If you’ve decided to join the thousands of investors who have transformed their retirement accounts into gold-backed IRA plans, congratulations. The independence and privacy one can gain through a Gold IRA is unmatched by any other type of savings plan. However, there are certain investments that may not be right for you. Some of these considerations are applicable in your non-retirement or “personal” investment portfolio as well.
SHORT TERM INVESTOR
If you are a short-term (14 months or less) investor you probably want to avoid the American Eagle Proof coins because of the premium added to those coins by the U.S. Mint. Although American Eagle Proof coins have shown greater leverage and appreciation potential than bullion in the past, they are not recommended for short-term holds due to the volatility of gold and silver prices. If there is a fixed date on which you need to liquidate your investment, you do not want to have paid a large premium for the gold. The market may have been flat or even negative during your short holding period. Therefore, the premium will be difficult to recoup during short-term investments.
BULLION COIN VS BAR
Gold and silver bullion coins cost more than their bullion bar counterparts. This is due to the cost of production and the relatively small size of the coinage. However, there is no extra benefit or guaranteed profit on the back end if you buy bullion coins.
The most common, circulated bullion coins are the American Eagle, South African Krugerrand and the Canadian Maple Leaf. There are bullion coins that have been minted by dozens of countries in recent times.
Bullion bars, on the other hand, typically have a lower premium over spot than coins. If you have concerns about the U.S. Government readopting a confiscation policy, however, bullion bars may not be your #1 choice as bar-type gold was historically a target of the U.S. government.
LONG TERM INVESTOR
Gold and silver bullion bars are often avoided by long-term holders, as they are more closely subjected to the volatility of spot prices. This can diminish or eliminate your ROI. And, as mentioned above, the bullion bars may again become the target of governmental confiscation while specific types of coins may be exempted.
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