Gold coins are a great way to diversify your portfolio and invest in something tangible. Gold has been used as currency for centuries and is still a great way to store wealth in times of economic uncertainty. However, as with most investments, the benefits and risks are associated with purchasing gold coins.
This article will explore the advantages and disadvantages of buying gold coins, including the potential returns, liquidity, and storage concerns. We'll also look at the different types of gold coins available, so you can find the one that best suits your investment goals.
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Background of Gold as An Investment
Before we get into the specifics of gold coins, we must understand why gold is such a valuable commodity. Gold is often referred to as the "poor man's" money, and rightfully so. Many cultures have used gold as both an investment and currency for centuries, making it highly resistant to changes in value over time. Gold coins are considered the first commercial success story because they were the first tangible object created from gold.
Gold coins were first produced in Lydia, present-day Turkey as early as 700 BC. During this period of primitive coinage, each coin was hand pressed with a design carved into it before being struck by a hammer. This process was still far superior to the currency of neighboring lands because the production of coins required more resources and skill than simply melting gold and making jewelry from it – the only alternative at the time.
By 500 BC. Barter was the primary form of trade, and coins were mainly used to handle transactions when other forms of currency were unavailable. Coins became more common during the 3rd Century BC when the Roman Empire began minting gold coins called "denarii" (dun-uh-REE).
The concept of gold as a monetary reserve likely stemmed from this time, and this included storing wealth in physical form by buying gold coins when bank loans were difficult to obtain and trust was not common.
In the early days of Europe, gold was primarily used as a currency within the continent. Key commodities, especially wine and olive oil also contained a heavy amount of gold and became a precious commodity for trading.
Eventually, this led to commerce as we know it today. Trade between countries began to flourish and discoveries were made, which helped spur global industrialization.
However, there were still many issues with using precious metals as currencies back then. For example, they were highly susceptible to theft and counterfeiting, which was exacerbated by the fact that coins were often used as decoration by merchants.
It wasn't until the 15th century when European countries began minting gold coins that actual gold value was added to the currency. This immensely helped reduce the problems of counterfeiting because now each coin contained a certain amount of actual gold – meaning you could weigh it to determine its value or take it to a jeweler for inspection.
Today, the concept of gold as a currency has gone by the wayside, though people still find it valuable in an investment capacity. Many people purchase gold to diversify their portfolios and protect against inflation since the purchasing power of paper money tends to decline over time.
Benefits of Buying Gold Coins
One of the main benefits of investing in gold coins is that they are an effective means of diversification. One way to diversify your portfolio today is to purchase gold coins, like the Canadian Maple Leaf, which contain more physical gold than most other investment types, including bitcoin.
As we saw with the 2008 financial crisis and its most recent outcome, investments in precious metals were extremely beneficial during both scenarios. In the 2008 crisis, gold prices reached record heights – setting an all-time high of $1,900 an ounce. Gold prices also went up and down during the recent recession, but they have generally remained stable.
Since gold has been proven to be a great source of value over many generations of owners, it is not surprising that it remains an effective way to remain diversified in any market environment. Since gold can be purchased with cash and does not report publicly, it is difficult to predict the potential volatility in its price.
Another benefit of buying gold coins is that they are highly liquid, meaning you can quickly buy and sell them for cash at any time. It is important to note that gold liquidity depends on the size of the coin market in which you are interested. For example, it may be more challenging to sell a small 1-gram gold coin than to find a buyer for a 50 oz gold bar.
🟩 Portable and Affordable
Gold coins are also highly portable, making them an excellent hedge against potential market fluctuations. This, combined with their low cost of entry and liquid nature, makes it easy for you to stay diversified at all times – even when you're on the go.
🟩 Low Risk/High Reward Potential
Another great benefit of buying gold coins is that they are a safe investment that provides a high rate of return. This is because gold has a low inherent risk and does not become obsolete like many other investments.
Gold coins are also very secure. Unlike paper currencies which the government can devalue, there is no risk of depreciation with gold. This makes gold coins an ideal way to store your wealth over time.
