Have You Ever Considered Gold as an Investment or a Hobby?

In today’s world of instant online stock trading and digital financial accounts, money often feels intangible. Many of us rarely see our money as physical objects anymore.

That’s why investing in gold coins can feel particularly satisfying and solid. There’s something unique about visiting a coin shop, leaving with a small-but-heavy paper bag, and feeling the weight of each coin at home.

But is investing in gold coins a wise decision in 2023 and beyond? Let’s explore the pros and cons of this investment strategy.

At a Glance:

• Gold can stabilize your portfolio during market downturns and protect against inflation.
• Physical gold carries risks such as theft and lacks dividends or interest payments.
• Alternatives to buying gold coins include investing in mining stocks or incorporating gold into your IRA.

Advantages of Buying Gold Coins

Gold and other precious metals have always been a staple in traditional investment plans for several reasons:

• Gold often appreciates when other investments decline, providing portfolio stability.
• It acts as a hedge against inflation.
• Capital gains tax is deferred until you sell.
• Ownership can be discreet, if privacy is a concern.
• In extreme financial scenarios, like severe currency devaluation, gold can be used for transactions. This may seem far-fetched, but it has occurred in other countries.

Disadvantages of Buying Gold Coins

On the flip side, there are notable drawbacks:

• Gold can be stolen if not properly secured.
• Unlike stocks and bonds, gold does not generate dividends or interest.
• It may take years for gold to increase in value.

How to Buy and Store Gold Coins

If you decide to invest in gold coins, purchase them from a reputable dealer or financial institution. Avoid buying from unverified sources like Craigslist. If you do buy from individuals, ensure the coins’ authenticity to avoid ending up with gold-plated lead.

U.S. gold coins are available in one, one-half, one-quarter, and one-tenth ounce denominations. Dealers charge a premium over the spot price of gold, which is higher for coins smaller than one ounce. It’s generally advisable to buy bullion coins like the American Gold Eagle, Canadian Gold Maple Leaf, or South African Krugerrand. Numismatic coins, which are collected for their rarity, can have high premiums and variable prices. Stick to bullion coins unless you’re well-versed in numismatics.

Limit your gold investments to 5-15% of your portfolio. Most investors prefer to allocate the majority of their funds to growth investments like stocks or mutual funds for a balanced risk and return profile.

Where to Store Gold Coins

Store gold coins in their cases to prevent scratches and fingerprints. Avoid hiding gold at home unless you have a secure safe, as thieves are adept at finding valuables. Consider renting a safe deposit box at a bank for secure storage.

Investing in Gold Coins Through Other Means

Did you know you can invest in gold coins through an Individual Retirement Arrangement (IRA)? The coins will be stored in a vault by your IRA administrator and must meet purity standards to qualify.

Alternatively, you can invest in gold without physically holding the coins by purchasing gold mining stocks, gold certificates, or exchange-traded products. These options provide the benefits of gold as an inflation hedge without the hassle of storage and security concerns.

This article is for informational purposes only and does not constitute legal or financial advice.