Have you ever considered gold as an investment? Or maybe just as a hobby? In the days of instant, online stock trading and financial accounts, sometimes money seems almost make-believe. We no longer even have a passbook to hold on to. We certainly never see most of our money as a tangible object.

That’s why there’s something very satisfying and solid about investing in and wanting to buy gold coins. There’s nothing like going to a coin shop, coming out with a small-but-heavy paper bag, and then taking it home and feel the weight of each coin.

Here are some advantages and disadvantages of buying gold coins as an investment:

Advantages to buy gold coins

Gold and other hard metals have always been a time-honoured part of traditional investment plans. Here’s why:

• Gold tends to go up when other investments decline, providing a stabilizing effect for your portfolio.
• Gold is a bulwark against inflation.
• You don’t have to pay capital gains tax until you sell.
• Nobody has to know you have it – if that matters to you.
• In worst-case financial scenarios, such as massive currency devaluation, you can use gold and silver to buy and sell. That may sound crazy – but it has happened in other countries.

Disadvantages to buy gold coins

On the other hand, gold has some disadvantages:

• A thief could take your gold if you’re not careful.
• Unlike stocks and bonds, a purchase of gold is not an investment in company growth. You won’t get dividends or interest from tangible gold.
• You may have to wait years for gold to go up in value.

If you decide to buy gold coins, get it from a reputable dealer or financial institution. If you buy gold coins from individuals or from anyone else you’re not sure of, have the gold coins’ authenticity verified first. You don’t want a collection of gold-plated lead.

You pay a “premium” over the price per ounce when you buy gold coins, which is how the dealer makes a profit.You may pay a higher premium if you buy gold coins less than one ounce each. You should generally buy bullion coins, such as the American Gold Eagle, Canadian Gold Maple Leaf, or South African Krugerrand.

Collector’s coins, called numismatic coins, are a different game than bullion gold coins. They can sell at a very high premium, and their prices are dependent on more factors.

Unless you are very knowledgeable about collector’s coins, stick with bullion coins.

Once you have the coins, you may be tempted to run the coins through your hands, like Ebenezer Scrooge. But of course you won’t – you should leave coins in their cases, away from scratches and fingerprints. Don’t even think of hiding gold in your house, unless you have a safe. Thieves know where to look, or they can find it with a metal detector. For very little money, you can rent a safe at a bank for your gold and other valuables.

Don’t get carried away buying gold. Perhaps 5 to 15% of your portfolio should be in hard assets like gold coins.

If you would like to know more about how gold can play a part in your investment plans just want a general chat, then please CONTACT US and we will be pleased to help