Risk of Investing in Gold Coins
The basic risk in owning gold is that the price of gold may decrease, and you may lose part of your investment if you need to sell the coins afterward. There is also risk of theft.
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Bullion vs. Numismatics
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Gold bullion coins are priced according to how much they weigh, and the purity of the gold they contain. By contrast, formerly circulating gold coins are sometimes worth more than their literal weight in gold, because collectors prize them.
Price of Gold
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Gold bullion coins sell by the troy ounce, and most coins in this category have their weight written on the coin itself. As a commodity, the price fluctuates daily on international exchanges.
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Gold Bubbles
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There is always the risk that the price of gold might collapse. In early 1980, for example, the metal traded briefly for about $850 per ounce---a level gold has never reached since. In present-day dollars, that would be about $2,200 an ounce.
Collectible Gold Coins
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In purchasing collectible gold coins, there is the risk of misunderstanding the numismatic value of the coins, and thus paying too much.
Security for Gold
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Anyone owning a substantial amount of gold needs to take great care to protect it from theft and other loss. Insurance can mitigate the risk---for a price.
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References
- Photo Credit Image by Flickr.com, courtesy of Jeremy Schultz
