Top 10 Gold Coin Blunders

1. Limit your gold coin holdings to no more than 30% of your entire investments.

Rationale: Diversity is always a good idea, as it allows your portfolio to shield itself from losses in particular types of assets. However, it is not necessary to have more than 30% of your holdings in gold, in fact, investments in gold coins constituting only 20-30% of your total holdings should be enough to balance any losses in other assets.

2. Don't buy your gold coins from dealers that accept credit card.

Rationale: Because a gold coin dealer has to pay the credit card merchant company 2.5 - 3% of every transaction, they must recover this cost through higher gold coin prices. A savvy investor will avoid this transaction fee by dealing solely with bank wire or check.

3. Don't let offshore companies hold your coins or bars.

Rationale: There's good reason the United States Government prohibits anyone form holding your gold coins in their name. By going offshore, companies lose this prohibition and you lose your protection should the company fail.

4. Always have a formal written account agreement.

Rationale: Gold coins constitute a formal investment, which should be treated like any other significant financial transaction. Make certain the company you deal with sets forth in writing all the rules and protections governing your account. Any company that is not willing to act professionally by using such an account agreement is probably not your best choice.

5. Insist the company charts the value of any gold coin you're considering purchasing for a sufficiently long time.

Rationale: The true value of a gold coin is measured by how it has stood up to fluctuations over a long period of time. A gold company should be able to give you a 20-year chart so you can evaluate the highs as well as lows.

6. Stay away from companies with celebrity endorsements.

Rationale: Just as with the credit card transaction fees described above, the amount a company must pay for a celebrity advertisement has to be recovered, which means its sale prices will be higher. Instead look for conservative gold exchanges offering the same coins and can afford to keep their prices low.

7. Don't fall into the borrowing money or leveraging traps on gold coins.

Rationale: While you may be tempted by a dealer to acquire more gold coins than you can currently afford by taking advantage of the dealer's borrowing/leveraging options, these work in the favor of the gold coin dealers, not you. Avoid paying interest or storage fees by purchasing all your gold coins with funds you already have.

8. Be aware of the 10-day shipping rule when buying gold coins.

Rationale: There's a law requiring gold coins to be shipped within 10 days of good funds. Any company that takes longer than 10 days to ship your gold coins may not be your safest option.

9. Don't purchase gold coins from auctions or non-licensed dealers.

Rationale: Auctions and other non-licensed gold coin sellers simply do not provide the protections of a licensed dealer. When you buy gold coins from anyone other than a licensed dealer, you run the risk of paying too much or receiving gold coins whose quality is less than described.

10. Don't purchase commemoratives or exclusive-offer gold coins.

Rationale: Despite the attractiveness of commemorative gold coins, they often come with a premium and many times are harder to resell.