Investing in Gold? Examine Your Options
The past year has seen an explosion in interest in investing in gold. Whether it’s fear of a stock market crash, worries about rising inflation, or merely an attempt to diversify an investment portfolio, investors are flocking to gold like they haven’t in years. Many of those investors are new to gold and precious metals. They may have an innate understanding of the benefits of investing in gold, but they may not know all of their options. And for a beginner, the options can be overwhelming.
From gold coins to gold ETFs to a gold IRA to gold mining stocks, there are numerous options available today, not all of which are the best choice for every investor. We’ll go over a few of the options available today, but in particular gold coins, which remain one of the most popular options for those looking to buy gold.
Gold American Eagle
The Gold American Eagle has become one of the most popular investment gold coins in the United States. First minted in 1986, the coin competed against established bullion coins such as the South African Krugerrand for market share. But unlike the Krugerrand and other older gold bullion coins, the Gold American Eagle is eligible for investment in a gold IRA. That allows those looking to invest in gold but still retain the same tax advantages as any other tax-advantaged retirement account the ability to hold gold coins in an IRA.
The Gold American Eagle comes in four different sizes: one ounce, half-ounce, quarter-ounce, and tenth-ounce. The one-ounce coin is by far the most popular, accounting for nearly 60% of total coins produced in 2020 and nearly 90% of total gold sales by weight.
The disadvantage to the larger coins is that in selling them you’re forced to sell them in increments of several thousand dollars at a time due to their great worth. Many investors choose to invest in smaller coins or in a mix of coins so that when the time comes to sell their coins they can sell small amounts at a time or tailor the amount they sell.
Canadian Gold Maple Leaf
The Canadian Gold Maple Leaf coins were first minted in 1979, taking advantage of rising investor demand in the aftermath of the stagflation of the 1970s. They currently contain 99.99% pure gold, making them one of the most pure investment gold coins in the world.
The Canadian Gold Maple Leaf is available in a wide variety of sizes, from the standard one-ounce coin down to coins as small as one gram. While the Gold Maple Leaf may not be quite as popular with American investors as the Gold American Eagle, it nonetheless remains one of the most popular gold coins for investment purposes around, and a popular choice for gold IRA investors.
Australian Gold Saltwater Crocodile
The Australian Gold Saltwater Crocodile coin from the Perth Mint is an iconic number from down under. The Perth Mint has a well deserved reputation for producing quality investment-grade gold coins, and the Gold Saltwater Crocodile is no different.
As with other gold coins, the Australian Gold Saltwater Crocodile is available in a number of different sizes, including the ever popular quarter-ounce size. And like other nearly pure gold coins, the Australian Gold Saltwater Crocodile coin can be held in a gold IRA.
British Gold Lunar Series
Great Britain’s experience with the gold standard spurred its adoption by numerous other countries throughout the world in the 19th century. While the gold standard may be ancient history in the UK, the Royal Mint’s standards of quality remain outstanding.
The coin most associated with the gold standard is probably the UK’s sovereign, a design that remains iconic. Unfortunately, the sovereign’s traditional 22-karat gold content makes it ineligible for investment through a gold IRA.
Thankfully, the Royal Mint has produced modern gold coins that combine the Mint’s standards of excellence with the necessary gold content for gold IRA investing. Among them are the Royal Mint’s Lunar Series of gold coins.
This series of gold coins features an image of Queen Elizabeth II on the obverse and a Chinese zodiac design on the reverse, with the reverse changing each year. These coins offer the ability to invest in gold, collect the entire series of designs, and enjoy the high quality of the Royal Mint’s production, all while still enjoying the tax protection offered by investing in these coins through a gold IRA.
Other Gold Investment Options
There are other gold investment options that investors choose today too, although they have their drawbacks when compared to investing in gold coins or bars. Gold exchange-traded funds (ETFs) for instance, are one popular choice. But ETFs have several disadvantages.
For one thing, the custodial and subcustodial relationships with the gold owned by ETFs bring up questions about who really owns or controls the gold the ETFs say they do. Certainly if you invest in a gold ETF you can’t convert your shares in the fund into gold, thus eliminating one of the advantages in investing in gold, namely the ability to own physical gold.
Other investors choose to invest in gold mining stocks, reasoning that if gold rises in price, gold mining stocks should too since their product is getting more valuable. But mining companies are just like any other company, and ineffective management, labor disputes, and rising energy costs can eat away at their profits, resulting in lackluster stock performance even when gold prices shoot up.
That’s why so many investors choose to invest in physical gold coins or bars rather than investing in other options such as gold ETFs or gold mining stocks. The tangibility of owning physical gold is something that for many investors just can’t be beat. With the ability of gold to protect against inflation and economic turmoil, not to mention the ease in the modern day of investing in physical gold such as through a gold IRA, there are few reasons not to prefer the safety and soundness of physical gold coins and bars.