investing in gold coins pros and cons

investing in Gold Coins Pros and Cons Explained

Responsible for shaping civilizations, gold has always been a token of wealth and economic strength. Recently, however, we are facing uncertainties around inflation, geopolitical tensions, and shifting currencies. Some might be asking themselves, “Is now the right time for investing in gold coins: pros and cons?”

If we look at recent data, it shows that the interest in gold is not slowing down, at least in Saudi Arabia, the demand for gold jewelry has surged by 35%, despite the global demand falling. Bullion and gold coin demand has risen 16%, hitting a ten-year high at 4.4 tonnes. This is proof that the interest in gold is still strong. We will take a look at the real pros and cons of investing in gold coins, especially in relation to the Saudi market.

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Why Gold Coins Could Be the Smart Move Now

Tangible value- not just paper

This asset differs from other digital assets, such as ETFs, stocks, or bonds, in that it is a physical metal you can handle. Ownership provides a level of security, especially during more uncertain times when banks or traditional cash might fail.

Deep Cultural and Emotional Roots in Saudi Arabia

In Saudi Arabia, gold is both a financial asset and a symbol of heritage, to be used in weddings, celebrations, and gifting. “Gold is deeply embedded in Saudi traditions”, according to Saxo Bank. Even during spikes in price, the demand remains making it is stable asset which could remain liquid and sought after long after a global sell-off.

Strong Local Demand Could Support Prices

The first quarter of 2025 saw gold bullion and coins rise by 16%, which is the highest level in a decade. This constant demand for gold could help ease sharp drops in price, meaning it has a more stable hold than globally traded assets.

A Hedge Against Economic Pressure

Coins offer a physical method of hedging, without the need to rely on brokers or digital platforms. In April of 2025, gold surpassed $3,500/oz, which is a record high and is driven by inflationary concerns, geopolitical tensions, and central bank buying.

Diversification That Could Be Stable

Should your equities, bonds, or property take a financial hit, having your savings in a different class, i.e., physical gold, could protect you. It acts as a layer of defence that complements digital and paper investments.

The Pros of Investing in Gold Coins

The old-timer continues to shine, offering several practical advantages, especially when times are uncertain, as 2025 is proving to be. We will cover the key benefits of gold as well as what makes it attractive to new and seasoned investors alike. We will be looking at it in context and through the lens of a Saudi investor, too, as the cultural relevance and market demand strengthens its case further.

  • Hedge Against Inflation and Economic Uncertainty

The “safe haven” investment, termed because it isn’t affected by inflation, currency devaluation, or global financial instability, in the same way digital and paper assets are. In early 2025, gold prices hit a record high, exceeding $3500 per ounce. This price was driven by rising inflation and geopolitical concerns. Gold acts as a layer of protection when paper and digital assets lose value.

  • Tangible ownership and Full Control

A physical product that you can own means there is no third party, no online platform dependency, and no exposure to counterparty risk. This may help some feel secure when markets are volatile or when there is a lack of trust in financial institutions.

  • Portfolio Diversification

Portfolio diversification is all about helping to balance risk, and adding gold can be a great method of doing so. It is not affected by inflation and moves independently of equities and bonds.

  • Strong Liquidity, Especially for recognised Coins

Well-known coins such as the Saudi Sovereign, Krugerrand, or American Eagle have established trust and are easily sold both locally and internationally. In Saudi Arabia, the high demand for physical gold means that there are great resale opportunities, even better than in other markets.

  • Flexible Entry Point and Potability

Simply put, you don’t need to buy a bar to get started; you can start off small. Coins come in varying weights, allowing you to set your investment pace. Their size and portability make them easy to store and transport discreetly.

  • Cultural and Emotional Value

In Saudi Arabia, gold holds sentimental, traditional, and symbolic value, in addition to being a financial asset. This increases demand for the precious metal and makes it more resilient an as investment.

Summary Table: Pros of Investing in Gold Coins

Benefit Reason
Inflation Hedge Could hold value during economic downturns and rising prices.
Full Ownership Direct control over your assets, no intermediaries
Diversification Could reduce overall portfolio risk
Liquidity Easily resold, especially in Saudi Arabia, and with well-known coins
Flexible entry point Accessible to all budgets, coins are available in varying weights.
Cultural Relevance Traditional and Symbolic value add to demand.

The Cons of Investing in Gold Coins

While it would be amazing if investing in gold were all pros, sadly, that is not the case there are a few cons we must discuss. We are going to cover some areas to watch out for, if you are considering investing in gold.

  • No Passive Income

Sadly, gold does not pay dividends, interest, or rent. The only way you make a profit is from price appreciation when you sell. This would be a major drawback if you are looking for cash flow.

