To hedge against the falling dollar, many smart investors are turning to a more tangible asset, gold. There are many ways you can invest in gold, you can purchase stocks in gold mines, gold bullion exchange-traded funds, or mutual funds, and of course, you can buy gold investment coins.
Before you pull out your wallet, you want to know a little more about the process of buying gold as an investment. For this post, we will talk strictly about buying gold coins as an investment.
No matter what you invest in, there is always a direct correlation between your knowledge and the amount of success you see with your investments. For that reason, you must do your homework and never skip doing the homework regardless of the type of investment.
Some History on Gold Ownership
The price of gold has been going up for some time now and is near an all-time high. Many coin collectors have begun to sell their collections, and they are being melted down just for the value of the gold. If this practice continues, gold coins might become even more valuable since there won’t be a large supply of them. The US government melted most gold coins after FDR passed Executive Order number 6102 in January 1934, making owning more than $100 of gold illegal until it was repealed by Ford effective at the start of 1975. For more on the repeal of this executive order, visit Executive Order 11825.
When you are ready to buy your first gold coin(s), make sure that you only purchase government-made and issued coins. These tend to have a higher value since investors know their quality well. Please stay away from privately minted coins as there is no guarantee of their purity or gold content.
Make sure that you will take possession of your coin(s) as soon as you buy them. It’s not uncommon for people to let the investment company or the coin company hold the coins for them. It may seem more secure, but if the company is dishonest or goes out of business, your investment will likely be gone too.
When you bring home your new investment, make sure you have a safe place to keep them. It’s best to either invest in good quality, bolted to the floor safe at home, or get a safe deposit box at your local bank. It’s probably also a good idea not to talk about all the expensive gold you have in your home unless you want to be robbed.
Go online to find out what the current price of gold is before you purchase. Again, knowledge will help you make a smarter investing decision.
What to Buy
You’ve probably heard the investment advice: buy low, sell high. Collecting gold coins is no different. The lower you can buy a quality coin for, the higher potential for a big payout down the road. I hate to sound like a broken record but do your research. Also, when buying gold coins pre-1933, US gold coins in good condition can be rare due to the previously mentioned Executive Order from 1933 and were mainly melted. But for modern issued gold coins try to avoid common bullion coins and focus more on proof gold coins. The reason for this is bullion coins rarely will bring a premium much over the spot price of gold, while the same coin but minted as a proof coin will indeed be much more likely to bring a premium over spot prices, if and when it is sold.
One last point: no matter how much education and knowledge you gain, there is always some risk involved in investing (you can greatly reduce your risk if you are knowledgeable, but it won’t go away entirely). For that reason, never invest more than you can afford to lose, and don’t put yourself in the hole financially by investing more than you should.
Starting an investing career is always a good idea. It won’t happen overnight, and you shouldn’t be pulling out your credit card anytime soon, but buying gold investment coins can help protect you against a falling dollar. These coins are not only a good investment, but they are beautiful and fun to collect.
While I am not an expert on coins, I collect certain ones myself. For any questions on how gold can fit into your financial goals, feel free to reach out to me. If you are not in or near the Metro Nashville area, reach out to a fee-only Registered Financial Consultant near you.
