Investing in Gold Coins: What You Need To Know!
Investing in gold coins is a great idea for those that want to diversify their portfolio. Gold coins are not as volatile as stocks or bonds, and they tend to be more stable than other assets such as real estate. This post will discuss what you need to know before investing in gold coins.
What to Know About Gold Coin Investments
These days, people can buy and sell stocks quickly. It’s possible to buy stocks from the Internet. Sometimes it feels like money is not real. We no longer use a passbook to hold on to our money. We see money only as numbers on our phone or computer screen.
That is why there is something very satisfying and solid about investing in and wanting to buy gold coins. Here are some advantages and disadvantages of buying gold coins as an investment:
Advantages to Buying Gold Coins
Gold and other hard metals have long been a part of traditional investing strategies. Here’s why:
- Gold can go up when other investments decline, and it stabilizes your portfolio.
- Gold is a reliable hedge against inflation.
- You don’t have to pay capital gains tax until you sell.
- Its scent is undetectable, so no one has to know you have it. – If that matters to you, nobody has to know.
- A worst-case financial scenario is when there is a lot of money. If that happens, you can use gold and silver to buy things. That may sound crazy, but it has happened before in other countries.
Disadvantages to Buying Gold Coins
On the other hand, gold has some disadvantages:
- If you’re not careful, a thief might steal your gold.
- Unlike stock and bond investments, purchasing gold is not a bet on company growth. You won’t get dividends or interest from real gold.
- It may take many years for the price of gold to go up.
How and Why to Invest in Gold Coins
Because gold is one of the rarest elements on the planet, it’s no surprise that gold bullion coins are popular among investors worldwide. Gold coins have been around for hundreds of years and are one of the longest-standing forms of currency.
Coins have a fabled history. Each series is linked with an interesting backstory that collectors find interesting. These historic connotations make them a valuable investment choice.
Gold coins are precious metal that maintains their value during inflation and stock market crashes. When there is an economic crisis, people who have invested in the stock market can lose money. But people who own gold don’t have to worry because gold is a hard asset that can’t be taken away.
Gold is a valuable resource that investors use to protect themselves from financial problems. It can also be handed down to future generations because it lasts long. Gold has the potential to give healthy returns over time.
Gold Coin Prices Explained
Gold can be traded in two different ways: bars or bullion coins. Bullion coins are more expensive because they are seen as being more valuable. This is because of their heritage, how many have been made, and how they used to be currency.
Gold bullion coins are very valuable. They are made to commemorate special events. People buy and sell these coins because they have a lot of value and stay in good condition.
Because there is a limited supply of gold and many people want it, it is precious. It is used for making things like medical devices, electronics, and jewelry. The demand for gold doesn’t seem to be slowing down anytime soon.
Gold is more expensive than other materials because it is popular. People think gold is a safe investment, so they buy it when the economy is terrible. But when the economy is good, people don’t need to buy gold as much, so the price goes down.
Popular Gold Coin Series at CoinInvest
South African Krugerrand
- The South African Krugerrand is a popular coin among collectors. It was first minted in 1967 in Johannesburg, and it has been famous all over the world. The Krugerrand is still legal tender, but it doesn’t have any face value. That means its value depends on the market price of gold. Owning a Krugerrand coin has the advantage of lawfully exchanging it for cash equal to the weight of gold it contains.
Canadian Maple Leaf
- The Maple Leaf is another famous gold investment coin. The maple leaf on the coin is a well-known symbol of Canada. The Maple Leaf is also one of the most traded coins. It has a purity of 24 carats (99.99% fineness). The Maple Leaf was the first bullion coin to be launched with 99.9% purity, and it is considered one of the purest coins to date.
American Eagle
- The United States’ most popular investment coin is the American Eagle. This coin is highly sought-after because of its detailed and heroic design. The gold American Eagle is also a good investment for the future, as it has a high value.
Vienna Philharmonic
- One of the most exciting coins is Austria’s Vienna Philharmonic gold coin. The Vienna Philharmonic Orchestra, one of the world’s most prestigious orchestras, was founded in Austria. The coin honors this organization with its stunning depiction of the Musikverein’s Great Organ and instruments. The Vienna Philharmonic coin was first issued in 1989 and has become one of the most popular bullion coins on the market.
Britannia
- Gold Britannia coins are a high-value series. It was the first European investment coin to have legal tender status issued by the British government. Investors choose gold Britannia coins because they are free of capital gains tax and, therefore, a more accessible investment option.
Five Ways to Buy and Sell Gold
The following are five diverse methods to acquire gold and discuss some of the dangers that come with each.
1. Gold bullion
Gold can be emotionally satisfying to own. You can purchase it in bars or coins. However, owning gold has some drawbacks, like the need to protect and insure it.
Owners of physical gold need the price of gold to go up to make a profit. This is different from business owners, who can produce more of their product if the price increases. This makes it a good investment for them.
You can purchase gold bullion in several ways. You can buy it from an online dealer or a local dealer or collector. You can also go to a pawn shop. Note the current price of gold per ounce, so you know if you are getting a good deal. You might want to buy bars instead of coins because you will pay for the collector value of the coin, rather than just the gold content.
The biggest risk is that someone can take the gold from you if you don’t keep it safe. The second-biggest risk is if you need to sell your gold. It can be difficult to obtain the full market value for your assets, particularly if they are coins and you require cash immediately. So you might have to sell them for much less than they would normally command on a national market.