  • Extra Costs: Premiums, Storage, and Security 
  • Premiums: Buying coins will cost you 6-10% more than if you were buying the gold, this is due to minting and collectablilty.
  • Storage & insurance: No Matter if you store your gold coins at home or in a value, you will be facing recurring costs. At home you need insurance and security like a safe, which still carries risk. A vault charges arounf 0.3 to 2% per annum.
  • Price Volatility and Timing Risk

The price of gold and spike and dip rapidly, buying it while it is in a peak could leave you underwater for years, the timing is absolutely crucial.

  • Lower Liquidity and Selling Hassles.

Trading shares is definitely an easier process; for gold, you need to find a trusted dealer, negotiate prices, and transport the coins securely. There’s a significant spread for some coins; dealers may only pay 7-10% less than the purchase price, which would shrink your profits.

  1. Taxation on Capital Gains

The tax is higher on physical gold, as it is treated as a collectible in many systems. The tax can be as high as 28% compared to the 15-20% for stocks.

  • Risk of Fraud and Counterfeits

The gold market is a magnet for counterfeit coins and rife with sellers looking to prey on unsuspecting buyers. It is of the utmost importance that coins are authenticated through certified dealers or assayers, but this takes time and affects the cost.

Cons Personal impact
No Passive income No dividends or rent; your return relies entirely on price growth.
High Costs Added Expense from premiums and ongoing storage or insurance fees.
Volatility Risk Prices can drop quickly: Mistiming a purchase may result in losses.
Selling Hassles Lower liquidity; reselling can be time-consuming and less profitable.
Higher Taxes Often taxed at a higher capital gains rate, reducing net return.
Fraud & Counterfeit Risk of counterfeit coins and needing verification can add costs and reduce trust in the product.

It is important to consider the cons as part of the convestation on investing in gold coins: pros and cons. Next we will be looking at gold coins in relation to the Saudi market specifically.

Gold Coin Investment in the Saudi Context

Gold, while pretty to look at and a financial asset, holds more weight in Saudi Arabia due to its cultural importance. 2024 saw the rise in demand for both coins and bars rise by 9% in the Kingdom, which means 15.4 tonnes. This shows us that gold remains a relevant investment in Saudi Arabia even if other markets are uncertain.

An advantage for Saudi investors is the VAT exemption on investment-grade gold, which means 99% or more pure gold. Making gold a more affordable investment than other physical assets, to benefit from this tax exemption, it is important to buy from a certified dealer to meet both legal standards and avoid buying counterfeit coins.

Recognised coins like the Krugerrand or regional gold sovereigns are easier to sell than a gold bar, offering liquidity. Jeddah and Riyadh have local gold markets offering opportunities for resale, especially if the coins are documented and have serial numbers.

Even though gold is a hot commodity in Saudi Arabia, it still follows global trends, but returns can still be affected by price swings. It is important to keep in mind the dealer’s cut, known as the dealer’s spread. In high-demand areas, you would not be likely to sell your gold for the same price you bought it for. It is wise to factor in a 5-10% reduction from the purchase price for the dealer’s spread.

Despite the few drawbacks to gold in the Saudi gold Market, it remains a favourable environment for gold coin investors. The VAT exemptions, strong resale culture, established trading hub, and the cultural connection to gold make it a good choice despite the few cons. It is worth your time to do your homework to avoid counterfeits and dodgy deals.

More topics can be read on the Gamma blog

Should You Add Gold Coins to Your Portfolio?

As gold offers security, acting as a hedge against market uncertainties, it has cultural relevance. For Saudi investors, gold offers a good diversification method, or at least a method to consider, especially if you are able to hold on to the gold for a while.

Think of gold as a static method of retaining wealth; it does not generate an income. But rather is dependent on price fluctuations. The spread may cut into your profits. It is unwise to put your entire investment into gold coin, but you should rather use it as part of a diverse portfolio.

While Gamma Assets does not offer gold, their focus is on long-term, goal-based investing, which applies to multiple asset types. With real estate options starting from 500 SAR, they help Saudis and foreign investors make smart choices. Whether investing in property or wanting to learn more from its expansive range of reading materials, Gamma Assets has you covered.

FAQ

 

What are the advantages of investing in gold coins within the Saudi market?


Gold coins in the Saudi Market, if they are 9% or more pure, are VAT-exempt, making them cost-effective. With strong local demand and cultural significance, the resale value and investors’ support make gold advantageous in the Saudi market.

Are there any specific regulations or taxes on gold coin investments in Saudi Arabia?

Yes, 99% pure gold coins are VAT-exempt if acquired through a licensed dealer. Ensuring both tax compliance and protection from counterfeit coins.

 

How does the liquidity of gold coins compare to other forms of gold investments in the Kingdom?

 

Gold coins are generally easier to sell than bars, especially if they are recognised. These recognized coins, such as Krugerrands and gold Sovereigns, are widely accepted in the Saudi souqs. These offer a more flexible option for investors.

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