What is a good size distribution for buying gold?
Diversification is an important aspect of precious metals investing.  Therefore I would suggest diversifying in a number of different ways: "Look at a broader diversification. Something like: For physical gold, I'd look at a mix of gold coins and bullion. Study the pricing model for coins -- you'll probably find that the spreads on small coins make them too expensive. There are a few levels of risk with storing in a vault -- the practical risk is that your government will close banks in the event of a panic, and your money will be inaccessible. You need to balance that risk with the risk to your personal security that comes with having lots of gold or cash in your home. My recommendation is to avoid wasting time on the ""Mad Max"" scenarios. If the world economy collapses into utter ruin, we're all screwed. A few gold coins won't do much for you." "If the ""crash"" you worry about is a dissolution of the euro, then the main thing you should concern yourself with is liquidity.  For that, purchase the most highly liquid gold ETF or futures contract, whichever is more appropriate for the total amount of money involved.  Any other way and you will lose a significant chunk of your assets to transaction costs. If, on the other hand, the ""crash"" you were concerned about were the total collapse of the world economy, and people around the world abandon all paper currencies and resort to barter as a method of trade, then I can see buying several small pieces being a rational strategy, although then I would also question whether you were a sane individual." You are really tangling up two questions here: Q1: Given I fear a dissolution of the Euro, is buying physical gold a good response and if so, how much should I buy? I see you separately asked about real estate, and cash, and perhaps other things.  Perhaps it would be better to just say: what is the right asset allocation, rather than asking about every thing individually, which will get you partial and perhaps contradictory answers.  The short answer, knowing very little about your case, is that some moderate amount of gold (maybe 5-10%, at most 25%) could be a counterbalance to other assets. If you're concerned about government and market stability, you might like Harry Browne's Permanent Portfolio, which has equal parts stocks, bonds, cash, and gold. Q2: If I want to buy physical gold, what size should I get? One-ounce bullion (about 10 x 10 x 5mm, 30g) is a reasonably small physical size and a reasonable monetary granularity: about $1700 today. I think buying $50 pieces of gold is pointless: However much you want to have in physical gold, buy that many ounces.
"As proposed: Buy 100 oz of gold at $1240 spot = -$124,000 Sell 1 Aug 2014 Future for $1256 = $125,600 Profit $1,600 Alternative Risk-Free Investment: 1 year CD @ 1% would earn $1240 on $124,000 investment. Rate from ads on www.bankrate.com ""Real"" Profit All you are really being paid for this trade is the difference between the  profit $1,600 and the opportunity for $1240 in risk free earnings.  That's only $360 or around 0.3%/year.   Pitfalls of trying to do this: Many retail futures brokers are set up for speculative traders and do not want to deal with customers selling contracts against delivery, or buying for delivery. If you are a trader you have to keep margin money on deposit.  This can be a T-note at some brokerages, but currently T-notes pay almost 0%.   If the price of gold rises and you are short a future in gold, then you need to deposit more margin money.  If gold went back up to $1500/oz, that could be $24,400.  If you need to borrow this money, the interest will eat into a very slim profit margin over the risk free rate.   Since you can't deliver, the trades have to be reversed.  Although futures trades have cheap commissions ~$5/trade, the bid/ask spread, even at 1 grid, is not so minimal.  Also there is often noisy jitter in the price.  The spot market in physical gold may have a higher bid/ask spread. You might be able to eliminate some of these issues by trading as a hedger or for delivery.  Good luck finding a broker to let you do this... but the issue here for gold is that you'd need to trade in depository receipts for gold that is acceptable for delivery, instead of trading physical gold.  To deliver physical gold it would likely have to be tested and certified, which costs money. By the time you've researched this, you'll either discover some more costs associated with it or could have spent your time making more money elsewhere." Very interesting. I would like to expand beyond just precious metals and stocks, but I am not ready just to jump in just yet (I am a relatively young investor, but have been playing around with stocks for 4 years on and off). The problem I often find is that the stock market is often too overvalued to play Ben Graham type strategy/ PE/B, so I would like to expand my knowledge of investing so I can invest in any market and still find value. After reading Jim Rogers, I was really interested in commodities as an alternative to stocks, but I like to play really conservative (generally). Thank you for your insight. If you don't mind, I would like to add you as a friend, since you seem quite above average in the strategy department. Gold's valuation is so stratospheric right now that I wonder if negative numbers (as in, you should short it) are acceptable in the short run.  