Gold laid the groundwork for trade and economic practices throughout history. Now, as the U. S. dollar declines, investors are asking a key question: Are gold coins a good investment? The answer is a resounding yes.
Gold is shining bright right now. As of this writing, it’s currently over $2700/oz, which is over 30% growth since the beginning of 2024. What’s driving the rise in prices? And what does that mean if you are looking to buy gold?
This article covers the benefits of gold investing, what to look for in coins, and how to get started buying gold for your investment portfolio.
Why buy gold coins
Sometimes, people compare buying gold to other investments like Bitcoin. But Bitcoin is not a physical coin, and if there’s a technology failure or a cyber attack, you can’t buy or sell it. But, your gold or silver coins remain secure and accessible whenever you need them, without relying on digital systems or online access.
Other benefits when you invest in gold coins include:
Diversification
It’s always smart to diversify part of your portfolio, and gold offers an advantage because it doesn’t move with the same patterns as stocks or bonds. When markets are volatile or downturns hit, gold can offset losses you might have with other investment classes.
Since gold doesn’t follow economic cycles in the same way, it often increases in value during times when other investments have challenges. This gives you a stabilizing asset to balance your portfolio during economic uncertainty.
Tax benefits
You can also buy gold coins inside of a retirement account by transferring a portion of your 401(k) or existing IRA to a Gold IRA. From there, you get all the benefits of traditional IRAs, like tax-deferred growth and potentially the ability to deduct contributions.
Many states don’t charge sales taxes on gold and silver bullion and coins so this also reduces your cost of buying these investments.
One caveat is that you will still have capital gains taxes on precious metals if you have a profit when you sell. The IRS considers gold coins as collectibles and taxes long-term gains at a max of 28%.
Tangible asset
One of the main perks of physical gold is a sense of security and true ownership. This is something most other forms of investment, like stocks, gold ETFs, bonds, or other paper investments, can’t provide. It provides you with privacy and control that doesn’t rely on any other party. If banks fail, the government changes policies, or there’s a cyber attack, you’ll still have your gold.
Low cost of entry
Coins come in smaller amounts than bars. You can buy them in sizes that are less than one ounce of gold, such as 1/20-ounce or 1/10-ounce coins. This means that instead of needing thousands of dollars to buy large gold bars, you can start investing in coins with just a few hundred dollars.
Hedge against inflation
When there’s a declining U.S. dollar, it takes more money to buy the same goods and services. But gold’s value often rises during this same time so people see gold as a hedge against inflation to protect the value of their hard-earned money.
Why is gold investing the path people take when they need a safe haven asset? It’s because gold is scarce, and we can’t just make more, which is very different from the dollar. Central banks also buy gold when they want an alternative store of wealth. Having gold reserves helps protect them since they can easily sell gold to pay debts or stabilize their currency during economic downturns.
Simplicity and convenience
Investing in gold is a straightforward alternative to other investments. You buy it from a dealer, store it, and sell it if needed. There’s no need to constantly monitor the market or make quick decisions that might cause you to lose thousands of dollars. It’s as simple as owning a tangible asset that you can hold onto without the usual investment complexities.
Other investments require specialized knowledge and accounts. For example:
Bitcoin: To buy it, you need to set up a digital wallet, understand blockchain technology, and navigate volatile markets.
Stocks: You’ll need to set up a brokerage account, identify promising stocks, understand market dynamics, and deal with reactions to bad news or individual companies not performing.
Real estate: This asset requires a large upfront investment, ongoing maintenance, and property management. You’ll need to handle tenant relations, property taxes, and market fluctuations, as well as manage the buying and selling process, which can take time.
Other ways to invest in gold
You can also buy gold investments that are paper assets. Just be aware they don’t give you all the benefits of tangible assets like physical gold.
Gold stocks
You can buy stocks for investing in gold companies like mining companies or those that specialize in gold exploration and production. Besides the fact that these are paper assets, you also need the company to perform. If they have operational issues or can’t manage other parts of their business, it hurts your ability to make money from your investments.
Gold funds ETFs/mutual funds
Exchange-traded fund(ETF) gold investments let investors buy shares linked to the value of gold. As a paper asset, the disadvantage is that you don’t have direct ownership of physical gold, which means you’ll rely on the fund manager for performance.
Gold certificates
Investors can buy these certificates from some financial institutions and precious metals dealers. They represent ownership of unallocated gold held by the issuing institution. These assets are a contract from the issuer that they’ve set aside a specific amount of gold for you.
The challenge with unallocated gold certificates is that they create counterparty risk because you have to rely on someone else to hold up their end of the deal.
