Author Topic: Thinking of buying a gold coin  (Read 10284 times)

dragonwalker

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Thinking of buying a gold coin
« on: May 10, 2014, 10:43:06 PM »
So I was looking over my investments and I realized that I made an investment into gold of about $5,000 about 2 years ago into the GLD ETF when gold was around $1700 an oz. I've lost 30% of that value and being nickled and dimed every month with an expense ration of 0.40%, not a lot but still bothers me. With gold prices relatively stabilized recently and a short term low, I was thinking of selling my ETF, using it as a write off against profits from stocks this year and buying a gold coin.

I've always been partial to coins although I've never had any type of collection. I admit part of this is the coolness factor for myself and for once owning something of value besides just cold hard cash. I've done some research and thinking of buying the best condition $20 Saint-Gaudens gold coin. It's really a beautiful piece and right now a great condition coin not from a particularly rare year is going for about $1500 and there is about 0.97 oz of gold. With spot gold at about $1290 an oz I'm paying a bit of a premium for it but it will have intrinsic value and possible growth in value from the numismatic value of the coin.

I'm thinking this is more of a splurge considering the opportunity cost lost while the money is in the gold, the possibility of needing to get a safe deposit box for it (although I've been contemplating this for security reasons anyway), and the cost if I ever wanted to redeem it back for cash.

Would it be fair to be able to rationalize this as an investment decision? A single gold coin that I may spend between $1500-$2000 on... or am I just being stupid and throwing away money at a materialistic luxury good?

marty998

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Re: Thinking of buying a gold coin
« Reply #1 on: May 11, 2014, 04:38:21 AM »
I think it's silly. But that personal opinion. My experience with rare coins comes from watching Hardcore Pawn and Pawn Stars.

Even from trash tv shows like that i know that
a great condition coin not from a particularly rare year
is probably not worth the trouble.

SDREMNGR

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Re: Thinking of buying a gold coin
« Reply #2 on: May 11, 2014, 07:03:28 AM »
With coin purchase, it becomes more of a.collectors item purchase which is even more different and market knowledge becomes important.

I'd look into non retail venues to purchase from, like estate auctions or coin auctions.  Better than retail websites.  Check out proxibid.com

Derrian

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Re: Thinking of buying a gold coin
« Reply #3 on: May 11, 2014, 07:12:31 AM »
A lot of people have been tricked by the "intrinsic value" of the St. Gaudens gold coin, including myself.. The coin itself is not rare (Unfortunately, I own several of them) and the value has steadily declined for the past 5 years from a high of $2300 to $1400 right now, if you find a decent deal. My advice would be either invest in gold and forget the intrinsic value of a coin, or just invest in a decent mix of stock and bond ETFs. Had I invested in the vanguard total stock market instead of taking the *bad* advice of a family friend to invest in the coins, I would have made roughly $7000 instead of losing $2000. Best of luck!

Westoftown

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Re: Thinking of buying a gold coin
« Reply #4 on: May 11, 2014, 07:17:40 AM »
I would agree - buy American Eagles, its just a pure play on the metal.  Why give yourself the added complexity of the rarity and condition of a coin?   Buy Eagles, store it and forget it(but don't forget where you stored it :)

Jack

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Re: Thinking of buying a gold coin
« Reply #5 on: May 11, 2014, 07:17:58 AM »

I've always been partial to coins although I've never had any type of collection. I admit part of this is the coolness factor for myself and for once owning something of value besides just cold hard cash. I've done some research and thinking of buying the best condition $20 Saint-Gaudens gold coin. It's really a beautiful piece and right now a great condition coin not from a particularly rare year is going for about $1500 and there is about 0.97 oz of gold. With spot gold at about $1290 an oz I'm paying a bit of a premium for it but it will have intrinsic value and possible growth in value from the numismatic value of the coin.

Every cent above $1251.30 (i.e., spot price * weight) is stupid anti-Mustachian speculation.

Personally, if I wanted physical gold I'd do some research on how to appraise jewelry and then put up some of those "I buy gold" signs. Get your investments at a discount!

Don't forget to compare the price of that safe deposit box to the ETF's expense ratio...


SnackDog

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Re: Thinking of buying a gold coin
« Reply #6 on: May 11, 2014, 07:56:59 AM »
I have a co-worker who, for the last few months, has been withdrawing the max from the ATM at work every day and buying gold coins during his lunch hour.  He has a huge stash at his point.  He is convinced the financial shenanigans of the last ten years will come home to roost soon and gold will be the only way to survive the stagflation apocolypse.  I believe he stores his in his gun safe at home.

