American Gold Eagle bullion coins are an excellent way to balance your investment portfolio and reduce risk with the security and profitability of gold, the world’s oldest and most trusted asset.
The only gold bullion coins backed by the U.S. government for weight and gold content, American Eagles are the safest, most secure, and most convenient way to invest in gold bullion.
My blog is about contrarian investing, but this is way too contrarian of an investment, even for me!
The first problem I have with buying gold coins are the transaction costs. For example, based on some quick research, it looks like one faces a 5% premium over the price of gold plus shipping costs in order to purchase gold coins. I imagine that you'd lose most of that premium when selling, resulting in a significant bid/ask spread.
The second problem with gold coins is that you have to store them somewhere. You'll need to buy a safe, and that's still not a 100% guarantee that they won't be stolen or destroyed in a hurricane, earthquake, fire, or other disaster.
The most sensible way to buy gold is via the new gold ETF (NYSE: GLD). You can buy and sell instantaneously with hardly any transaction costs.
Perhaps some gold investors fear the ETF because they think that the financial system will collapse and their shares in the ETF will become worthless. But I don't understand why it's assumed that gold coins would be worth anything under these circumstances. If one is planning for the end of the financial system, perhaps a better investment would be a nuclear fallout shelter, guns and ammo, and a year of canned food and bottled water.
Even the gold ETF is a bad investment in my opinion. It's just not leveraged enough. If the price of gold goes up by 50% from here, that's really not such a great return on investment. I like to buy things that will at least double. That's why I own shares of DRD Gold (NasdaqSC: DROOY), a gold mining company. DRD Gold is highly leveraged to the price of gold and will increase in value many times if gold ever takes off.