11/11/2019
The Reasons for Buying Gold and Silver Coins
Gold offers benefits far beyond the fact that its price can rise and that it is a portable asset to own and grow your wealth.
Gold is
• A tangible asset that you can hold gold coins in your hand, which you can’t do with most other investments. It cannot be destroyed by fire, water, or even time. And unlike other commodities, gold coins don’t need feeding, fertilizer, or maintenance.
• Free of counterparty risk. Gold coins require no paper contract to be made whole.
• Highly liquid. Gold coins can be sold virtually anywhere in the world. In a crisis, gold will be in high demand. Other collectibles, like artwork, take longer to sell, have a smaller customer base, and will likely entail a big commission.
• Value dense. Gold coins take up such little space that you can store more value of them in a safe deposit box than stacks of Rands.
• Private and confidential. How many assets can you say that about in today’s world? You must pay taxes on any gain, of course, but if you want a little privacy or confidentiality, just buy some gold coins!
• Portable. You can take gold coins with you wherever you go in the world.
• A store of value. The gold price fluctuates, of course but its value is timeless. Consider that gold retains its purchasing power over long periods of time, while the US dollar, for example, has lost 98% of its purchasing power since the creation of the Federal Reserve in 1913. And since gold will outlast you, it is an ideal asset to pass on to your heirs.
By the way, it’s a faulty argument that gold doesn’t produce any income. That’s not gold’s role. Its function is as money and a store of value, similar to a currency. That’s also why it shouldn’t be viewed as a commodity; it doesn’t get used up, like oil or corn. In other words, gold is money!
• Can’t be hacked or erased. It’s probably not a good idea to keep all your wealth in digital form today. That’s easy to do if you own some gold coins.
• Requires no specialized knowledge.
• Comes with low maintenance and carrying costs. Even if you pay for storage, compare that to the costs and taxes and headaches of, say, real estate.
The Best Gold Coins to Buy
There are a lot of gold coins on the market. But they all fall into two basic categories:
Standard Gold Coins & Numismatic Collector Coins
Bullion coins simply refer to gold coins that are made almost exclusively from precious metal, in this case gold. Their attraction is that they consist of highly refined gold and are viewed primarily as an investment. Bullion coins are not regarded as a “collector” coin, which is a different class of coin
They also come with a face value (except the South African Krugerrand). These face values are mostly symbolic at this point, since the gold content of the coin makes them worth a lot more than the value printed on the coin. But each government guarantees they will always be worth the amount stated.
Numismatic coins refer to rare coins, ones that are bought and sold by collectors. Unlike bullion coins, their value isn’t based on the gold content, but rather on their rarity and condition. Their premiums (or mark-ups) are usually much higher than bullion coins, and can stretch into the thousands of Rands (and in some cases, millions!).
The best rule of thumb on whether to buy numismatic coins is this:
Proof coins are another form of numismatics. These are high relief coins and are very eye-appealing, but also come with high mark-ups. Again, these are geared for collectors, and unless that’s what you want to be, you don’t need to buy these when you invest in gold.
There’s one more element that will help us identify the best gold coins to buy—and that’s being prepared to sell…
As an investor, you want to buy something that won’t just rise in value, but that will also be easy to sell. That’s generally easy to do in the stock market, as most stocks are highly liquid. But you’ve probably heard that some stocks have very low volume, which can make them tricky to sell. The same thing is true with gold coins: you want a class of coins that will be easy to sell. You want to avoid a product that could experience a delay when it’s sold, or cost you more than you expected, or won’t have a lot of buyers.
Add it all up and…
• All investors should start by buying gold and silver coins.
The golden rule when buying gold coins is this: buy the most common or popular items, so that you have high liquidity when the time to sell comes.
It’s easy to see that the average gold and silver investor should start with, common bullion coins.
Contact me today to provide you with the best market related prices and start investing today!
