Gold has long been used as a basis for currency all over the world, and is a popular and durable form of wealth whether in the form of a Krugerrand or a brick. Gold mines still in operation around the world offer investors a wealth of opportunities, as does collecting gold coins, ingots, bars or trinkets. However, as with anything, there are pros and cons to collecting and investing in precious metals such as gold, all of which need to be carefully assessed before purchasing.
Con: Currency Rates
Gold is traded in American dollars, according to the "London Telegraph." Therefore, the value of a gold piece is determined by the strength or weakness of the American dollar and exchange rates.
Con: Law of Supply and Demand
Gold coins in plentiful supply don't increase in value. Rare gold coins offer the best return in investment, but many consumers investing in gold pieces can't afford rare or antique pieces. The price of any gold coin or piece is directly related to the demand for such pieces. Large supplies of such pieces don't show high increase in premiums on return.
Con: Cost
Gold is expensive for many consumers. The cost of gold bullion averages about $1,200, according to GoldPrice.org, while Krugerrand gold coins may average between $1,100 and $1,250. American Eagle and Buffalo gold coins average about $1,200. However, gold pieces such as the American (also known as the Double Eagle) are $20. A rare Double Eagle may be valued at approximately $15,000, according to Coinsite.com.
Pro: Legal Tender
In most countries around the world, bullion gold coins are considered legal tender, value of which is dependent on their gold content, purity and age of the piece. Coins and bars may be purchased through private parties or investors in private and secure transactions.
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