Which are better for a gold bullion investment: krugerrands or eagles? - why?

Question

Note: this is only for 10% of my portfolio

Look, I happen to believe that our government can't stop spending and that, as a result, we're either headed for inflation and/or a constantly devaluing $ - so, long term, I think a certain % in gold is reasonable.

Answer 1

exactly the same - bullion trading depends on the value (amount) of the gold being traded

Answer 2

You have a reasonable "oh crap" allocation of 10% in gold, and it's your investment to live with :). Before discussing coins, you may wish to consider ETF gold shares, such as GLD. The benefit is you are not paying the added $20 - $35 an ounce just to hold the physical gold. This can add up over time and make a real difference in your returns.

The difference in price between most coins is small in proportion to the price of the underlying gold, so don't worry too much. But whatever premium you pay for the numismatic value, that detracts from how much gold you can buy. I think selling, you won't get back the original difference in price.

Krugerrands have less of a "numismatic" premium than eagles, so you are paying about $10 less for the same ounce of gold. Around WWII, gold was confiscated by the government. Ostensibly, Eagles would be less likely to be confiscated, but even if they were, the government should pay you the notional value of them, which is $50 - printed on the coin.

In contrast to the other poster, I calculate an annual return of 5.4% over the last 50 years (see chart below)

Answer 3

The ban is done on krugerrands so it does not matter. A pound of meat is a pound of meat. An oz of gold is an oz of gold. Who's face or image you print on it is of no relevance unless your a collector.

Having a hand full of gold is not a bad idea but its not an investment in my personal view. I know every one is touting gold right now (one of many reasons I don't like it) in fact as soon as every one is talking about it and you hear it advertised on the radio etc, That's my first clue to get out and move on.

That said, I have other uses for gold. I tend to look more on it as an insurance policy. If the world comes to an end and the 4 horse men of the Apocalypse are parading down my main street, that might be a handy thing to have to start life over with. Otherwise I have no use for gold right now. There are other things and places that I can put my time and energy to prepare for the 4 horsemen. There are other ways of protecting value than just gold.

you may also wish to add some mining stocks to your "gold" holdings including coal. I bet you didn't see that one coming. 28 of the united states have coal. There is more coal in the US (counting in BTUs) than (again in BTUs) oil in the middle east. When that oil is under the conflict of war .....I'll stop there, you seem inteligent enough to figure it out. So get a bucket of coal or better still some mining stock.

But if we are just talking gold? Gold is gold. If you don't like the image on the front melt it down and make it something else.

I came back for quick edit

Yes browncoat has a very valid point. If you factor in all the debt of the united states, and who now owns that debt, and the debt of the private sector and the housing bubble that may or may not be happening, HE HAS A VERY VALID POINT. I think thats enough said on that.

Answer 4

I would advise neither. If you really want to invest in gold, try gold Liberties (they have additional collector value and are slightly more stable in price than bullion).

However, given your two choices, I would pick Eagles simply because they are less likely to be confiscated during national economic hardship (like the Great Depression under FDR), although all non-collector bullion was confiscated then.

Over the last 50 years, gold has averaged approximately 3%. Over the last 50 years inflation has averaged approximately 4%. There are mutual funds available that for the last 50 years have averaged approximately 12%. (But mutual funds should be only a long-term investment; short-term, more risk is involved.)

Answer 5

You are wise to include physical gold in your portfolio. I would simply buy the one with the smallest premium over spot. The American Eagle could be more popular some day when the general investing public decides to get into the market, probably at much higher prices.

Answer 6

Nobody buys coins anymore.

If you want to invest in GOLD buy Gold Mine Stocks or the Gold itself (Digitally)

Answer 7

Have you noticed all those ads on TV trying to get you to buy gold?

If they are advertising it, then it must not be selling and if it isn't selling then it must not a good buy. If it were a good investment, they wouldn't be trying to sell it.

Put your money into a serious investment.