Investing in gold coins is gaining more popularity in recent days, as there had been recent moves in the purchase of gold exchange-traded funds in past years. The thinking there was that if gold coins are purchased, they have to be physically shipped and stored. Gold futures were also in vogue with the speculative antennae in full bloom for the future.
Now the prevailing school of thought is that these types of investments may be riskier than previously thought. Now the thinking is that having the real gold on hand may be the best way to go. Gold coins such as the Canadian Maple Leaf and the American Eagle are very good investments, they have a high level of gold and are easily bought and sold all over the place.
It is important to be aware that gold coins are not to be traded, as the prices do fluctuate quite a bit. It is suggested that they be held for a minimum of three years. There are also some inconveniences to owning the coins. Most coin dealers will not accept credit or debit cards for gold purchases. They will want to have the customer use a bank wire or a cashier’s check to consummate the transaction.
When the coins are sold, it will mean the physical process of packing them in bubble wrapped coin protectors and shipping them back to the coin dealer. The method of shipping should have a tracking mechanism such as FedEx or UPS. Insuring the coins for the full value is also a very good idea.
The South African Krugerrand may have lower markups and can also be a good buy for gold coins. The whole idea is to get back to owning the gold outright rather than have paper that is backed by gold. Certainly there can be more complications when dealing with paper such as delays, more complexity in trading, and even the possibility of the paper being lost or destroyed in fires, floods, etc., where gold can be safely stored in safety deposit boxes in banks for example.
There is another factor to consider when buying and investing in gold coins. When investing in Canadian Maple Leafs, American Eagles, and Saint-Gaudens Double Eagles for example, there can be an advantage. The Saint-Gaudens Double Eagles will trade for bullion value plus around 8 to 10% most of the time.
The gold in these coins will always be at bullion value, but they may increase in value even more due to rarity. A coin that is 100 years old has that possibility and the thinking is that they may just become even more rare over time.
When investing in gold coins people should be certain to take delivery for the gold themselves, and not have the gold companies store it for them. If the company should go bankrupt or unforeseen circumstances occur that are out of the buyer’s control, it could end up being a disaster for the buyer. It is much better to have the gold under the control of the buyer where the buyer can store it. The best place for storage probably is the safe deposit box of a local bank.