Have you ever considered gold as an investment? Or maybe just as a hobby?
In the days of instant online stock trading and financial accounts, sometimes money seems almost make-believe. Many of us no longer see our money as a tangible object.
That’s why there’s something very satisfying and solid about investing in and wanting to buy gold coins. There’s nothing like going to a coin shop, coming out with a small-but-heavy paper bag, and then taking it home and feeling the weight of each coin.
But is it crazy to invest in gold coins in 2023 and beyond? Let’s look at some advantages and disadvantages of buying gold coins as an investment.
At a glance:
- Investing in gold can stabilize your portfolio during market declines and safeguard against inflation.
- Investing in tangible objects such as gold comes with a risk of theft and no perks of dividends or interest payments.
- Alternatives for investing in gold include purchasing mining stocks or buying gold with your IRA investments.
Advantages to buying gold coins
Gold and other hard metals have always been a time-honored part of traditional investment plans. Here’s why:
- Gold tends to go up when other investments decline, providing a stabilizing effect for your portfolio.
- Gold is a safeguard against inflation.
- You don’t have to paycapital gains taxuntil you sell.
- Nobody must know you have it — if that matters to you.
- In worst-case financial scenarios, such as massive currency devaluation, you can use gold and silver to buy and sell. That may sound crazy, but it has happened in other countries.
Disadvantages to buying gold coins
On the other hand, there are some disadvantages to buying gold:
- A thief could take your gold if you’re not careful.
- Unlike stocks and bonds, a purchase of gold is not an investment in company growth. You won’t get dividends or interest from tangible gold.
- You may have to wait years for gold to go up in value.
How to buy and keep gold coins
If you decide to buy gold coins, it’s best to get them from a reputable dealer or financial institution. We wouldn’t recommend buying gold coins on Craigslist, for example (but you do you). If you buy gold coins from individuals or from anyone else you’re not sure of, have their authenticity verified first. You don’t want to unwittingly end up with a collection of gold-plated lead.
U.S. gold coins come in one, one-half, one-quarter, and one-tenth ounce denominations. You pay a premium over the price per ounce when you buy gold coins, which is how the dealer makes a profit. You may pay a higher premium if you buy gold coins that are less than one ounce each. You should generally buybullion coins, such as the American Gold Eagle, Canadian Gold Maple Leaf, or South African Krugerrand. Collector’s coins, called numismatic coins, are a different game than bullion gold coins. They can sell at a very high premium, and their prices are dependent on more factors. Unless you are very knowledgeable about collector’s coins, stick with bullion coins.
Don’t get carried away buying gold either. Perhaps 5-15% of your portfolio should be in hard assets like gold coins. Most investors want most of their portfolios to be in growth funds, stocks, or other investments. That’s a good way to get the best balance of risk and return.
Where to store gold coins
Once you buy gold coins, make sure to keep them in their cases, away from scratches and fingerprints.
Don’t even think of hiding gold in your house, unless you have a safe. Thieves know where to look, or they can find it with a metal detector. Instead, consider renting a safe at a bank where you can keep your gold and other valuables.
Investing in gold coins in other ways
Did you know you can even buy coins with your Individual Retirement Arrangement (IRA)? There’s just one catch — you won’t be able to take these coins home. Instead, your IRA administrator will keep them in a vault for you. Coins must meet standards of purity to qualify as IRA investments.
There are other ways to invest in gold without actually bringing home any gold coins. By purchasing gold mining stock, gold certificates, or exchange-traded products, for example, you can gain the advantages of gold’s hedge against inflation without lugging heavy gold coins around or worrying about where to keep them.
This article is for informational purposes only and not legal or financial advice.
FAQs
Advantages to buying gold coins
Is it smart to invest in gold coins? ›
Investing in gold can often be a prudent choice for those seeking to diversify their portfolios, hedge against inflation, and protect their assets during economic uncertainty. Gold's enduring value and its role as a safe haven asset make it a compelling investment, particularly in volatile or unpredictable markets.
