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Investors who prefer to own physical gold that they can see and touch have multiple ways to achieve that comfort level. But when stacking up the choices, bullion appears to have the edge over coins for investors who a..

17 Dec 2011

By G. Paul Avalos
Investors who prefer to own physical gold that they can see and touch have multiple ways to achieve that comfort level. But when stacking up the choices, bullion appears to have the edge over coins for investors who also think about selling as much as acquiring.

“Everyone should keep a little physical at hand,” said Adrian Ash, head of research with London-based BullionVault. “The problem with using coins or small bars for the bulk of your precious metals is threefold: cost, liquidity and security.”

Either way, it’s clear buyers who want physical gold have an array of purchase options to pick through. And these choices come at a time when buyers clamor for owning the real thing.

“We’re seeing an increase in demand by investors for gold ownership in all forms,” said William Rhind, managing director of ETF Securities US.

Gold coins, the smallest of the physical units, can be bought in some surprising venues, said New York City-based attorney David Ganz, a past president of the American Numismatic Association and an expert in the gold market over a period of decades.

“There are even machines at airports that have them,” Ganz said. “I was at an airport in South Africa where I saw them. Cape Town has vending machines where you can buy gold in about half-ounce increments.”

Many vending machines for gold have also popped up in Europe and Asia.

Yet the precise form of gold ownership might not matter as much as making sure to be an owner of the metal, Ganz opined.

“I’m a strong proponent of gold ownership, whether in bullion form, ingots, bars, rounds, an ounce or more, or coins,” Ganz said.

The channels of ownership have proliferated along with the remarkable jump in the price of precious metals such as gold and silver. This may seem something of a throwback to the past in an era of gold and silver ownership through financial instruments like ETFs.

“The advantage of coins, bars and bullion is they are physical,” Rhind said. “The disadvantage of an ETF is it is not tangible. You can’t see or touch or hold the gold.”

Experts also point to advantages and disadvantages in owning coins compared with bullion.

“They are very different products,” said Sharlene Dozois, a marketing director for Kitco Inc., a Canadian retailer in bullion and other precious metals products. “Coins are more of a collector’s item. Bullion is more of an investment product. But you can argue that the coins can grow in value with time.”

Overall, ownership of coins is a good idea, Ganz noted.

“Coins have a numismatic value,” Ganz said. “This is true of coins that are intended to be bullion. You know what is the mint, what is the condition, and there are people who collect them.”

Coins themselves are offered in multiple categories when it comes to investment goals. Some gold coins are more appropriate for numismatic-oriented investors.

“The public generally does not have the experience or the knowledge level to buy numismatic coins,” said Walt Breitinger, president of Breitinger & Sons, a commodities futures brokerage. “Investing in numismatic coins is a subspecialty that would require an enormous amount of homework to be undertaken to be done properly.”

Buying bulk gold coins, or purchasing bullion, is a different matter altogether.


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