Have you ever thought about buying gold coins as part of your investment strategy? Even if you haven’t, it’s worth considering. Here are the pros and cons of buying gold coins, plus some tips on how to buy and store them, and a few alternate options if you want to invest in gold without lugging around a bunch of coins.
Pros of buying gold coins
Buying gold is a smart move for a number of reasons:
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Gold can stabilize your portfolio, as it usually goes up when other investments go down
Gold isn’t subject to inflation
You don’t pay capital gains taxes on gold until you sell it
You can keep it a secret (if you care about that)
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While it may sound extreme, in a worst-case scenario, you could use gold to buy and sell
Cons of buying gold coins
But not all that glitters is gold. Buying gold coins could be a bad move for a few reasons:
Your gold could get stolen
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Buying gold isn’t like investing in stock, you won’t get interest or dividends
It may take years for your gold to increase in value
At the end of the day, whether or not buying gold is a good idea depends on your personal investing reasons and goals. It could be a good move if you’re trying to safeguard your portfolio or prepare for a worst-case scenario, but it’s not the best way to grow your investment right off the bat.
How to buy gold coins
So, if you decide gold is for you, how should you go about buying it? Here are some tips for first-timers:
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Buy from a reputable dealer or financial institution (not Craigslist)
Verify the coins’ authenticity before you buy
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Be prepared to pay a premium above the price per ounce (gold coins come in 1 oz, ½ oz, ¼ oz, and 1/10 oz packages)
Start with 1 oz packages, as these usually have lower premiums
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Buy bullion coins like the American Gold Eagle, South African Krugerrand, or Canadian Maple Leaf: these are a better first choice for beginners, as collector’s coins tend to be more expensive and require you to know a lot in order to pick the most valuable ones
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Keep the gold percent of your portfolio at 5-15, with the rest made up of funds, stocks, and other investments
How to store gold coins
Storing your gold coins is one of the trickiest parts. While you may be tempted to keep it in your house, a better option is renting a safe at a bank—unless you have a safe in your house already. Most thieves know exactly where to look to find gold; some even use metal detectors!
For the best value, keep the coins in their cases, and make sure they don’t get scratched or get grubby fingerprints on them.
Invest in gold coins without buying them
If the thought of holding on to those gold coins makes you nervous, you have a few other options.
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Buy gold coins with your IRA: your IRA administrator will keep these in a vault so you don’t have to store them
Purchase gold mining stock
Purchase gold certificates
Purchase exchange-traded products
An investment advisor can help you decide whether or not buying gold coins is the right move for you.