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Gold Coin Investing: Asset Protection

AnneM | Jan 18, 2010 |

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Gold coin investing can be a good solution to protect your financial assets in case of a recession or an economic crisis. Gold has always maintained its value and when times are tough its price rises because people buy up gold to make sure that they can maintain a portion of their wealth. Gold coins are a form of bullion but they are much easier to store as well as easier to liquidate if you need quick cash.

Gold coin investing also carries certain risks especially if you are not knowledgeable in the field, which is a good reason for you to make sure you only buy from reputable dealers. Gold coins come in various sizes and are minted by many countries but the best coins to invest in are British Gold Sovereigns and South African Krugerrands.

British Gold Sovereigns usually carry a slightly higher premium than other gold coins but the advantage is that usually their resale price is much higher and they are also easier to liquidate. Many gold investors trust the British Gold Sovereign due to its longevity so you will find it pretty easy to sell them off if you find yourself in a bind. However, if you are buying over 50 coins you will find that the premium is comparable to other gold coins.

Kurgerrands have a different advantage, namely that the premium is often negligible and because of this they are easy to sell but don't expect too great a profit.

Gold coin investing is an excellent way to hedge other financial assets that rely on paper currency from real estate to equity. The idea is to already have 10% of your investment portfolio allocated to gold with an equal split between bullion or coins and equity before a disaster strikes. Once the economy starts flailing or there is even a whisper of uncertainty the price of gold will shoot up and you may find yourself buying at a price that will later bring you a loss. For example, in the 80s the price of gold shot up significantly because there was a rumor that Reagan would reintroduce the gold standard for the US dollar. Many people rushed to buy gold but the price they purchased at was so high that they lost a lot of money, especially when it turned out that the rumor was unfounded.

Gold coin investing is a great way to protect your investments in the case of hyperinflation or any other crisis that will cause the value of paper currency to fall. It will maintain its value because of its scarcity and the fact that it does not degrade in time.