The art of buying coins to resell at a higher price is not something new, but as the gold price has risen significantly in recent years it changes the supply and demand dynamics of the market. 

‘Coin flipping’ is a term given to the practice of buying a coin and then immediately selling for a profit. In a rising gold market this has resulted in relatively easy profit for anyone who owns gold coins. As with most things, not everything can go up forever and this is likely true for the price of gold and so we have to question whether risks of this business model have increased after the gold price has risen so much.

How the gold coin flipping works

Anyone looking to make some passive income with this business model will need some capital to start. The best type of coins to buy for flipping are low-premium smaller coins such as the gold sovereign as it is a popular and affordable coin. The gold sovereign trades at a very low premium which means it is only worth its weight in gold. 

Coin flippers are reliant on timing the market well when buying or hoping the price of gold increases. The profits can be small per coin with 1-2% gains equating to around £5-£10 profit and so the scale of your operation is very important. 

With scale come larger risk as you will naturally have more exposure to the gold spot price if you have a large gold sovereign coin holding. The best way to reduce this risk is to only buy more gold sovereigns after the gold price has fallen rather than buy after the market has been going up. 

The gold sovereigns are very easy to buy from online bullion companies, many of which offer buyback guarantees as well. As the gold sovereign is a very low-premium coin, it means that the “spread” between what online bullion companies buy and sell at is very small. It only takes the gold price to move 2% in your favour before you can successfully bank your profit by selling back to the bullion company. 

If you can time your purchases when the gold price has been falling for a few days and looks set for an upside correction this will increase your probability of being able to limit your losses. 

Discipline is central to success!

The price movements are key to the gold coin flipping business model, and it is important that one buys when prices have been in decline and to not panic sell when prices move down more than expected. Fear of losses can lead to bad decisions especially with inexperienced traders. 

Selling when gold is becoming cheaper is the opposite of what you should be aiming for. The business model can only be profitable if you manage to buy when gold has become cheaper and to sell it back when gold has become more expensive. The aim is to buy dips in uptrends and sell rallies in sideways or down markets.

Risk reduction tip

As no one really knows where the price of gold will go in the short-term, a further risk mitigation tactic is to not buy all your gold sovereigns on the same day. Stagger your entry points by buying periodically and selling all when the market price has advanced. If you make a mess of your entry, at lease you only bought a small amount of your overall position. 

Buying everything in a single trading session puts you at the mercy of the market because you have no options remaining as you now can only hold your gold sovereigns and hope for higher prices. Leaving some funds available in case of lower prices is a great risk mitigation strategy, it gives you the option and in the world of trading and finance “options” are worth money.

Is it still a legit model?

The practice of gold coin flipping has become an intriguing business model in today’s evolving gold market especially where more people are being drawn to side income ventures. Beyond the basic mechanics of buying and reselling, the profitability of this model is determined by market timing and the wider macroeconomic picture. Today’s volatile worldcreate new opportunities and challenges for coin flippers but as long as the gold price does not crash then there will be gold coin flippers banking profits from trading gold sovereigns. 

One often overlooked aspect of gold coin flipping is the role of collector demand for different types of coin. While most flippers focus on low-premium coins such as gold sovereigns for their consistent liquidity and narrow buy/sell spreads, the numismatic value of rare or limited-edition coins can offer additional profit potential. However, this avenue requires a deeper understanding of the collector market and its trends, adding a layer of complexity to the flipping strategy.