The Pros & Cons of Investing in Gold Coins

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Last Updated: November 19, 2023

Gold investments are rising in popularity, and for good reason. Soaring inflation, dollar devaluation, and stock market instability mean more people flock to gold as a safe haven investment.

Gold typically fares well, even in economic downturns. Historically, gold prices recover quickly after drops. Gold coins are an ideal investment for the long term and can help stabilize your investment portfolio.

Before investing, you need to know the pros and cons of investing in gold coins. Take your time with the process and seek a reputable gold dealer like American Hartford Gold or Goldco to guide your investment strategy.

Key Takeaways

Pros of Investing in Gold Coins

As you consider investing, you must consider the pros and cons of investing in gold coins. Although most investors feel the pros outweigh the cons, you should review both and see if gold coin investments fit your needs.

The following are some pros of investing in gold coins:

Investment Portfolio Stability

One of the top reasons people invest in gold coins is to stabilize their investment portfolio by diversification. Some people have all their investments tied to paper stocks, which can cause them to lose money quickly. Investors have lost it all playing the stock market.

Diversifying your investment portfolio means spreading your assets over several investment classes. Gold coins are an excellent diversifier, giving people added peace of mind during high inflation.

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Hedge Against Inflation

Everyone is talking about inflation these days, as it seems to soar. Inflation causes the price of goods and services to rise, sometimes exponentially. When inflation increases, fiat currencies devalue.

As the dollar value erodes, demand for gold investments increase. Greater demand means gold prices soar, allowing investors to capitalize on their gold coin investments.

Gold acts as a stable hedge against inflation. When the dollar drops, gold prices rise, allowing investors to improve their financial outlooks.

Gold Coin Liquidity

Gold coins are accepted throughout the world because of their high gold content. Should you need to buy or sell quickly, gold offers high liquidity.

You can sell gold coins anytime; many buyers are waiting to give you cash. Practice caution when buying and selling gold coins. Know the difference between spot price and retail price, and plan accordingly.

Tax Advantages

When you invest in gold coins as part of a precious metals IRA, you can take advantage of tax benefits. Depending on the type of gold IRA, you will only pay capital gain taxes once you sell.

People are flocking to gold IRAs because of the tax advantages alone. Working with an expert custodian to ensure your accounts remain in good standing with the IRS and its rules is important.

Privacy

Some investments open you to criticism from the Internal Revenue Service. You can purchase gold coins in small amounts without anyone knowing. Discretion is one of the many reasons people prefer investing in gold coins.

Although people prefer to remain private when seeking gold investments, you must comply with the IRS rules and state and local laws. Ensure you are investing wisely and discreetly without breaking any laws.

Pass on to Future Generations

Another advantage of investing in gold coins is the ability to pass on your wealth to future generations. People generally want to leave a sound inheritance to their heirs. Investments in gold ensure your heirs will receive their assets without significant losses.

Not only will your heirs appreciate their gold inheritance, but it will also propel them to take action and begin investing in gold for themselves. Everyone should consider a gold coin investment for the future and retirement.

Cons of Investing in Gold Coins

When considering investing in gold coins pros and cons, the cons are just as important to evaluate as the advantages and may be even more important. If you can look at the cons and still want to invest, then gold coins will likely be an attractive option.

High Markups and Premiums

You will find that many gold dealers have exorbitant price markups on certain coins, especially those rare ones. We recommend first choosing a reputable dealer and then shopping around for the best price on gold coins.

You must also understand that gold coins have a higher premium than gold bars because they require exacting detail during minting. You will generally pay more for gold coins than other gold investments, but they can increase your returns, especially if they are rare and in high demand.

Counterfeit Coins

Buying counterfeit coins is always risky if you do not know what you are looking for. We ask you to consider the following ways to test for authenticity

One of the best ways to avoid counterfeit coins is to only purchase from reputable gold coin dealers like American Hartford Gold, Goldco, Augusta Precious Metals, Birch Gold Group, and Noble Gold.

Fraudulent Gold Coin Dealers

Just as there are good gold dealers, there are also those who seek to prey on the insecurities of new investors. You should never buy from a dealer if you receive an unsolicited phone call or email.

Research the gold dealer on the Better Business Bureau and Consumer Business Alliance. Read customer reviews and consider checking out our vast inventory of comprehensive company reviews, where we break down all the information about gold dealers in the industry.

Losses to Theft

There are also risks of theft, especially if you store your gold at home. The IRS requires investors to store their gold in an approved third-party depository if they invest in a gold IRA. You cannot store your gold at home or in your bank deposit box.

Even outside of an IRA, gold storage depositories are beneficial. These vast depositories have the most advanced technology and billion-dollar insurance policies to protect their customers. An affordable annual fee is well worth the peace of mind.

Insurance and Storage

Some people worry about the costs of insurance and storage and consider them a drawback in gold coin investing. When you are weighing investing in gold coins pros and cons, this is one of the considerations.

You will pay according to the amount of gold coins you put in the depository. The fees vary and can go as high as 1.25%. You should read the terms and conditions carefully to know the fee amounts and what you are paying for.

IRA Gold Coin Purity Requirements

One of the most effective ways of investing in gold IRAs is with gold coins. There are many popular options, but they must all meet the IRS requirements for purity. Below, we list the purity amounts for each type of precious metal, including gold.

There are also other requirements, including withdrawal threshold ages. You must meet the requirements or face hefty IRS penalties and fees.

Popular Gold Coin Investments

As you begin investing in gold coins, you may feel overwhelmed. There are many things to consider, including circulated or uncirculated condition and purity.

You should examine each gold coin and learn as much as possible about its history before buying. Consider the coin’s condition and ensure it is as perfect as possible.

The following are some of the top gold coin investment options available:

Factors to Consider When Buying Gold Coins

There are a few things smart investors consider when buying gold coin investments. Remain vigilant when shopping, and do not purchase on gut instinct or feelings. Only purchase based on the facts.

Our Final Thoughts: Should You Invest in Gold Coins?

Historically, gold coins retain their value during economic and geopolitical uncertainty. Since the United States government allowed gold coin currency production, people have become increasingly interested in its appeal.

Gold is a safe haven investment because it hedges against inflation and offers investment portfolio diversification. Gold coins are a safe option if you are new to investments, but you must proceed cautiously.

Research is critical when learning about the best gold coin options. You must weigh the good and bad when considering investing in gold coins. We have given you a lot of information and hope it will help you in your investment ventures.

Consider companies like American Hartford Gold or Goldco to help you invest in gold coins. Wise investments are more likely to pay off and yield a great return on investment. 

Top Rated Gold & Silver Companies in 2023
Best Overall
9.7

Bar Code Score Card ™

5/5
Goldco
Excellent customer service from precious metals experts.
Best For Service
9.4

Bar Code Score Card ™

5/5
American Hartford Gold
5 Star customer service, easy to work with, and a low price guarantee.
Best For Education
8.9

Bar Code Score Card ™

4.5/5
Augusta Precious Metals
Earned best overall gold IRA company of 2022 by Investopedia's most transparent.
4
7.9

Bar Code Score Card ™

4/5
Birch Gold
High level of customer service and a solid reputation
5
7.0

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4/5
Noble Gold
High level of customer service and a solid reputation