A recent story broke about a man who died with more than $7 million worth of gold hidden in his home. There was so much of the precious metal, that it had to be taken out in a wheelbarrow. The bullion ranged from your standard American Eagles to “British sovereigns with Queen Victoria’s picture on them, gold maple leafs and a lot of Mexican coins” a local news station reported. The boxes were stacked two feet high and two and a half feet long, as this gold hoarder was sure to keep plenty of bullion on hand in case he needed it [for more gold news and analysis subscribe to our free newsletter].
Unfortunate circumstances never allowed him to use his bullion and that got us thinking, when is the right time to sell your bullion? Many investors prefer physical bullion over any other means of allocation, as they either do not trust financial instruments or they have a mistrust for the government. But the question still remains as to when your gold holdings turn from an investment to a hoarded object. After all, given the massive capital allocation it takes to buy gold it would be silly to simply let it sit for forever. Sure, there are reasons why you may never want to sell, but a fair amount of gold buyers get in the business for the attractive appreciation the metal offers.
It is important not to get too emotional with your physical investment, as there will invariably come a time when you will want to sell. You may see gold prices continually increase, discouraging you from selling, but going by that logic would there really ever be a time when you would be comfortable selling? Physical gold investing can turn a financial play into a darling that you have trouble parting with. At a certain point, you need to just bite the bullet and unload some of your bullion, otherwise you may have the tendency to hold onto it until you are no longer able to use it [see also Warning: John Hussman’s Model Shows the Worst Short Term S&P Risk-Reward in a Century].
For those who fear they may have an issue with hoarding physical gold holding, we outline three ETFs to help get past your addiction, as you may find it easier to sell a financial instrument than your long-held physical bullion.
- SPDR Gold Trust (GLD): The second largest ETF in the world, GLD is also one of the most popular. The fund tracks physical gold and trades hands more than 11.5 million times each day.
- Physical Swiss Gold Shares (SGOL): For physical investors who are afraid of another U.S. gold confiscation, this fund stores its physical bullion in a secure vault in Switzerland and has a market cap of more than $1.9 billion.
- Physical Asian Gold Shares (AGOL): Just in case you have an issue with both the U.S. and Switzerland, AGOL stores its physical bullion in a vault in Singapore, though this fund has not been as quick to catch on as the previous two.
Disclosure: No positions at time of writing.