That depends on your goals. We typically answer that question with one of our own, “Why are you interested in buying gold?” If your goal is simply to hedge financial uncertainly and/or capitalize on price movement, then the contemporary bullion coins just mentioned will serve your purposes. On the other hand, those approaching gold more as a safety-net and/or asset-preservation tool often see value in the added privacy and liquidity advantages associated with the ‘historic bullion’ coin category – coins minted before 1933 – that still trade at modest premiums to the underlying spot price of gold, track the gold price, and enjoy strong liquidity internationally.

Gold owners are a group of people we have come to know very well in our nearly 50 years in the precious metals business. Contrary to the less than flattering picture sometimes painted by the mainstream press, the people we have helped become gold owners are among those we rely upon most in our daily lives – our physicians and dentists, nurses and teachers, plumbers, carpenters, and building contractors, business owners and executives, attorneys, engineers and university professors (to name a few.) In other words, gold ownership is pretty much a Main Street endeavor. A recent Gallup poll found that 16% of American investors rated gold as the best investment. By comparison, 21% of those polled rated stocks and mutual funds as the best investment. A recent Bankrate survey produced similar results, with 14% choosing gold as the best place to park funds for more than ten years. 

Traditionally, wealthy, aristocratic European and Asian families have kept a substantial percentage of their assets in gold as a protective factor. However, the long-term economic picture for the United States has changed enormously over the past several years. As a result, that same philosophy has taken hold in the United States, particularly among those interested in preserving their wealth both for themselves and for their families from one generation to the next. In recent years, we have helped many family trusts diversify with gold coins and bullion at the advice of their portfolio managers. Few people know that the United States is the third-largest consumer market of gold after China and India.

Gold’s baseline essential quality is its role as the only primary asset that is not someone else’s liability. That separates gold from the majority of capital assets, which in fact, do rely on another’s ability to pay, like bonds and bank savings, or the performance of the management, or some other delimiting factor, as is the case with stocks. The first chapter of The ABCs of Gold Investing ends with this: “No matter what happens in this country, with the dollar, with the stock and bond markets, the gold owner will find a friend in the yellow metal — something to rely upon when the chips are down. In gold, investors will find a vehicle to protect their wealth. Gold is bedrock.” For a helpful review of gold’s role in preserving assets under various worst-case economic scenarios, we recommend spending some time with BlackSwansYellowGold, linked below.

If you were to take a cross-section of advisors who recommend gold as part of an investment portfolio, you would find their preferred level of diversification would range between 5% and 30%. Of course, how high you go within that range depends upon how concerned you are about the current economic, financial, and political situation. Analyst Michael Fitzsimmons offered an interesting take on how much gold is enough in a recent Seeking Alpha editorial, “Assuming a well-diversified portfolio (which does include cash for emergencies),” he says, “my belief is that middle-class investors (net worth under $1 million), should own at least 5-10% in gold. I also believe that as an American investor’s net worth climbs, the higher that percentage should be because, in my opinion, he or she simply has more to lose by a falling US$. For instance, an investor with a net worth of $2-5 million might have a 15-20% exposure to gold; $10 million, perhaps a 30-40% exposure.”

First and most important: Check the Better Business Bureau’s profile on a company before doing business with it. Check not only its rating but the number of complaints lodged against it and how those complaints were handled. A consistent record of complaints can be a warning sign even if it has managed to keep an A+ rating. Every first-time investor should take this simple and straightforward step, but it is amazing how many ignore it. Second, choose a gold firm that has a solid track record. Ten years in business is good; fifteen years or more is even better. Third, choose a firm committed to keeping you informed, i.e., one that is interested in answering your questions now and keeping you informed in the future. If a salesperson gives you short shrift or hits you with a heavy sales pitch, take it as a warning.

Futures and options contracts are generally considered among the most speculative arenas in the investment marketplace. The investor’s exposure to the market is leveraged, and the moves both up and down are greatly exaggerated. Something like 9 out of 10 investors who enter the futures/options market come away losers. For someone looking to hedge their portfolio against economic and financial risk, this is a poor substitute for owning the metal itself.

Since, for one reason or another, it is difficult to take delivery from any of the ETFs, they are generally viewed as a price bet and not actual ownership of the metal. Most gold investors want possession of their gold because they are buying it as a hedge against an economic, financial, or political disaster. When disaster strikes, it does not do you much good to have your gold stored in some distant facility by a third party. For this reason, over the past couple of years, the trend even with hedge fund operators has been away from the ETFs. (For further reading, please see our special report. Should I buy a gold ETF?)

 If you want to protect yourself against inflation, deflation, stock market weakness, and potential currency problems — in other words, if you want to hedge financial uncertainties, there is only one portfolio item that will serve you in all seasons and under most circumstances — gold coins and bullion. Make sure you do your homework on the company with which you choose to do business and ensure that the gold ownership vehicle you choose truly reflects your goals and aspirations.