Pros & Cons of Gold Coin Investments

Gold coins add value to many portfolios during periods of economic uncertainty.

Gold coins provide a tangible, often desirable way for many investors to own gold. Purchase gold coins from reputable dealers. Physical ownership of any commodity, including gold coins, requires secure storage and insurance.

Tips for Buying

Purchase gold coins through reputable dealers. When you are purchasing gold coins from a mint, evaluate the premium asked over the spot cost. Some dealers charge premiums in excess of 10 percent. The South African Krugerrand remains popular with gold coin buyers. Plentiful coins refine a narrower spread between purchase and sales prices. The ability to liquidate coins without large premiums encourages investor confidence.

Reasons to Own Gold Coins

Benefits of buying gold coins include availability of dealers and mints from which to choose; ease of buying and selling coins (such as the Kruggerand); ability to test content of gold coins; tangible satisfaction of owning real gold; and potential for higher gold prices.

Reasons Not to Own Gold Coins

Problems with buying gold coins as investments include premiums assessed by some sellers; larger spreads charged by dealers to liquidate coins; verification of rare gold coins; and storage/insurance costs. Gold's potential for price appreciation remains unknown. Buying commodities such as gold coins involves supply and demand factors.

References

• U.S. Mint: reputable dealers
• U.S. Treasury: gold coins
• International Business Times: Kruggerand
• Kitco.com: spot price
• USAGold: potential for price appreciation

Resources

• "Portfolio Construction, Management and Protection"; Robert A. Strong; 2008
• "Buy Gold Like an Insider"; Steve Peters; 2009
• New York Magazine: "The New Kruggerands"; 1980
• "Collecting and Investing Strategies for U.S. Gold Coins"; Jeff Ambio; 2008
• "Scott Travers' 88 Coins to Buy and Sell"; Scott A. Travers; 2007