In the long run I'd say the answer is zero.  The problem with gold is that its only major fundamental value is for making jewelry and the vast majority is just being hoarded in ways that can only be justified by the Greater Fool Theory.  In the long run gold shouldn't return more than inflation because a pile of gold creates no new wealth like the capital that stocks are a claim on and doesn't allow others to create new wealth like money lent via bonds.  It's also not an important and increasingly scarce resource for wealth creation in the global economy like oil and other more useful commodities are. I've halfway-thought about taking a short position in gold, though I haven't taken any position, short or long, in gold for the following reasons: Straight up short-selling of a gold ETF is too risky for me, given its potential for unlimited losses. Some other short strategy like an inverse ETF or put options is also risky, though less so, and ties up a lot of capital.  While I strongly believe such an investment would be profitable, I think the things that will likely rise when the flight-to-safety is over and gold comes back to Earth (mainly stocks, especially in the more beaten-down sectors of the economy) will be equally profitable with less risk than taking one of these positions in gold. No. Bonds don't work like that.  When you buy a bond, you buy pieces of notional at a price. 1K denotes the amount you would get back at maturity (+ coupons), So the smallest piece size would be 1k.  I've even seen 50K plus but thats for more illiquid products.... It's extremely divisible. The smallest unit is 0.00000001 BTC. This smallest unit is called a satoshi, after the pseudonym of the inventor of Bitcoin.  I suggested to my friends and family back in mid 2015 that they invest a little of their money. Nobody did. Back then I bought 21 BTC at around $600 USD/BTC for a total value of slightly less than $13k USD. Currently it's worth over $90k. I can't tell you how many of them say they wish they had listened to me. Then when I tell them they should still buy they think it's too late. It's not. I would track it using a regular asset account.  The same way I would track the value of a house, a car, or any other personal asset. ETA: If you want automatic tracking, you could set it up as a stock portfolio holding shares of the GLD ETF.  One share of GLD represents 1/10 ounce of gold.  So, if you have 5 ounces of gold, you would set that up in Quicken as 50 shares of GLD. "Ok, I think what you're really asking is ""how can I benefit from a collapse in the price of gold?""  :-) And that's easy. (The hard part's making that kind of call with money on the line...) The ETF GLD is entirely physical gold sitting in a bank vault. In New York, I believe. You could simply sell it short.  Alternatively, you could buy a put option on it. Even more risky, you could sell a (naked) call option on it. i.e. you receive the option premium up front, and if it expires worthless you keep the money. Of course, if gold goes up, you're on the hook. (Don't do this.)   (the ""Don't do this"" was added by Chris W. Rea. I agree that selling naked options is best avoided, but I'm not going to tell you what to do. What I should have done was make clear that your potential losses are unlimited when selling naked calls. For example, if you sold a single GLD naked call, and gold went to shoot to $1,000,000/oz, you'd be on the hook for around $10,000,000. An unrealistic example, perhaps, but one that's worth pondering to grasp the risk you'd be exposing yourself to with selling naked calls. -- Patches) Alternative ETFs that work the same, holding physical gold, are IAU and SGOL. With those the gold is stored in London and Switzerland, respectively, if I remember right.  Gold peaked around $1900 and is now back down to the $1500s. So, is the run over, and it's all downhill from here? Or is it a simple retracement, gathering strength to push past $2000? I have no idea.  And I make no recommendations." There are several problems with your reasoning: if I buy one share of GOOGLE now for $830, I could have $860 within the end of tonight -- totally possible and maybe even likely. You can do the same thing with 1,000,000 shares of google, and it's just as likely to go down as go up.   if I were to invest $1,000.00 in gold to have $1,000.00 worth of gold, it's no different than keeping $1,000.00 in cash It's VERY different.  Gold can be just as volatile as stocks, so it certainly is different as just keeping it in cash. Benefits of a larger portfolio: It seems that you're interested in an asset which you can hold that would go up when the gold price went down. It seems like a good place to start would be an index fund, which invests in the general stock market. When the gold market falls, this would mainly affect gold mining companies. These do not make up a sizable portion of any index fund, which is invested broadly in the market. Unfortunately, in order to act on this, you would also have to believe that the stock market was a good investment.   