Are Gold Coins a Good Investment?

Posted - July 19, 2023
are gold coins a good investment

Gold coins have been a preferred investment tool for generations. Collectors all over the world understand what gold bullion coins can add to their portfolios, and the intrinsic value offered by these products helps to counter the effects of inflation and economic insecurity. With so many different gold coins on the market, it can be tough for new investors to figure out if this type of non-correlated asset is good for their own investment goals and objectives. 

Are gold coins a good investment? Hero Bullion always has your back with the latest investment advice and bullion market analysis. Today, we’re taking a deep dive into the world of gold coins. If you’re wondering if gold coins are the right investment for your growing portfolio or precious metals IRA, you’ve come to the right place. 

Advantages of Investing in Gold Coins

There are a number of important advantages to investing in gold coins. After all, there’s got to be a reason why so many investment experts advocate gold, silver, and platinum to help diversify and expand your investing portfolio. Below, we’ll discuss the five main advantages of investing in gold coins: tangible asset status, hedging against inflation, diversification potential, liquidity, and historical value for collectors. Are gold coins a good investment? The five advantages of investing in gold coins listed below should help you make up your mind. 

Tangible and Portable Assets

Unlike stocks, ETFs, or fiat currency, gold is a tangible, portable asset. Investors in gold can hold the metal in their hands and use it to trade with other collectors. This makes it a unique asset class and is one reason why precious metals remain premier investment vehicles. Collectors who are unsure of the state of the current market tend to have a more favorable view of gold, which holds intrinsic value.

2023 1 oz South African Gold Krugerrand
1 oz Gold Krugerrand

There’s something to be said about holding your investment in your own hands. Even if you choose to store your gold in a bank or bullion dealer’s vault, holding onto a tangible asset gives you leverage – even in perilous economic conditions. Are gold coins a good investment because of their status as a tangible asset? Investing experts tend to think so. 

Potential Hedge Against Inflation 

Are gold coins a good investment to hedge against inflation? During times of economic insecurity, gold tends to perform well. The reason for this is pretty simple. Gold is considered a non-correlated asset. This asset class is largely unaffected by movements in the traditional investment market. Some non-correlated assets actually perform better when the market is struggling. This is the case with gold. Gold coins can help to hedge against inflation by providing your investment portfolio with assets that perform well – even when the rest of the market is on a bearish run. 

Diversification in Investment Portfolio

One law of investing is that diversification is almost always good. If your investment portfolio is filled with traditional assets like stocks and bonds, adding a bit of precious metal might help you to diversify. The philosophy behind diversification is extremely simple. If you have multiple asset types in your portfolio, then the failure of a single stock or market doesn’t sink the value of your total investment. Are gold coins a good investment for a diversified portfolio? We say yes. 

In other words, gold coins might retain value while your stocks continue to plummet. This can mean the difference between losing most of your portfolio or losing just a bit. 

Liquidity and Global Acceptance

Gold coins are always in high demand. This isn’t just a modern trend; people have wanted gold bullion coins for their collections for thousands of years. Even when the global market tanks or conflicts cause a decline in fiat currency value, gold has high liquidity. This means that you’ll almost always be able to find a buyer for your gold coins when you need some cash – provided that you’ve taken steps to keep your investment in excellent condition. Investors often ask us, “are gold coins a good investment for high liquidity?” Because demand for gold is always impressively high, the answer is yes! 

Historical Value and Collector’s Appeal

We briefly mentioned the longstanding history of intrinsic value behind gold bullion coins. Gold coins also have numismatic value. Investors don’t just value a gold coin for its pure gold content. Popular coins, such as the American Gold Eagle, often appreciate in total value over time, even when the spot price of gold decreases. The beautiful designs and limited mintage of the world’s most popular gold coins helps give them additional collector’s appeal. In terms of diversification, this is an excellent tool that helps make gold coins an exceptionally unique investment opportunity.

Gold Eagle
1 oz Type 2 American Gold Eagle

Are gold coins a good investment historically? Thousands of years of evidence suggests that they certainly are. 

