One area where gold may be a good investment is for numismatic purposes. Collecting various gold coins in various conditions and ages can be fun, rewarding and make an excellent hobby that can be passed on to heirs. Additionally, gold coins such as American Gold Eagles, South African Krugerrands, Canadian Maple Leafs and Chinese Pandas tend to hold their value more than the bullion will – simply because it has the numismatic value of collection, scarcity, and condition.
Finally, you may already “own” gold in your portfolio if you hold a broad based index such as a total stock market index fund or ETF. The reason I say you already “own” the gold is by owning broad index funds you’re already investing in companies that mine for and produce the precious metal. While you don’t technically own the asset; generally when the price of gold increases so does the stock of the companies that mine it.
There are even ETFs and index funds that hold commodities in general. While not specific to gold they hold gold, silver, timber and other commodities for additional asset allocation correlated differently to the market.
Other than starting a hobby or becoming a serious numismatist, there generally isn’t a need to own gold in order to achieve adequate diversification for potential long term portfolio success.
This article was republished with permission from Financial Ducks in a Row.