Physical gold
Rules, protection and tax below are for United States.
What it is
Metal in your hand or in a vault with your name on it. Unlike a gold fund, nothing stands between you and the gold: no fund, no custodian's balance sheet, no exchange. That is why people who distrust the financial system buy it, and why it has kept value through wars, defaults and currency collapses.
It earns nothing. A century of gold prices roughly tracks inflation, with decades of going nowhere between the spikes. Owning it costs money: a dealer margin when you buy and sell, and storage and insurance if you keep any real amount.
As a small insurance holding it has a respectable history. As a plan for growing money it has none.
How it works
- You buy coins or bars from a dealer at the spot price plus a margin, or through a bank accumulation plan in small monthly amounts.
- You store it yourself, in a bank box, or in an allocated vault where specific bars are yours.
- There is no income; the value is the metal price on the day.
- You sell back to a dealer at spot minus a margin, and some countries tax the gain.
The honest pros and cons
For
- No counterparty: it is yours, wherever the banks are.
- Has held buying power over very long periods and through crises.
- Widely recognised and sellable almost anywhere.
Against
- Earns nothing and costs money to hold.
- Dealer margins of 2 to 5 percent each way, more for small coins.
- Long stretches of flat or falling prices; the 1980 peak took decades to regain.
- Theft, loss and storage risk if kept at home.
Getting it in United States
not researchedWherever you are
- Decide the size as insurance, not as growth; a small percentage of total savings is the usual range.
- Buy recognised coins or bars from a reputable dealer and compare the premium over spot.
- Store it properly and keep the purchase records for the day you sell.
Go deeper
Also called
bullion, gold coins, Krugerrands, sovereigns, gold accumulation plan
Often confused with
- Savings account: Money kept at a bank that pays interest and can be withdrawn at any time.
- Commodity ETF: An exchange traded fund tracking a raw material such as gold or oil.