Factors to Consider When Investing in Gold Coins

Are good coins a good investment for your portfolio? Smart investors consider a number of factors before they make any big investment decision. There are five main factors to consider when investing in gold coins. Below, we’ll cover the authenticity and purity of coins, market demand and liquidity, premiums and pricing considerations, storage arrangements, and transaction costs and taxes. 

Authenticity and Purity of Coins 

The authenticity of your gold coin is the first thing you need to consider before investing. Reputable dealers should ensure that every coin they sell is 100% authentic before it makes its way into your hands. Shopping around for a respected, transparent bullion dealer like Hero Bullion can protect you against the dangers of counterfeits. 

Most gold bullion coins are made with a high level of purity. American Gold Eagles are minted with a purity of .9167, while the Gold Britannias and Canadian Gold Maples use .9999 pure gold. Some investors actually prefer the lower purity provided by Gold Eagles, as it results in a sturdier coin. Are gold coins a good investment for pure bullion? Coins minted by government distributors generally contain exceptionally fine gold. 

Market Demand and Liquidity 

Market demand is an important factor in the investment value of gold coins. Are gold coins a good investment in the current market? If you plan on investing in gold for a long time, developing strategies for measuring market demand for gold coins is an important skill to learn. 

But are gold coins a good investment for their liquidity? Global demand for gold coins can wax and wane, so it’s important for investors to gauge the market before – and during – their investment journey. 

Premiums and Pricing Considerations 

Are gold coins a good investment for low budget collectors? Maybe not. Gold coins generally require high premiums over spot. A premium is an additional cost added to the price of a gold coin, bar, or round. Since gold coins are backed by sovereign government mints, they come with a high production cost. This cost is kicked back onto the consumer, meaning that these particular products have some of the highest premiums in the bullion market. 

Still, some investors consider the numismatic value of gold coins to be worth the inflated premiums. This is a decision you’ll have to make with your own investment goals and objectives in mind. 

Storage and Security Arrangements

If you plan on investing in gold coins, it’s important that you develop a clear strategy for safely storing your bullion products. For small collections, a home safe is probably sufficient. Some investors who spend tens of thousands of dollars on gold coins tend to prefer storing their coins at a mint or bank vault, which can definitely provide a bit of added security. Are gold coins a good investment if they aren’t stored properly? Absolutely not; there’s nothing worse than losing your investment because of theft, damage, or natural disaster. 

Transaction Costs and Taxes

Be sure to familiarize yourself with bullion tax laws in your state/country before investing in gold coins. Gold coins may be subject to additional taxes, depending both on the nature of your product and the length of time you hold the investment. Are gold coins a good investment, despite taxation and transaction costs? We generally think so, but this is one more decision you’ll have to make for yourself. 

Potential Risks and Drawbacks of Gold Coin Investments

Just like with any other investment, there are risks to putting your money on gold. In this section, we’ll briefly discuss five main drawbacks to investing in gold coins: price volatility, limited income generation, counterfeiting risks, storage and insurance costs, and market timing. 

Volatility and Price Fluctuations

Gold is a volatile market. The spot price of gold can change from day to day with little or no warning. Investors should understand this fact before investing in gold coins. Are gold coins a good investment, given the historical volatility of gold bullion? Many collectors think that gold is still worth collecting, given its role as a hedge against inflation. 

Limited Income Generation

Even during exceptionally profitable periods, gold doesn’t tend to outperform many traditional investment assets. The main role of gold in most investment portfolios is to counter inflation and add asset diversity. While you might profit over time from investing in gold, it does offer limited income generation compared to most other investment vehicles.

2023 1 oz Canadian Gold Maple Leaf Coin
1 oz Gold Canadian Maple

But are gold coins a good investment in the long term? Historical price charts suggest that gold can hold substantial value and offer appreciation over time. Despite its volatility, gold is still a non-correlated asset, making it a fantastic asset to hold during times of economic insecurity or instability. 

Counterfeiting and Fraud Risks

While doing business with respected, honest dealers can mitigate the risk of fraud, the counterfeiting industry is huge. If you’re planning on investing in several expensive gold coins, factor the risk of fraud into your investment plan. Take steps to protect yourself against counterfeits. Are gold coins a good investment, or do counterfeits make them a dangerous asset class? It’s important to familiarize yourself with methods of verifying the legitimacy of coins, such as assay cards and professional coin certification. These tools can protect you from the risk of falling victim to a scam. 

