Financial Q&A: Some price advice for investors about to join the gold rush

Submit your questions to Steve at: money@csmonitor.com

Q: What is the best way to purchase 100 percent gold coins, what kind are best, and from whom should one buy?

A.M.B., via e-mail

A: Gold-coin and gold-bullion dealers can be found in nearly every major city as well as on the Internet. All are happy to sell you gold, as will the US Mint (usmint.gov).

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Because gold is soft and can get damaged in handling, the closest you'll actually come to 24-karat pure gold is 99.99 percent pure. In this arena, the most popular choices are Canadian Maple Leafs and US Buffalos, says David McCarthy, senior numismatist at Kagin's, a coin-and-gold dealership in Tiburon, Calif. Each coin is minted by their respective governments.

The biggest selling coin, however, is the 22-karat American Eagle. Because it is less pure, it weighs slightly more than one ounce. But it still contains precisely one ounce of this increasingly popular metal.

Because all of these coins, as well as the South African Krugerrand, contain one ounce of gold, their price calculations are fairly easy. Other coins may have a lesser content or a lower karat weight, so you'll need a calculator whenever you try to peg it to the commonly traded price of one troy ounce.

After you find a seller, determine which coins you want and the price. This is a very volatile market, and Mr. McCarthy says that a quoted price is basically good for as long as you hold the coin in your hand. If you see a price you like, be prepared to act.

But more important, ask the dealer how much of a premium he'll assess. McCarthy says he typically charges a 2-to-3 percent markup over his cost of a coin. He's seen it 10 percent or more elsewhere. One ad, for example, listed a Gold Eagle at $1,025, or 11.8 percent more than the going rate of $916 per ounce as of March 7.

Gold prices are set twice daily by the London Bullion Market Association, at lbma.org.uk, or throughout the day by the Comex division of the New York Mercantile Exchange, at nymex.com.

Q: Can one own too many charitable annuities? It seems a wonderful way to donate to worthy causes and help them over the long term, especially since the funds (in my case) are directed to them. For me, the added quarterly or monthly income is welcome. I'm now considering this type of donation to a summer camp program for children. That would make it No. 4. Is that too many?

V.C., via e-mail

A: It's perfectly fine to have several gift annuities. In fact, it isn't uncommon for a single donor to have 20 or even 30 gift annuities at a time, says Johni Hays, an attorney with Stelter Co., a Des Moines-based firm that supports the charitable giving industry.

Briefly, a charitable gift annuity involves donating funds to a qualified charity of your choice – a college, hospital, or summer camp, for example. In return, donors will likely be entitled to a tax break for their gifts, and the charity will give them a predetermined amount of money each year. When a donor dies, the nonprofit keeps any of the original gift amount that remains.

Ms. Hays says these annuities have become popular because they provide higher rates of return than a typical stock dividend or savings account. And the repayment amount rises with your age.

The underlying question to ask might be more about how much of your total net worth is comprised of gift annuities. Because you no longer have access to the principal once it's given to a charity in exchange for a charitable gift annuity, Hays says that you'll want to be certain that you still have access to other funds in the event you might need them later on.

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