Is there a downside to investing in gold? ›
However, gold is typically a poor investment option when the economy is strong. It will often lose money during these periods as investors sell gold to put their money in the stock market and other growth assets. In the long run, gold has a significantly lower average annual return than stocks.
Is it better to buy 1 oz gold bar or coin? ›
If you're looking for a convenient, flexible addition to your investment portfolio, with capital gains tax benefits, then gold coins could be the best choice for you. If you're looking to make a larger investment and want to avoid paying a higher premium, then gold bars could be your best option.
How much of my investments should be in gold? ›
Experts typically recommend devoting between 5% to 10% of your portfolio to it. "This amount aims to balance the benefits of diversification with the unique risks and fluctuations of the gold market," says Nicholas Ganesh, manager at Endeavor Metals Group.
What are the disadvantages of gold coins? ›
A physical gold investment comes with an ongoing risk of theft, so it's wise to keep your gold bars and coins in a safer and more protected place, like a bank safe deposit box. The fees to store and insure the precious metal can add up to a large amount and detract from your investment gains.
Is 1 oz of gold a good investment? ›
And like all gold investments, 1-ounce bars can serve as a hedge against inflation. That means buying in now, while inflation remains high, could deliver big benefits.
What is better than investing in gold? ›
If you want an investment that provides an income stream, stocks are likely the better choice. Note: You might be able to earn dividends from gold stocks or gold ETFs, but these are riskier than investing in physical gold like bars and coins.
What is the best form of gold to buy? ›
Ideal for Long-Term Investment
If you consider to hold physical gold for a long period of time without any intention to sell part of your investment overtime, gold bars will be the best option for you. They will cost you less per gram compared to gold coins. This is because of their lower premium, as explained below.
How do beginners buy gold? ›
How Do Beginners Buy Gold? Mutual funds and ETFs are probably the smartest options for beginners. Each share of these securities represents a fixed amount of gold, and you can easily buy or sell these funds in your brokerage account or retirement account.
The most popular size gold bullion coin is the one-ounce format. Their design makes them highly recognisable and as they are immensely popular among investors and can be bought and sold through thousands of gold dealers worldwide. This makes them very portable and liquid i.e., easy to buy and sell.
Is it easier to sell gold coins or bars? ›
Which is Better: Gold Coins or Gold Bars? Although coins are easy to store and trade, gold bars can be deal options as long-term investments. Again, gold coins are flexible and easy to buy and sell than gold bars.
What does Warren Buffett say about investing in gold? ›
What Has Buffett Said About Investing in Gold? Fundamentally, Warren Buffett doesn't want to own anything that can't produce something, be it income, revenue or some type of profit. To him, gold is the “classic case” of an investment that doesn't produce anything.
What does Suze Orman say about investing in gold? ›
Commodities like gold are speculative, so you should only invest what you can afford to lose. Orman recommends putting no more than 5% of your investments into commodities.
What does Dave Ramsey say about investing in gold? ›
It's very seldom you ever see gold come to the rescue. I don't believe in investing in gold for that reason. Plus, the track record on gold, as far as a rate of return, is horrible over the long haul. There was a time a few years ago when everyone went crazy on it, but other than that?
Are gold coins worth keeping? ›
Gold Coins: A Wise Investment in Precious Metals
They provide a hedge against inflation and currency fluctuations, often appreciating over time. More than just their face value, gold coins often possess a historical and aesthetic appeal that makes them a unique investment.
Do gold coins increase in value? ›
There's a finite supply of gold, so it tends to hold its value over time. And, because investor demand tends to increase during periods of inflation, the price of gold also often climbs during these periods.
Which gold coin is worth investing in? ›
2024 American Eagle Gold Coin
Produced by the US Mint, American Eagle Gold Coin remains one of the best coins to buy in 2024. This coin continues to occupy the first position in the list, thanks to its quality and legacy.
Are gold coins easy to sell? ›
Selling gold coins is a relatively simple process, although there are several things you'll want to know before you begin. Below, we've covered everything you need to know about selling gold coins, from tips to get the best price to the best vendors to sell to.
