As mentioned, commission is one. Unless you are buying coins and KNOW WHAT YOU ARE DOING and are buying from a reputable dealer that sells for a thin margin, it is difficult to come out on top.
Secondly is the storage. Be they coins or bullion, you have to keep it somewhere and that means either a safe deposit box or a safe in the house. That is an added expense that can kill any gains.
They pay no dividends or interest, so you are relying strictly on price movement.
They can and are used as a storage of value. One good analogy I heard was that in the 1850's, a $20.00 gold piece would buy you a finely tailored suit. Today, that same gold piece will buy you a finely tailored suit.
I had a client who bought heavily into coins in '06 and if he sold at the right time, he would have done well. If he didn't? Not so much, not to mention, as I indicated above, he had a lot of money tied up in an asset that provided no dividends.
There is nothing wrong with having a portion of your portfolio in metals, but how much depends on your risk tolerance, and ALL commodities are an inherently risky asset class for the average investor.
(Edit here; This is a possible reason why SheilaT above, has never had an advisor suggest it. As an asset class, it is likely outside her risk tolerance and they knew it, as they should if they have done their jobs properly.)
Would you also consider placing a portion of your portfolio in Feeder Cattle? Oil? Corn?....etc.
As mentioned by others, a Gold or other precious metal ETF is a somewhat safer and certainly more liquid facsimile.
Gold ETF's;
http://etfdb.com/type/commodity/precious-metals/gold-etf/
Other precious metal ETF's;
http://etfdb.com/etfdb-category/precious-metals/
CAUTION! On the tables at those links above, where you see the letters "ETN", that stands for "Exchange Traded NOTE". These are debt securities. One should make sure they understand COMPLETELY these securities before investing, as they act differently and can be priced contrarily to an Exchange Traded Fund.
= new reply since forum marked as read
