U.S. mints pure gold–but is it a good investment?
And unlike stocks and bonds, you don't get paid to wait for gold prices to rise through dividends or interest income.
"It doesn't provide any cash flow," Shambo says. As a result, gold probably does not belong in a retiree's portfolio, he says.
If you do own gold, it probably should not exceed 5 to 10 percent of your total portfolio, financial planners say. Remember that no matter how much gold you own, it is a single asset.
Also keep in mind that there are ways to hedge against inflation without owning gold. John Markese, president of the American Association of Individual Investors, notes that investments in real estate, stocks, inflation-protected bonds, and natural-resources funds all provide investors with an inflation hedge.
Moreover, even if you want exposure to gold, there are other, more efficient ways for small investors to gain exposure to the precious metal than buying physical coins.
Investors who purchase physical gold will have to store and insure their inventory – possibly for years or decades. This means you will most likely incur annual storage costs. That's something you don't have to worry about with paper assets like stocks and bonds.
What's more, small investors might not be able to get the best pricing when they trade a handful of coins at a time.
"Buying or selling in small quantities – one gold coin here and there to rebalance your portfolio – can be quite inefficient," said Cuggino.
An alternative for small investors is to invest in a gold mutual fund, which invests in shares of gold-mining companies and sometimes physical gold. Or, you can invest in a regular mutual fund that treats gold as a core holding, like the Permanent Portfolio, which buys and holds physical gold.
Of course, some experts like Markese think that investors don't need to own gold at all. "Whenever gold runs up, people get interested in owning it," he said. "But it's proven to be a high-risk, highly volatile asset that's performed poorly over long periods of time."
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