Honest Abe

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Re: Thinking of buying a gold coin
« Reply #7 on: May 11, 2014, 08:31:59 AM »
American Gold Eagle and Silver Eagles... They're always in demand at coin shops and online retailers. You'll get spot price upon selling... Don't get into numismatics unless you actually know what you're doing. Check out /r/silverbugs on reddit for alot of info if you're really looking to keep some PMs on the side.

timmoney

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Re: Thinking of buying a gold coin
« Reply #8 on: May 11, 2014, 09:34:43 AM »
you have to do whats right for you. if it was me i'd probably just stick with the etf. i personally never bought one even when prices were rising because i didnt understand all the machinations behind the move and i knew i wouldnt know when to sell. longer term it may still be a good investment. if i was going to sell it i'd wait until year end just to see what it does. if you follow the markets there is obviously a change occurring. it looks like interest rates are going to begin to rise a bit.  how that affects the price of gold i have no idea. im sure you can find many different opinions if you research it a bit and it may help you uncloud your thinking a bit.
   the problem with owning physical gold is where do you keep it? im sure you dont want to just stick it in your sock draw.

Tyler

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Re: Thinking of buying a gold coin
« Reply #9 on: May 11, 2014, 10:26:56 AM »
American Gold Eagle and Silver Eagles... They're always in demand at coin shops and online retailers. You'll get spot price upon selling... Don't get into numismatics unless you actually know what you're doing. Check out /r/silverbugs on reddit for alot of info if you're really looking to keep some PMs on the side.

+1.   Stick to American Eagles, Krugerrands, or other commonly traded coins.
« Last Edit: May 11, 2014, 11:48:51 AM by Tyler »

forward

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Re: Thinking of buying a gold coin
« Reply #10 on: May 12, 2014, 08:21:38 AM »
I have a co-worker who, for the last few months, has been withdrawing the max from the ATM at work every day and buying gold coins during his lunch hour.  He has a huge stash at his point.  He is convinced the financial shenanigans of the last ten years will come home to roost soon and gold will be the only way to survive the stagflation apocolypse.  I believe he stores his in his gun safe at home.

Are you just pulling our (collective) legs?  I am always entertained by characters like that.  I need more characters like this working where I work as long as they are not in positions with any power.

Sparafusile

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Re: Thinking of buying a gold coin
« Reply #11 on: May 12, 2014, 08:33:46 AM »
American Gold Eagle and Silver Eagles... They're always in demand at coin shops and online retailers. You'll get spot price upon selling... Don't get into numismatics unless you actually know what you're doing. Check out /r/silverbugs on reddit for alot of info if you're really looking to keep some PMs on the side.

+1.   Stick to American Eagles, Krugerrands, or other commonly traded coins.

+1 again. I'm thinking about buying a Krugerrand just because they are different. Maybe in 50 years they'll be worth something extra.

Loud Noises

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Re: Thinking of buying a gold coin
« Reply #12 on: May 12, 2014, 12:09:08 PM »
In my opinion, you should decide whether you are doing this because you want to get into investing into collectible coins, or whether you want to hold physical bullion outside of "the system" as insurance for your other assets.  I personally think they're very different.  Keep in mind that dabbling in collectibles of any category is usually very profitable for a small number of very knowledgeable people and a money siphon for the rest.

I include physical commodities as part of my portfolio, exactly in proportion with the risk I feel the rest of my portfolio is exposed to.  It gives me asset class diversification as well as jurisdictional diversification, as well as some degree of invisibility if needed.  Ideally, it's a bunch of boring stuff taking up space which will be passed on to heirs.

strider3700

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Re: Thinking of buying a gold coin
« Reply #13 on: May 12, 2014, 02:24:02 PM »
kruggerands are not not pure gold  they're 91% or something like that.    canadian maple leafs are 99.99% gold and frankly just cool to hold.

ritchie70

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Re: Thinking of buying a gold coin
« Reply #14 on: May 12, 2014, 03:42:47 PM »
kruggerands are not not pure gold  they're 91% or something like that.    canadian maple leafs are 99.99% gold and frankly just cool to hold.

I believe a 1-ounce Krugerrand contains one ounce of pure gold plus some other metal (copper?) for strength. The ounces refers to amount of gold, not total weight of the coin.

Sparafusile

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Re: Thinking of buying a gold coin
« Reply #15 on: May 12, 2014, 06:41:43 PM »
Correct, there is one troy ounce of gold in a krugerrand, but the coin itself weighs 1.09 troy ounces. The remainder of the weight is made up of copper which gives it a distinct hue compared to gold eagles, maple leaves, buffalos, philharmonics, libertads, etc.

