How to Invest in Gold Coins

Investing In Gold Coins

How to Invest in Gold Coins

November 23, 2023 1126 view(s)

With so many opportunities to make purchases digitally, it's much less common today for people to carry cash. Those who keep cash on them often carry only bills and not coins.

For thousands of years, using metal coins for transactions was the norm. Gold coins were first used around 650 BC, and their purpose has changed substantially since then. Investing in gold coins is a great opportunity for people who wish to exponentially grow their net worth.

Not everybody understands the key details about gold coin investing, however. We've compiled a brief guide with the info you should know. Let's explore the key details.

Establish Your Goals
Before moving forward with any investment strategy, you should clearly define your goals. If you're looking for short-term gains, investing in gold coins is not the right option.

This is a long-term strategy that requires careful planning and plenty of patience. People who want to see gradual returns over time should look into this option as an alternative to conventional investing. The same can be said about those who want a stable investment.

Understand Key Factors

It's crucial to keep certain factors in mind when allocating money to gold coin investments. One of the most important is the purity of the gold.

A higher purity value means a gold coin contains a larger amount of gold. It's worth noting that coins with high purity can sometimes be softer than expected.

This makes them more prone to damage. The weight and size of the coin are also crucial to consider.

Coins are often available in 1 oz sizes. Heavier, larger coins have more value than smaller, lighter coins.

The coin's condition also plays a role in how much it's worth. When purchasing coins, have a plan to protect them from damage. You should avoid handling them unless absolutely necessary.

Verify Gold Coin Authenticity

The last thing you want is to purchase fake gold coins. Gold coins should come with a certificate of authenticity from a reputable grading service.

These certificates assess the coin's condition and legitimacy for assigning a grade. The grade the coins receive will directly impact their value.

It's worth educating yourself on mint marks and hallmarks. These are placed during production and provide info on the coin's authenticity, purity, and origin. Be wary of sellers that price gold coins at amounts far lower than what they should be worth.

This could indicate the coins aren't legitimate. If purchasing gold online, stay away from shady websites. Sites with suspicious designs, grammar errors, and unrealistic offers are red flags you can't ignore.

Don't Neglect Storage and Security

Unlike investing in the stock market, investing in gold coins requires prioritizing security. If you keep your gold at home, store it in a fireproof safe. The safe should also be mounted to a floor or wall so that it can't be picked up and carried.

Many people choose to keep gold in a safe deposit box at a bank. It's worth ensuring your gold so you have a course of action if contingencies arise. Conventional homeowners insurance policies may not cover the total value of your coins.

Bank safe deposit boxes often aren't insured. Purchasing additional protection could mean the difference between whether you can recover from a disaster.

Diversify Your Portfolio

Regardless of what you invest in, you should always keep your portfolio diverse. Gold can be a stable form of investment that offers high returns over time.

You shouldn't invest in only gold coins, though. Consider allocating money toward other precious metals. This will protect your portfolio from sudden changes in market performance.


Tax Considerations

If you profit from selling gold coins, there are tax considerations you can't overlook. Tax is applied to the gains you made from the sale and not the total amount.

For example, let's assume you purchased a gold coin for $2,000. You later sell it for $2,700, giving you a $700 profit. You would only pay taxes on the $700.

Keep in mind that your tax obligations will vary depending on whether your capital gains are short-term or long-term. If you hold your investment for less than one year and make a profit, you'll experience short-term capital gains.

The issue here is that short-term gains are classified as ordinary income. Long-term gains have lower tax brackets.

It's always recommended to only sell your investment after a year has passed. Otherwise, you could lose a large portion of your profits due to taxes. Some investors use a 1031 exchange for a tax advantage.

This allows you to defer your tax obligations on capital gains as long as you allocate those profits to another investment. The investment needs to be similar to the one you sold, though. Someone using a 1031 exchange for gold coins would need to invest in other precious metals.

This can be a great part of a long-term investment strategy. However, it's not ideal for people looking to liquidate their gold coin investments for cash.


Getting Started

Finding a reputable source is imperative when purchasing gold coins. This ensures you don't fall for scams and waste money on inauthentic products. Consider their reputation before making your choice.

Researching online is a great way to gain insight into what you can expect. Look for resources that have plenty of positive feedback.

What is their customer support policy like? If issues arise, it can be difficult to overcome them on your own.

Ask where they obtain their gold coins from. They should be fully transparent when answering this question. It's best to create a brief list of different options and narrow it down from there.

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Don't Overlook Investing in Gold Coins

Investing in gold coins can be an amazing opportunity. Ensure you do your due diligence so you can make smart investments. From here, you'll maximize your chance of success and avoid complications.

The United States Gold Bureau aims to educate people on using gold as an investment. We serve as a private distributor of gold, silver, and platinum coins. Reach out to us today to learn more about how we can help.