Why Own Gold?

(This is a Guest Post)

A Stable Asset

When economies and governments quaver and fall, the value of precious metals rises dramatically. For hundreds of years, during periods of economic instability, investors have fled volatile financial markets in search of stable, “quality” assets such as gold, silver, and palladium.

In recent years, as the price of gold and other tangible assets has soared in response to political upheavals, radical weather events, and turbulent financial markets, a growing number of American investors have sought to preserve the value of their capital by purchasing gold coins, gold bullion, gold futures, and gold-based Exchange Traded Funds. More importantly, as the purchasing power of many currencies has generally declined in past three decades, the real value of gold has remained remarkably stable for hundreds of years.

Unlike stocks, bonds, mutual funds, and other traditional market-bound assets, the value of gold is “independent,” that is, the value of your gold coins is not dependent upon an issuer’s promise to pay. A corporation can declare bankruptcy, and a government can collapse, but gold and other tangible assets are intrinsically valuable. In other words, gold will never fold.

Investing in Gold Coins

Many investors find the notion of solid gold bars romantic, but gold bars are often expensive and difficult to liquidate. A gold bar cannot be broken down into discrete units of value; a single 1-kg might be worth upwards of $60,000, but it cannot be divided into six $10,000 pieces. On the other hand, gold coins can be purchased and sold individually.

Specially-minted collectible coins, also known as numismatic coins, have proven to be a stable, high-performing tangible-asset investment. According to the CU 3000 Index, the standard of numismatic and rare coin performance, collectible coins have outperformed the Dow Jones Industrial Average by a factoring of 2:1 since 1970. Between 1981 and 1989, the CU 3000 Rare Coin Index soared an astounding 660%.

The price of gold bullion coins depends on the fine gold content, the method of production, and the country of origin. Most bullion coins are denominated in “troy ounces” and coins are typically issued in one of four sizes: 1 oz, 1/2 oz, 1/4 oz, and 1/10  oz. The supply of a each numismatic coin is limited, but the demand for rare precious metal coins continues to grow. Collectors look for coins that are rare in mint condition or those that have never been circulated publicly.

A particularly popular choice among gold connoisseurs and collectors is the American Gold Eagle coin, issued by the United States Mint since 1986. American Eagle coins meet rigorous standards of purity and refinement, and each coin is backed by the United States Mint and the Federal Treasury.

For more information on American Gold Eagle Coins and other gold-based investments, contact Lear Capital online or call toll free 800-576-9355.