Gyroscopic Investing

Hi everybody,
I've been lurking around here for the past several months, and have been making preparations to start a PP in the US in the near future.  I wanted to learn more about buying physical gold, so I went to visit our local coin shop today.  The dealer said his premium for Maple Leafs and Kruggerands is $50, and $80 for American Eagles.  Why the higher premium for the Eagles, and is it worth the extra $30?  Thanks.

The premium is higher for Eagles due to supply and demand issues.  More Americans apparently desire the Eagles, either due to the look or that they are more familiar with them since they are produced by the US mint.  

When you sell a coin you will get most of that premium back, so it doesn't matter so much which coin you buy as long as it is a non-numismatic coin (no rarity value).

It really won't matter if you buy AGEs, Krugerrands, or Maple Leaf coins.

I assume by premium, the dealer is referring to the premium over the gold price.  Since the AGE, Krugerrand, Maple Leaf have all been trading for a long time, their premiums will vary as a group a little over time based on the overall demand by investors for gold in coin form, but are fairly stable relative to each other.  The premiums are pretty much built in to both the buy and sell sides of the equation, so Pkg Man is right that it really doesn't make much difference which one you buy.  All three are very liquid.  I've tended mostly toward Krugerrands and to a slightly lesser degree, AGEs, over the years. 

Don't confuse the premium with the dealer spreads -- the difference between what the dealer will currently buy or sell for today.  They tend to be wider at small local coin dealers (vs. internet or phone dealers), but that may be offset by the advantage and comfort level to you of being able to literally walk in with the money and out with the gold.  I've bought and sold both ways, although I'm much more comfortable with internet/phone transactions than I used to be.  In the long run, it only ends up making much difference if you are buying or selling frequently.  If you are, you may want to keep some portion (say, 20% to 40%) of your gold holdings in something more liquid like one of the ETFs, or possibly something like BullionVault or GoldMoney.

Anyway you look at it, buying, selling and holding physical gold is going to have higher transaction costs than the other components of the PP, but that is the nature of the beast.     

The Eagle's are more widely known in the US. But honestly I own Krugerrands, Maples and American Eagles. All were purchased based on the best final price, spread, premium. I probably own more Krugerrands because the premium is the lowest. So you get more gold for the money. So if you want to buy Krugerrands then go for it. Have you checked online dealers to see if the spread is comparable?

Thanks again for the quick responses. 

@ HB Reader - When I walked into the shop, the dealer had a spot price for gold written on a wipe board.  The $50 and $80 premiums were the mark-up above the spot price. 

I haven't checked any online dealer spreads yet, which I'll do this weekend, but the plan for now is to drop back into the shop next week and buy a mix of the coins.