Storage and Insurance Costs

If you’re going to put your money into gold coins, consider the cost of storage as one necessary part of your investment. Storage costs might not be high for new collectors. If your gold coin investment isn’t worth a lot of money, just buying a basic (but secure) home safe is more than sufficient. Long-term investors with thousands of dollars in gold coins should consider paying extra for professional storage solutions.

Most homeowners’ insurance plans only cover a certain amount of gold or silver bullion. If your portfolio continues to grow, it’s important to invest in additional insurance from your provider to keep your coins safe and secure. Are gold coins a good investment, given the cost of storage and insurance? If you take steps to protect your coins, appreciation in numismatic value can help you remain profitable down the line. 

Market Timing and Economic Factors

Smart investors learn to time the market. You shouldn’t just ask, “are gold coins a good investment?” If you’re serious about planning for your financial future using precious metals, you need to figure out: are gold coins a good investment in today’s market

Expert Tips for Investing in Gold Coins

Before we set you loose to explore different investment-grade gold coins, we have four additional tips for investing in gold coins. Let’s take a look at dealer reputation, coin diversity, market evaluation, and financial expert consultation below. Are gold coins a good investment? The factors below should help you decide for yourself. 

Buy From Reputable Dealers or Sources

The reputation of your dealer is one of the most important factors in the value of your gold coin investment. Are gold coins a good investment? They can be if you buy from dealers with fair prices and safe shipping protocols. Hero Bullion works hard to be as transparent as possible in our pricing models, and our shipping policies are carefully constructed to keep your gold coins safe during transit. 

We even offer free shipping for orders over $149. Whether you choose to do business with us or with another dealer, be sure to research your seller’s reputation before buying gold coins from them. 

Diversify Across Different Coin Types

Investment diversification doesn’t stop at buying precious metals. As you collect gold coins, try to diversify your collection by buying from different mints around the world. Hero Bullion is excited to offer coins from all over, including European gold coins. Diversifying your gold portfolio helps ensure that you can meet investor demand when it comes time to sell. Are gold coins a good investment? Gold coins can be en exceptional investment vehicle if you choose to buy a diverse selection of bullion products.

Great Britain Gold Sovereign
Gold Sovereign Coin

Regularly Evaluate and Monitor the Market

Your gold coin investment doesn’t stop when you have precious metals in the vault. Continue to monitor the market. During times of economic security, the value of gold tends to decline. Smart investors know that this is a great time to buy the dip. And when gold’s price hits a peak and is unlikely to continue to climb, selling your gold coins might be wise. 

Every investor has their own strategy for when and how to buy gold coins. Are gold coins a good investment in the current market? This is the question you should be asking yourself throughout the full length of your investment. After all, research is king for gold investors! 

Consult with Financial Advisors if Needed

Hero Bullion is not a financial advisor. We try to equip our customers with all the knowledge they need to make informed investment decisions, but there’s no substitute for the help of a certified financial advisor. Questions like, “are gold coins a good investment” are excellent topics to discuss with your own financial advisor. A financial expert might even help you develop a nuanced, long-term investment strategy that fits your own investment objectives and time horizon

Final Thoughts: Are Gold Coins a Good Investment? 

Gold coins have been used to store value and wealth for thousands of years. Thanks to online precious metal dealers like Hero Bullion, it has never been easier to invest in gold coins. Smart investors can take advantage of internet resources to research, compare prices, and ask questions about their favorite gold coins. Are gold coins a good investment? 

Like we mentioned earlier in this guide, gold coins serve several important functions in the modern investment portfolio. Gold bullion can help you mitigate inflation, retain investment value during times of financial instability, and diversify your portfolio. Still, we always recommend that collectors do their own research before investing in gold coins. There are advantages and disadvantages to every investment vehicle, and gold coins are no exception. 

Hero Bullion is here to help you on your precious metal investment journey. Do you still have questions about investing in gold coins, bars, or rounds? Our dedicated customer support team is happy to assist with any comments or concerns you still might have. Please feel free to reach out any time for customized assistance .

About The Author

Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.