Roland of Gilead

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Re: Thinking of buying a gold coin
« Reply #16 on: May 12, 2014, 07:07:24 PM »
Gold is a horrible investment.  Buy Twitter stock next time it hits $70 instead.

Clover

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Re: Thinking of buying a gold coin
« Reply #17 on: May 12, 2014, 07:36:41 PM »

Don't forget to compare the price of that safe deposit box to the ETF's expense ratio...

Yep.  With a stock you get dividends.  With a bond you get interest.  With metals you won't get income at all - just storage fees and the hope that someone will pay more for it at a later date.   

Roland of Gilead

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Re: Thinking of buying a gold coin
« Reply #18 on: May 12, 2014, 08:11:34 PM »
Yep.  With a stock you get dividends.  With a bond you get interest.  With metals you won't get income at all - just storage fees and the hope that someone will pay more for it at a later date.   

Except with a bond the interest is sometimes not enough to keep up with inflation thus technically you are not getting any income with said bond.  In the case of a bond having a yield that is less than inflation, gold *could* generate more income.

Clover

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Re: Thinking of buying a gold coin
« Reply #19 on: May 12, 2014, 08:43:31 PM »
The rate of inflation doesn't negate the fact that a bond is paying interest.  If anything, the rate of inflation is another negative for gold. 

 http://www.forbes.com/sites/danielfisher/2013/08/08/gold-not-much-of-a-hedge-for-anything-unless-youre-a-centurion/

Roland of Gilead

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Re: Thinking of buying a gold coin
« Reply #20 on: May 12, 2014, 08:58:29 PM »
The rate of inflation doesn't negate the fact that a bond is paying interest.  If anything, the rate of inflation is another negative for gold. 

 http://www.forbes.com/sites/danielfisher/2013/08/08/gold-not-much-of-a-hedge-for-anything-unless-youre-a-centurion/

I didn't say gold was always a hedge against inflation I said that a bond which doesn't pay enough interest to even keep up with inflation is not producing income.

Clover

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Re: Thinking of buying a gold coin
« Reply #21 on: May 12, 2014, 09:05:52 PM »


 I said that a bond which doesn't pay enough interest to even keep up with inflation is not producing income.

Tell that to the IRS.

Roland of Gilead

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Re: Thinking of buying a gold coin
« Reply #22 on: May 12, 2014, 10:05:47 PM »


 I said that a bond which doesn't pay enough interest to even keep up with inflation is not producing income.

Tell that to the IRS.

Well, the IRS also taxes gains in gold so I guess gold does produce income after all.

Clover

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Re: Thinking of buying a gold coin
« Reply #23 on: May 12, 2014, 10:17:42 PM »
Income, no.  Capital gains, possibly. 

Loud Noises

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Re: Thinking of buying a gold coin
« Reply #24 on: May 13, 2014, 07:04:05 AM »
Clover,

I think all the rest of us in this thread have gotten your point that you hate gold.  It is duly noted, thank you.

I include it among my assets because of reasons that aren't on your radar.  That's perfectly ok, we're all different.

Clover

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Re: Thinking of buying a gold coin
« Reply #25 on: May 13, 2014, 07:38:51 AM »
What?  I don't hate gold.  Roland was the one saying that gold was a horrible investment - not me.  I'm simply defending my position that gold doesn't produce income but bonds do.

thesinecure

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Re: Thinking of buying a gold coin
« Reply #26 on: May 13, 2014, 09:16:27 AM »
Dragonwalker -

Call Kathy Derbes, (877)-718-8777, or visit her at www.kdpm.com.  She is awesome, get in touch with her and you'll see.

I don't have her email handy, but she can tell you everything you would ever need or want to know about precious metals investing.


Now, for my personal opinion, I prefer to own American Eagles and generally the most recent issues as the premiums are generally lower.  I also prefer 1 oz. coins over the smaller incremental ounce coins, again due to premiums.  I also live in America so the Eagles are generally the most "liquid" if you were to decide to sell.  Maple Leafs are also pretty popular and very cool looking coins.

I have also owned some Perth 1 oz. bars, I like them because they come packaged and numbered, you know exactly what you've got and don't have to worry about condition unless you bang up the case or something.

Kruggerands are a fine choice, but as pointed out you do need to know how much gold is actually there so you pay the right price.

The St. Gaudens are nice, I'd like to own one but just have never pulled the trigger.  When you get into these and other of the older and/or turn of the century gold coins, you're starting to venture into the "numismatic" value of the coin as well, which is more akin to it's "collecting value" beyond just the gold component.  That's a whole other subject on these coins, grades and conditions matter, it's pretty subjective stuff probably for more advanced "collectors".  Most investors I know don't mess with those coins, but if you know what you're doing it's also a way to go.

Good luck with it!