To test this theory, I looked at an ETF index fund which tracks the S&P 500, and compared it to an ETF which invests in gold.  I found that the daily price movements of the stock market were positively correlated with the price of gold. This result was statistically significant.  The weekly price movements of the stock market were also correlated with the price of gold. This result was also statistically significant.  When the holding period was stretched to one month, there was still a positive relationship between the stock market's price moves and the price of gold. This result was not statistically significant.  When the holding period was stretched to one year, there was a negative relationship between the price changes in the stock market and the price of gold.  This result was not statistically significant, either. Gold is classified as a collectible so the gain rates are as follows: So you'd report a gain of $100 or $1,000 , depending on which coin you sold. "In addition to the possibility of buying gold ETFs or tradable certificates, there are also firms specializing in providing ""bank accounts"" of sorts which are denominated in units of weight of precious metal. While these usually charge some fees, they do meet your criteria of being able to buy and sell precious metals without needing to store them yourself; also, these fees are likely lower than similar storage arranged by yourself. Depending on the specifics, they may also make buying small amounts practical (buying small amounts of physical precious metals usually comes with a large mark-up over the spot price, sometimes to the tune of a 50% or so immediate loss if you buy and then immediately sell). Do note that, as pointed out by John Bensin, buying gold gets you an amount of metal, the local currency value of which will vary over time, sometimes wildly, so it is not the same thing as depositing the original amount of money in a bank account. Since 2006, the price of an ounce (about 31.1 grams) of gold has gone from under $500 US to over $1800 US to under $1100 US. Few other investment classes are anywhere near this volatile. If you are interested in this type of service, you might want to check out BitGold (not the same thing at all as Bitcoin) or GoldMoney. (I am not affiliated with either.) Make sure to do your research thoroughly as these may or may not be covered by the same regulations as regular banks, particularly if you choose a company based outside of or a storage location outside of your own country." ETF's are great products for investing in GOLD. Depending on where you are there are also leveraged products such as CFD's (Contracts For Difference) which may be more suitable for your budget. I would stick with the big CFD providers as they offer very liquid products with tight spreads. Some CFD providers are MarketMakers whilst others provide DMA products. Futures contracts are great leveraged products but can be very volatile and like any leveraged product (such as some ETF's and most CFD's), you must be aware of the risks involved in controlling such a large position for such a small outlay. There also ETN's (Exchange Traded Notes) which are debt products issued by banks (or an underwriter), but these are subject to fees when the note matures. You will also find pooled (unallocated to physical bullion) certificates sold through many gold institutions although you will often pay a small premium for their services (some are very attractive, others have a markup worse than the example of your gold coin). (Note from JoeT - CFDs are not authorized for trading in the US) Gold is traded on the London stock exchange (LSE) and the New York stock exchange (NYSE) under various separate asset tickers, mainly denominated in sterling and US dollars respectively.  These stocks will reflect FX changes very quickly.  If you sold LSE gold and foreign exchanged your sterling to dollars to buy NYSE gold you would almost certainly lose on the spreads upon selling, FX'ing and re-buying. In short, the same asset doesn't exist in multiple currencies.  It may have the same International Securities Identification Number (ISIN), but it can trade with different Stock Exchange Daily Official List (SEDOL) identifiers, reflecting different currencies and/or exchanges, each carrying a different price at any one time. Redditors! Buy gold and demand that the financial institution who sold it deliver it. When they try to buy enough gold to cover their short the price will explode, free money.  Disclaimer: you all have to do it or it won't work For reporting purposes, I would treat the purchase and sale of gold like a purchase and sale of a stock. The place to do so is Schedule D. (And if it's the wrong form, but you reported it, there is might not be a penalty, whereas there is a penalty for NOT reporting.) The long term gain would be at capital gains rates. The short term gain would be at ordinary income rates. And if you have two coins bought at two different times, you get to choose which one to report (as long as you report the OTHER one when you sell the second coin).