How much, and what types of Gold should be in your investment portfolio for diversification? If you speak to ten metals dealers, you will get ten different opinions of how much and what you should purchase. We say that the answers depend on your individual asset allocation strategy.
Many investment experts suggest a prudent 10%-20% of an investor's assets should be in tangible assets. Remember, Gold is the only asset that generally moves in the opposite direction of other asset classes such as U.S. Stocks, Treasury Bills, and Bonds. Therefore, it is Negatively Correlated to other assets in your portfolio and serves as a balancing diversifier for your other investments.
Next, one must consider the controversial topic of the Gold Confiscation Act of 1933 (click to view). Many investors new to the metals market are surprised to learn that President Franklin D. Roosevelt issued Executive Order 6102 requiring U.S. citizens to turn their privately held gold bullion into the U.S. government in 1933 to strengthen the U.S. Dollar and pay off U.S. debt. In section 2B, the order excluded "gold coins having recognized value to collectors of rare and unusual coins" from confiscation. For this reason, it can be argued that old U.S. Gold coins and antique foreign coins minted prior to 1933 (pre-1933) are considered numismatic as opposed to modern bullion coins and bars. El Dorado always suggests that buyers purchase pre-1933 coins over modern bullion.
Our first product suggestion is pre-1933 Foreign (Euro) Gold coins which strike the best balance between value and collectability. In some cases, they can be even less expensive on a per-Ounce basis than some modern bullion coins. The coins featured by El Dorado represent the most liquid and internationally recognized examples. Customer favorites include Swiss and French 20 Francs and British Sovereigns. These coins are fractionally-sized and are perfect choice for barter or trade.
Next, we suggest purchasing Pre-1933 U.S Gold coins. Since the majority of U.S. gold coins were melted during the 1933 Confiscation, the surviving coins are much scarcer than many other pre-1933 gold coins. These coins cost a little more than foreign (Euro) gold coins, but many investors believe they are worth the additional premium. The most common denominations (sizes) that were struck were the $10 Eagles which contain about 1/2 Ounce net gold and the $20 Double Eagles which contain roughly 1 Ounce of net gold. The earlier coins that were minted between 1849 and 1907 are referred to as the "Liberty" series and the coins minted between 1907 and 1933 were referred to as the "St. Gaudens and Indian" series.
Finally, we offer Modern Bullion coins from US Mints such as the Gold Eagle, Gold Buffalo, and Silver Eagle. Silver Eagles are only available in a 1 Troy Ounce size. The gold coins are available from the mint in 1 Oz, 1/2 Oz., 1/4 Oz., and 1/10 Oz. sizes, but they become extremely expensive on a per-Ounce basis as the fractional size becomes smaller.