🟩 Tax Benefits
Another great benefit of owning gold coins is that they offer several tax benefits. For example, you can enjoy favorable tax treatment if you sell gold coins to pay for qualified educational expenses.
Disadvantages of Gold Coins
Gold coins have many benefits and disadvantages that you should consider before investing in them.
🟥 Difficult to Store
Storing gold coins can also be challenging. It would help if you found a secure place to store them, such as a bank vault or safety deposit box. If you decide to keep them in your house, you must ensure they're well-protected from potential thieves. Also, you may have to pay additional storage and insurance costs if you store your coins in a safe deposit box or vault.
🟥 High Costs
The costs associated with buying gold coins can be quite high. Often, a markup is applied to the price of the gold itself, making gold coins less affordable than other investment forms.
🟥 Market Volatility
The price of gold coins tends to experience some volatility, which can make it tough to predict when you should purchase or sell them. This is especially true if you are looking to buy and sell quickly.
🟥 Risk of Fraud
Finally, there is always the risk of fraud with gold coins. Even though they are highly liquid and safe, you should be careful not to get scammed or defrauded if you decide to buy gold coins.
Popular Gold Coins for Investing
The following are some popular gold coins that you can buy today. More information on each can be found below.
Canadian Maple Leaf
If you want to spread your risk and increase your rewards, investing in Canadian Maple Leaf is a smart move. The Royal Canadian Mint strikes the coin in pure 24-karat gold. It is available in sizes ranging from 1/20 ounce to 1 ounce and has a face value of CAD 50.
The authenticity and superior craftsmanship of the Canadian Maple Leaf makes it a sought-after collectible. The London Bullion Market Association has certified it as one of the few gold coins used for payment at major bullion dealers. The Maple Leaf has no import or export restrictions, making it simple to keep and move.
As one of the world's most beautiful coins, the Maple Leaf has a rich history. An emblem of Canadian national identity since its debut in 1979. The distinctive maple leaf decorates the rear, while a photograph of Queen Elizabeth II appears on the front.
The American Eagle is the official gold bullion coin of the United States, and the United States Mint first introduced it in 1986. The coin comes in various sizes, including ½ ounce, 1 ounce, and ¼ ounce. Its face value is 50 USD ($50), a legal tender that can be used to pay any debt or obligation in the United States.
The design of the American Eagle is quite impressive, and it features a certain amount of gold – ranging from 1/10 troy oz to 1 troy oz – along with the coin's weight and purity. The front of the coin depicts a family of eagles soaring in the sky, while the reverse side has an inscription of "In God We Trust."
South African Krugerrand
The Krugerrand, with a face value of one Rand, is a legal tender coin in South Africa. This South African Mint-made gold coin has been in circulation since 1967.
The Krugerrand is unlike any other investment option because it comprises 91.67% pure gold. The coin's unique orange color comes from the remaining 8.33% copper content. This alloy provides more excellent protection against wear and tear than possible with a pure gold coin.
The Kruggerand's value as a financial asset is boosted by the fact that it is accepted and recognized all over the world. It can be bought, sold or converted to fiat currency with relative ease thanks to its regular trading on the open market. The Krugerrand is very liquid and fungible, which is a massive plus in the eyes of investors.
Originally released in 2006, the American Buffalo gold coin is recognized as a legal tender coin of the United States. With one troy ounce of.9999 pure gold, this piece is the first 24-karat gold coin struck by the United States Mint.
On one side of the coin is a profile of a Native American, while the other depicts a bison in its native habitat. The inspiration for the design comes from James Earle Fraser's Buffalo Nickel from 1913. There is a premium placed on mint-state examples of the American Buffalo coin due to their rarity and numismatic significance.
Due to their legal tender status and IRA eligibility, American Buffalo coins have gained much popularity among investors. They provide a low-priced option for diversifying your holdings with a one-ounce gold coin. The American Buffalo, with a face value of $50, is a fantastic option for seasoned investors and those just starting.
Austrian Gold Philharmonic
This coin offers a wide variety of advantages to buyers, making it one of the most sought-after gold coins. For obvious reasons, the Austrian Gold Philharmonic is struck in the Austrian Mint in Vienna.
