The following are some of the pros and cons of purchasing gold coins for investment purposes:
Pros to purchasing gold coins
Gold as well as other hard metals have been a part of traditional investment plans for quite some time. Here are some of the main reasons why:
- Gold has a tendency to increase when other types of investments decrease, which can help to stabilize your portfolio.
- Gold is a hedge against inflation.
- Capital gains taxes do not have to pay until you sell your gold.
- If it is important to you – no one needs to know you own it.
With massive currency devaluations and other kinds of worst-case financial scenarios, gold and silver can be bought and sold. That might sound crazy – but in other countries it has occurred.
Cons to purchasing gold coins
There are also some disadvantages to gold:
- If you aren’t careful, your gold could be stolen by a thief.
- When you purchase gold, unlike bonds and stocks, you aren’t investing in the growth of a company. Tangible gold doesn’t provide you with interest or dividends.
- You might have to wait for several years at least for gold to increase in value.
How to purchase and store gold coins
If you make the decision to purchase gold coins, make sure you buy them from a reputable financial institution or dealer. We wouldn’t purchase gold coins off of Craigslist.
If you purchase gold coins from anyone you aren’t sure of or individuals, have the authenticity of the gold coins verified before you buy. You don’t want to end up with gold-plated lead instead of real gold coins.
The denominations for U.S. gold coins are one-tenth, one-quarter and one-half ounce. When purchasing gold coins you must pay a premium above the price per ounce. That is how the dealer earns a profit.
If you are purchasing gold coins that are under one ounce each you might have too pay a higher premium. In general you should purchase bullion coins, like the South African Krugerrand, Canadian Gold Maple Leaf and the American Gold Eagle.
Numismatic coins, or collector’s coins are much different compared to bullion gold coins. Their prices depend on more factors and they sell at very high premiums.
You should stick with just bullion coins unless you know a lot about collector’s coins. There’s a vast array of kinds, so unless you know your gold maple leaf from your gold eagle keep it safe.
You might be tempted after you have gold coins to run them through your hands the way Ebenezer Scrooge would.
Of course you will not do that. The coins should be left in their cases, to keep them away from fingerprints and scratches.
Unless you happen to have a safe, you should hide gold inside your house. Thieves can use a metal detector and they also know all of the places to look for it.
For a small amount of money a safe can be rented at a bank to store your gold as well as other valuables in.
When it comes to buying gold, don’t get too carried away. Your portfolio should not be more than 5 to 15% in gold coins or other hard assets.
A majority of investors like to have more of their portfolio invested in stocks, growth funds and other similar investments. When it comes to risk and return, this is a great way to achieve the best balance.
Other ways of investing in gold coins.
Gold coins can even be purchased via an Individual Retirement Account (IRA). Those coins you won’t be able to take home with you.
Instead your IRA Administrators holds them inside a vault on your behalf. To qualify as an IRA investment, gold coins have to meet certain purity standards.
Go you can invest in gold without having any gold coins at home.
For example, when you buy gold certificates, gold mining stock or exchange-traded products provide you with the advantage that gold has as a hedge against inflation, without needing to lug around heavy gold coins or worrying where you have to store them.