best of both world, by offering:

• Brand New gold bullion coin at very low premium.
• Discounts on bulk purchases on all our brand new coins.
• Tube bundles of 10 coins (gold) and 25 coins (silver), as an even more cost effective way to invest in precious metals.

This is so you can benefit from buying gold at the lowest price, while ensuring that you will receive a high quality product.

 

Should you buy secondary market gold or brand new gold?

	Brand New	Secondary Market
Looking for the best condition possible?
Looking to buy at the cheapest price?
Looking to hold and store?
Looking to sell short term and trade?
Looking to buy at low premium?
Looking to buy large amounts in a cost effective way?
Looking for rare or unique pieces?