As fun, exciting, and adventurous as it can be, living in Central America as an expat comes with its share of challenges. In addition to navigating new cultures, languages, and laws, there is the issue of managing your finances in a region that is notorious for high inflation, security issues, and financial fraud.
One strategy that stands to add a lot of value to the lives and finances of expats in the region, is investing in gold coins, not bars, COINS! (more on this later).
In this article, we take a quick look at why this is considered a savvy move for expats in the region, and how you can go about investing in gold coins yourself.
Diversification: The Golden Rule
First up, diversification. This is key for investments of all kinds, to better hedge against uncertainties that are dime a dozen in Central America. Gold offers such diversification, being insulated from equity, debt, and real estate markets, and holding on to its value even in the worst of times.
In fact, gold prices traditionally move inversely to stock markets and currencies, often making it the perfect hedge.
This characteristic makes it particularly appealing to expats who deal with the worst aspects of currency fluctuations and economic instabilities.
Preference For Coins Over Bars
Now, as promised, why choose coins over bars? For starters, coins offer several advantages, such as being more accessible, smaller, and thus more affordable than large bars. It is also easy to store, transport, and safeguard them, as opposed to bars, which can be quite cumbersome.
Coins are also easier to sell than bars, allowing investors to liquidate a portion of their holdings, without having to sell an entire bar at once.
Finally, gold coins are more expensive than gold bars, partly owing to the factors discussed above, and also at times because of their collectability.
Like American Eagle, Canadian Maple Leaf, or Australian Kangaroo are valued for more than just their gold, factoring in their aesthetic appeal and rarity, making them much better investments than pure bars.
Hedge Against Inflation
If you are a working professional who is living in any of the Central American countries, you risk losing your savings to inflation or currency depreciation, if they’re stored in local currencies and bank accounts. Gold, however, is known for its ability to retain its value even during the worst economic periods in history.
Thus, there are few better hedges against inflation and currency depreciation, making it a prudent choice for expats to hold their savings.
This holds even for those who aren’t expats and are currently living in the United States. Inflation is an ever-present threat to your savings, especially with the US government going deeper and deeper into debt, and there being no political will to address this.
There are also growing concerns regarding de-dollarization across the globe, which could significantly impact dollar-denominated savings. All of this makes gold a highly sought-after commodity to be used as a store of value.
Portability: Wealth On The Move
Let’s talk about portability. Gold coins are compact, easy to store, and move, qualities that are particularly important for those who might not stay in one place for long. Unlike large assets or property, gold coins can travel with you, providing a form of wealth that’s as mobile as the expat lifestyle.
Whether you’re moving from one country to another or heading back home, having a portion of your wealth in gold coins can simplify the process.
Of course, this isn’t always that simple, and most cases impose restrictions on the amount of gold you can bring in. You will either have to declare in customs and pay a tax on them when entering a country, or wear them as jewelry, but this too only within the permissible limits.
A Bit Pricier, But Worth It
Yes, gold coins are more expensive on a per-unit basis when compared to bars, but as mentioned above, this premium is well deserved, as they are more affordable and easier to transport, store, and safeguard, making them the perfect choice for small investors and salaried professionals.
Bars are never practical for small investors and pose a considerable risk given how difficult they are to hide effectively and transport from one place to another. They are mostly for traders, wholesalers, jewelry designers, and big institutional investors who have the necessary measures to handle them.
Wrapping It Up
With their ability to diversify investment portfolios, protect against inflation, and offer a high degree of portability, gold coins make a compelling case for themselves. Demand for gold and coins as the medium of choice will only continue to grow in an increasingly inflationary and uncertain global economy.
Whether you’re a seasoned investor or just looking to protect your financial future, consider how these shiny assets might fit into your broader financial strategy.
