Not quite a century ago FDR demanded that savers surrender their gold in return for paper dollars. Since that day the dollars have lost 96% of their buying power.

Are we in for more damage in greenbacks? You could hedge. You could own the gold that was outlawed in 1933 and is now legal again.

There is something to be said for precious metal as a repository of buying power. Also something to be said against: Gold is an erratic hedge against inflation, it has a negative yield (cost of storage) and over long stretches it does worse than stocks and real estate.

But maybe you want to go ahead, with 5% or 10% of your savings. Then consider these six ways to own bullion, directly or indirectly.

Costco is doing a lively business selling one-ounce gold bars and coins to its members. Recent price: A mere 2.7% above the value of the metal. Costco customers with a premium membership and a Costco charge card can recover most or all of the premium. Alas, quantities are limited.

You could buy an American Eagle, put it in your lingerie drawer for 20 years, then sell it to buy stuff. If the price of gold has doubled but the prices of everything else have also doubled in the meantime, you’re just breaking even in real terms. You will nonetheless owe capital gain taxes on your papery profit.

Disadvantages: two. The coin or bar might be lost or stolen. Also: Costco won’t buy it back. You’ll have to sell it to a bullion dealer, who will be justifiably suspicious and need to subject the piece to tests for integrity. Expect a 5% haircut from the dealer.

On sale, the tax on a long-term precious metals gain is at your ordinary income rate or 28%, whichever is lower, plus 3.8% if you pay the investment income surtax (at adjusted gross income over $250,000 on a joint return), plus state income tax. An upper-middle-income couple will lose maybe a third of the appreciation to the government.

A plethora of operators are offering gold-based IRAs. They solve the capital gain problem. They don’t spare you the frictional costs.

Goldco is one of the larger players; it claims $3 billion in sales since its 2006 founding. I was interested in buying 12........

© Forbes