Gold and Silver coins as an investment?

Frank99

I don't currently own any Gold,Silver or Platinum coins and wondered if they should form part of the portfolio, thinking of the double whammy of precious metal and collectability.
I notice the gold price is very high and i wonder where the legit places to buy these coins from.
I know holding metal won't yield and dividends but it also won't incur fund management fees, anybody have experience of getting some of these coins and if so where from The Royal Mint or Hattons etc?  

Another_Saver

No.
1. Plenty of threads with opinions on metal as an investment.
2. You only make a profit by deciding when to sell. So you have to market time on the way in and out, and you have to shop around for the best deal, and not get ripped off or robbed or lose them.

3. No standard pricing for coins.
4. No FSCS protection.
5. If you get burgled or have a fire you could lose it all - ask your home insurance provider.

csgohan4

I would put money into an ETC to be honest, those management fees may seem alot, but so will the cost of insuring them, keeping them safe and getting ripped off

Some on here do buy gold coins, bars, krugerands e.t.c your choice

jsmith9

If you are investing in the standard meaning of the word then ETC is a good start. If you are also looking at a backstop in case the whole world goes down, then you won't be able to buy your tin of baked beans with an ETC certificate but you just might with a Krugerrand

bowlhead99

Frank99 said:

 thinking of the double whammy of precious metal and collectability. 

Really 'collectability' is pure speculation. Super rare things can be worth whatever a desperate collector is willing to pay, while the vast majority of things that seem like you might enjoy collecting them have terrible financial value or can fall from grace after you've overpaid - beanie babies, comic books, pogs, cabbage patch kids, Diana memorabilia, signed trading cards, stamps, the list is endless. As numismatists will tell you, the typical gold or silver coin is not rare and is worth whatever the metal is worth, but is always sold to you for more than the metal is worth and is typically only able to be sold back to a dealer for less than the metal is worth, because that's how professional dealers make their money.

So you are only getting 'single whammy' in terms of financial value. Some like to look at a coin collection because it's shiny or the years or countries stamped on the coin bring them happy memories. In that sense it is like art. It comes with insurance cost and security practicalities.

For the latter: a seven year old boy randomly mentions to his teenage window cleaner that old Mr Smith down the road has a cool collection of big gold coins on his mantelpiece. The cleaner jokes about it to his older brother for a laugh about plotting a life of crime. The older brother tells his weed dealer when he comes up short for what he owes, but the dealer is not much of a criminal and tells him to pissoff. But later down the pub relays the information about the £5000 in coins on the mantelpiece to someone, in exchange for half a pint of lager. A week later, a masked intruder breaks in to nick the coins. Unfortunately the coins have been moved out of the way. The intruder has the brainwave that he will go upstairs with a baseball bat and ask the sleeping Mr Smith where he keeps his coins and jewellery. After the old man opens the safe, the thug tells him not to contact the police and in a show of bravado gives him a tap with the bat. A bit too hard, and Mr Smith is left with a brain injury.

I notice the gold price is very high and i wonder where the legit places to buy these coins from.

Have you considered that it would be better to buy gold coins when their price is not very high. Just a thought.

There are plenty of legit dealers. The question does come up every few weeks. Example thread Re: Gold (for diversification and balance) (moneysavingexpert.com)

wondered if they should form part of the portfolio, 

I know holding metal won't yield and dividends but it also won't incur fund management fees

a) This assumes you already have a diverse 'portfolio' of income paying, capital appreciating assets helping to grow or maintain your wealth. If you do not, get that sorted before you start buying a pile of coins.

b) Generally only a small part, as precious metal doesn't pay income or grow while it costs money to store and insure, and physical coins have a wide spread of several percent between buying and selling prices even in larger denominations. While they may go up in value over the very long term it's not unexpected for them to fall in value by half over the space of a few years (as has been seen in the past) and may not keep their real terms value even over a period of a decade or longer.

c) Management fees of a fraction of a percent each year are a lot smaller than typical yields or long term capital growth rates on a diversified portfolio of actual financial assets, so it's a false economy to think that you should buy (e.g.) a Britannia coin when you could buy a global stockmarket index fund because the coin doesn't incur management fees. The 3-4% spread between purchase price of buying the coin today and what a dealer would pay to buy back the coin tomorrow would pay for two decades of management fee on the global index tracker

d) Following from (c), both the index and the coin could fall in value by over 50% in the space of a couple of years as has been seen within the last couple of decades from looking at price charts and factsheets; over the long term the index fund's value would significantly outgrow the coin's value because the fund represents equity ownership of companies that grow with the global economy while the coin is a piece of metal in a box.

nick1234

I buy 1oz Gold coins, one of the few ways to protect yourself against inflation and weakening currency.  The price is linked to the spot price of Gold which is published live so you know what your coin is worth.  I bought Gold at £800 per oz its now 1.4k oz, but i dont buy for gains but the defensive nature 

Another_Saver

nick1234 said:

I buy 1oz Gold coins, one of the few ways to protect yourself against inflation and weakening currency.  The price is linked to the spot price of Gold which is published live so you know what your coin is worth.  I bought Gold at £800 per oz its now 1.4k oz, but i dont buy for gains but the defensive nature 

Historically a global equity index fund does that better.

letsbetfair

Holding gold safely will cost you some money - whether it's home security and insurance or paying someone else to hold it securely. As mentioned above, holding a lot of gold in your home might also make it a target.
Gold dealers will make a margin on buying and selling. See e.g. this one that's mentioned on MSE https://www.hattongardenmetals.com/sell-scrap-gold.aspx
That doesn't mean you shouldn't hold gold, but do bear the costs of buying/owning/selling in mind.

barnstar2077

Some people think that gold will fair better than the stock market during a crisis, but if it ever got to the point where the financial system has broken down then you won't be swapping gold for beans, you will be exchanging shotgun shells, clean water etc.

It would still be worth a bit of a punt if gold was cheap at the moment, and if you already had a good variety of investments in your portfolio.