When the world seems to be going to hell in a handbasket, investors look for something solid to sink their teeth—and their money—into. That’s when the goldbug often bites.

The price of gold recently hovered around $1,300 an ounce, far below the roughly $1,900 seen in 2011 but not far off from this year’s high of about $1,350 in early September.

“For some, the goldbug bites and they want to put everything into gold,” says Craig Hill, a CFP in Punta Gorda, Fla., and advisor for precious metal investments. “Then there is the other extreme where people look at gold and precious metals as having no place in a modern portfolio. I’m somewhere in the middle.”

Hill, the CEO of Hill & Vaughn Precious Metals (and founder of Gold Planner Inc.), recalls a woman who came to him to fix the mess she got into with a gold investment. She put all of her $250,000 in savings into gold because she thought it was safe. Unfortunately, she dealt with an unscrupulous dealer and quickly lost $95,000 to his excessive fees. Hill says he is still trying to recoup some of her money.

Some investors opt for gold-centric funds, while others want to own the real thing. According to Hill, physical gold is one of those market niches rife with scam artists and it’s bound to become more so if political turmoil increases and gold becomes more attractive to investors seeking shelter.

If a client is reacting to fear of a volatile market, says Hill, he or she may be irrational and do silly things. This is where financial advisors can help, though they’re not always well-schooled in the asset class.

“Many financial advisors do not know much about investing in precious metals, so they shy away from them,” says Hill, who adds he learned about the niche market of precious metals—both coins and bars—shortly before the financial crisis of 2008-2009 when his parents wanted to invest in gold. That’s when he started studying the market.

There are two types of precious metal coins available for investment: numismatic coins, with a collector value above that of the metal, and bullion coins based on the value of the metal.

Investors pay a premium of a percentage of the sale, which is split between the wholesaler and broker and should be in the 1% to 3% range. Some unscrupulous dealers charge far more, and advisors need to determine that premium before buying for a client.

If clients don’t want to keep the metals on their premises, advisors need to educate them about storage costs.

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