2. Gold futures
Gold futures are a way to speculate on the price of gold. You can choose to buy or sell a futures contract, betting that the price of gold will go up or down. If you’re right, you make money. You can also take physical delivery of gold if you want. Still, most people don’t do this because they’re not interested in holding the physical metal.
One of the biggest advantages of investing in gold futures is that you can use a lot of leverage. This means that you can own a lot of gold futures for a small amount of money. If the price of gold futures moves in the direction you think it will, you can quickly make a lot of money.
The leverage that futures contracts offer can be a good thing or a bad thing. You’ll have to put up a lot of money to keep the contract if the price of gold falls against you (called margin). If you can’t do this, the broker will close the position and lose money. So while futures contracts allow you to make a lot of money quickly, you can also lose it quickly.
The futures market is for people who are more advanced investors. You’ll need a broker that provides futures trading, which not all big brokers do.
3. ETFs that own gold
Suppose you don’t want to own physical gold or deal with the futures market’s fast pace and margin requirements. In that situation, purchasing an exchange-traded fund (ETF) that tracks the commodity is a wonderful option. SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and Aberdeen Standard Physical Gold Shares ETF are three of the most popular ETFs (SGOL). The purpose of these ETFs is to replicate gold’s price performance minus the ETF’s yearly expense ratio. As of February 2022, the expense ratios on the funds mentioned are merely 0.4 percent, 0.25 percent, and 0.17 percent, respectively.
Another benefit of owning an ETF is that it is easier to exchange for cash than bullion. You can trade the fund on any day the market is open at the prevailing price. So if you need to sell, you can do so quickly and easily.
ETFs allow you to invest in the price of gold. People who own ETFs will see their value change as the price of gold changes. The only thing to keep in mind is how much the ETF costs. These ETFs let you avoid some of the risks of owning real gold, like protecting your investment and getting back the full value if you want to sell.
4. Mining stocks
Another way to benefit from the rising price of gold is to own the businesses that produce gold.
Investors may want to consider gold as an investment because they can benefit in two ways. First, if the price of gold rises, the investor’s profits will rise too. Second, the investor can increase production over time, which will double impact their profits.
When you invest in stocks, it is important to understand the business carefully. There are a lot of risky mining companies out there, so you’ll want to be careful about which company you choose. It’s best to avoid small miners and companies that don’t have a producing mine yet. Finally, remember that mining stocks can be volatile.
5. ETFs that own mining stocks
If you don’t want to research different gold companies, buying an ETF could be good. Gold miner ETFs hold shares in many other gold mining companies. If one company does poorly, the ETF will still do well overall.
Some larger funds that invest in this sector are
- VanEck Vectors Gold Miners ETF (GDX),
- VanEck Vectors Junior Gold Miners ETF (GDXJ), and
- iShares MSCI Global Gold Miners ETF (RING).
These funds have expense ratios of 0.51 percent, 0.52 percent, and 0.39 percent, respectively, as of February 2022. They offer the advantages of owning individual miners while being safe because they are diversified.
The diversified ETF protects you against anyone company doing poorly. However, it won’t protect you against something that affects the whole industry, such as sustained low gold prices. When selecting your fund, be careful and understand what the fund consists of. Some funds have established miners, while others have junior miners, which are riskier.
Frequently Asked Questions About Invest Gold Coins
Gold is unlike stocks or bonds. You do not get dividends or interest from tangible gold. Sometimes, you may have to wait years for it to go up in value.
Gold is an unproductive asset because it does not create anything. Gold is not like shares, bonds, and deposits because you do not invest and get money back. Gold has always been valued by the fear that other assets will lose value.
Bullion coins are best for most investors. They can be easier to sell back, and transaction costs are lower. You could buy smaller bullion bars, but they are harder to sell.
You cannot sell gold back to banks. If you buy gold from a bank, you will not sell it back to them. Instead, you will need to go somewhere else, like a jeweler or pawn shop. They might offer you less money than what the bank gave you for it, though, even though they are charging more per ounce.
Based on the price of gold versus silver, buy silver if you plan to put less than $1,500 in precious metals. But if you plan to spend more than $1,500 on precious metals, buy gold.
The U.S. Internal Revenue Service (IRS) categorizes gold and other precious metals as “collectibles.” They are taxed at a 28% long-term capital gains rate instead of 15% or 20%.
Most banks don’t buy gold coins because they are risky. The process takes a long time when you sell them, and we don’t recommend you sell your coins this way. We doubt you’ll get a high price for your coins because the bank and coin dealer will share the profits from selling them.
Gold coins can be sold to a jewelry retailer, and they will give you jewelry or cash. There are other ways you can invest in gold, like bars and bullions.
Gold coins can be bought from collectors or private dealers. You can sell them later for a profit. Dealers are located in most cities, and gold coins are easy to buy. Gold coins are a good way to invest in gold if you’re new because it is easy.
Gold prices are expected to increase over the next 12 months. Gold is trading at about Rs 52,000-53,000 per 10 grams. But in 2021, it will be between Rs 47,000 and 49,000. During 2019 and 2020, the price of gold increased by 52% and 25%.
Selling gold coins is not too difficult, but there are a few things you should know first. Tips on how to get the best price for your coins and where to sell them are below.
Gold doesn’t lose value as other things do. For example, land and cars lose value over time, but gold doesn’t. That’s because it never gets old or wears out.
Read more: How to invest in gold: 5 Ways to Buy and Sell It