The gold used in its construction comes from the province of Carinthia, making it some of the finest gold in the world. On top of all that, it is of the best grade because it is.9999 pure gold.
Just as easily recognizable is the Austrian Gold Philharmonic, which features a design that has become a cultural landmark in Austria. The Great Organ of the Vienna Musikverein may be seen on the flip side of the coin.
A cello, four violins, a bassoon, a harp, a French horn, and a Viennese horn are among the nine instruments depicted on the obverse. Because of this, it is desirable among collectors and investors alike.
Gold Australian Kangaroo
The Gold Australian Kangaroo is legal tender at face value in Australia, making it a useful physical asset to buy and hold onto. Its unique design also makes it popular among investors and collectors worldwide who appreciate its beauty.
The effigy of Queen Elizabeth II appears on the obverse side, while a different kangaroo design is used yearly on the reverse. These coins have a face value of AUD 100 and come in quantities from 1/20 oz to 1 kilogram.
Investors like Gold Australian Kangaroos because of their high quality, high liquidity, and high intrinsic value. Gold is an excellent investment since it protects your money from inflation and could increase in value.
Gold Kangaroos from Australia have widespread appeal and can be easily traded worldwide. In addition, a certificate of authenticity guarantees these coins' gold content, weight, and purity.
British Britannia 1-Ounce Gold Coin
Investors in gold coins often choose the British Britannia 1-ounce Gold Coin. It's a smart strategy for spreading financial risk and maximizing returns. The coins are among the finest gold coins on the market since they are minted from 99.99% pure 24-carat gold.
Since 1987, this design has become instantly recognizable because of its depiction of Britannia, a feminine representation of Britain, and the word "BRITANNIA" inscribed on the coin's reverse. Additionally, this coin can be used to buy things in the UK because it is considered legal money there.
The British Britannia 1-ounce Gold Coin is a sound investment that may provide safety, stability, and growth in value over time. Its compact size and ease of transportation make it a valuable yet highly practical asset.
Among buyers of gold coins, the Chinese Panda is among the most sought-after. It is one of the rarest and most valuable coins in circulation due to its extensive past. Originally released in 1982, the Chinese Panda was the first gold coin to display a new design yearly. Because of this, they are both valuable and desirable as collectibles and investments.
The Temple of Heaven in Beijing is shown on the obverse, and a panda is shown on the reverse, hence the coin's moniker. Available in sizes ranging from one-twentieth of an ounce to one kilogram, each coin is made from 99.99% pure gold.
In addition to being accepted as payment for goods and services within China, the Chinese Panda is also considered a legal currency. Since the People's Bank of China mints every Chinese Panda, you can be assured that you're getting a genuine and high-quality coin.
Can You Invest in Gold Coins With an IRA?
Buying gold coins with an IRA offers the same benefits as investing in physical gold, such as tax advantages and protection against inflation. The fact that you can buy gold coins with an IRA is simply gravy on top of a great deal!
Gold coins can easily diversify your investment portfolio and add extra asset protection. Because of this, many people choose to invest in gold with their IRA.
Many choose not to take their retirement savings out of the market entirely but prefer to hold onto them as long as possible. As such, they put a portion of their retirement money into gold in exchange for the investment's safety and stability.
A gold IRA rollover can be ideal for investors to continue investing in gold. A gold IRA rollover transfers IRAs from one account provider to another. The most familiar example is the transfer of a traditional IRA from an employer-sponsored plan to an individual retirement plan (IRA). However, you can also transfer a 401(k) or other retirement plans as part of a rollover.
Many investors have turned to gold as a haven for storing wealth over the years because of its many benefits. Purchasing gold coins can help you diversify your holdings, ensure your wealth stays secure and avoid potential losses due to market volatility.
Gold coins are a sound investment because of their precious metal content and ease of purchase, which makes them a desirable asset.
Choosing gold IRA investments is a smart strategy for diversifying your retirement portfolio and maintaining the safety of your assets. It can also help you avoid paying taxes on your investment. If you're looking to protect your wealth, a gold IRA rollover could be one of the best ways to do so while saving taxes.
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