Considerations when investing in gold coins
If you are looking to buy this precious metal, here are a few characteristics to know:
Purity
The higher the purity of your gold coin, the higher its gold content. The industry measures it in karats. Pure gold is 24 karats and contains 99.99% gold. As the karat number decreases, the gold content also decreases.
For example, 18-karat gold contains 75% gold, while 14-karat gold is 58.3% gold. If you buy gold coins with lower purity it can affect your investment value and how easily you can sell them.
Weight
You’ll see that gold coins get measured in ounces. The common sizes include:
1/10 oz
1/4 oz
1/2 oz
1 oz
The type of gold coin
Different types of gold hold varying values and not all coin types are the same.
Bullion coins: Investment coins are called bullion and they cost close to the spot price of gold plus a small premium for production costs.
Collectible coins: These are often called numismatic coins and derive their value from factors such as rarity, historical significance, condition, and aesthetic appeal. They might have greater potential for appreciation but their value is more volatile and subjective.
There’s many different opinions about the best coins to buy and in Reddit’s r/Gold forum users shared:
Complex-Asparagus-42: “Get a Buffalo. It’s .9999 fine, doesn’t scratch like a maple or Britannia, and minted only with American-mined gold (if that matters to you). It costs a little more than other coins but you’ll be able to sell it super easily and for a little more, should you ever decide to sell it.”
Opie30-30: “Krugerrand was my first coin. I’m very happy with it. Relatively decent price and you can actually hold it, unlike bars which all come in a card.”
Erkevin: “I don’t know if there is a best. However, since you are unlikely to have a pm verifier or some of the experience need to make sure the gold is legit, be sure to purchase from a reputable source and maybe buy a piece that is difficult to counterfeit. I would suggest a Canadian Maple.”
IRA-approved gold coins
If you’re buying gold coins as part of a Gold or precious metals IRA, the IRS has specific rules around which coins qualify. These rules protect investors from scams or low-quality metals in their retirement accounts. The specific requirements include purity levels of at least 99.5% and coins that come from government mints or accredited manufacturers.
Common approved coins include:
- American Gold Eagle
- American Gold Buffalo
- Austrian Philharmonic
- British Gold Britannia
- Canadian Gold Maple Leaf
Market analysis
Before buying gold coins, it’s good to understand current market prices to see if it’s the right time to invest or sell.
To keep up with the current gold prices and trends, you can check out Gold.org and follow financial experts like Goldman Sachs and Morgan Stanley for forecasts and analysis. In fact, Goldman Sachs recently predicted gold to reach $3000/oz by the end of 2025.
You can also follow our podcast where we discuss the price of gold and the impact of market dynamics like economic uncertainty, currency reset and de-dollarization.
What are the disadvantages of gold coins?
While investing in gold coins comes with a lot of benefits, there are some disadvantages to consider:
Security risks
Owning physical gold comes with a risk of theft if you don’t securely store your metal. You can reduce your risk here by buying a home safe, using a bank safety deposit box, or keeping your metal at a third-party depository.
Limited income generation
Gold coins are not a dividend-paying asset. But, that’s not why people buy it. Investors consider gold a safe-haven investment and the whole reason for purchasing gold coins is to preserve wealth. It’s almost like buying insurance because it’s a way to create store of value in case there’s a crisis or economic crash.
Why investors choose Swiss America
For over 40 years, thousands of happy customers have been buying gold from the experts at Swiss America. Our clients appreciate our educational resources like in-depth guides, regular podcasts, and daily news updates to help them make the best investment decisions.
Our team can help provide guidance on options like Gold and Precious Metal IRAs or what to consider for storage and insurance costs. You can also confidently buy gold coins knowing we’re members of industry organizations committed to quality metals.
Once you own gold as an investment, you can easily use our online portal to see market value in real time. And, if you ever want to sell your metals, you can get a quote to liquidate as needed.
Final thoughts on gold coins as an investment
Investing in gold coins can be a smart way to protect your wealth and diversify your portfolio. These assets can provide financial planning security and the potential for appreciation over time.
And while all gold coins have value due to their gold content, investors buy bullion coins to use gold as a store of wealth.
If you want to learn more about investing in gold coins, connect with the Swiss America team today!
Are gold coins a good investment? FAQs
Is it better to buy gold coins or stock?
Gold coins are haven assets that provide security and hedge against inflation. Stocks can offer the potential for higher growth but can be volatile.
How much gold can you buy for $1000?
You can buy a 1/4 oz American Gold Eagle coin. This popular gold bullion coin, minted by the U.S. Mint, contains 0.25 ounces of pure gold.
Will a gold coin go up in value?
If you buy bullion gold coins, they follow the market’s value. Gold’s performance throughout history usually continues to grow in value over the long term.
Note: The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
