by Jim Cone
The thrill of this way of diversified investing is that you
are actually investing using one of the oldest ways in the world-gold and
silver coins. The thing is that gold for certain is one of the stablest mediums in the world. Imagine that you and Croesus
the king of Lydia
who lived from 595 BC and died 546 BC actually share something, a desire to
store wealth through acquiring gold coins. Actually I will be talking more
about coins then bullion but it is equally as financially stable to collect but
doesn't have the numismatic value of coins. So what we are looking at is an
investment in a product that you can hold in your hand, has stable value and
can be a hedge against severe market or especially economic downturns. Cool
huh? Can you imagine getting the same thrill from a beautiful and expensive
gold piece and then hold a notice of the purchase of stock.
Although ones value may at that moment be
more valuable than the other-for sheer awe nothing beats the feel of a gold
coin. Speaking of awe at the sight of a gold coin,, my
wife and I visited Charlestown, SC
last month and were privileged to visit the restoration of the CSS Hunley. For those who don't know, the CSS Hunley was the first recorded combat submarine that
actually sunk a wooden hulled ship off Charleston
Harbor during the war between the states. One of the recovered artifacts was a
gold $20.00 piece that the owner had had at the battle of Shiloh.
He had been shot in the hip the bullet hitting the coin in his pocket. The coin
saved his life but was bent. The owner had a jeweler write on the coin the date
and circumstances of the battle that stated that the coin saved his life.. We saw this coin 143 years later just as shiny as new but
with the marks from the bullet. What do you think that a coin like that was
worth? Priceless? It certainly was then to its owner . Or could you even place a price on it?
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Now for anyone to find the idea of gold coin collecting as a
means of diversified investing , archaic and very old
fashioned let me further relate events that occurred in the 1980s, not so long
ago. During the four years of President Carter one of the favorite hedges to
inflation and the general instability of the economy at that time was gold coins. The coins most easily
available in large lots was the Krugerrand
from South Africa.
I am sure that you are aware that during the height of the inflation that
occurred in the Carter years, the severe rationing of gas from OPEC during that
time and the economic downturn, the choice of the Smart Money Crowd was Krugerrands. They were easily available of high quality (.917 purity) and the government permitted their purchase.
Although the American Government did not allow private
ownership of what was termed "bullion" but did allow ownership of
foreign coins this soon became an all-time favorite of many professional men
and women.. The Krugerrand
was first minted in about 1967 and soon fulfilled the need for a stable and
easily portable one ounce coin with a purity factor of .917. Its sort of
amusing to me that Paul Kruger's likeness was on a coin which was probably made
from the gold discovered at Witwatersrand in South
Africa and for which he once said that the
discovery " will cause our land to be soaked in
blood." How right he was. But gold has always had that reputation.
A careful check of the spot market for gold on the day this
article was written shows that the bid was $662.83 and the
ask was $665.63. To give you some thoughts about the stability and
usefulness as a hedge against economic fears-this comment came from a precious
metal trader in Europe, "if we can get above the resistance to an increase
in gold prices from 667.00 it should easily run up to the $700.00s in
price." And a comment from a bank in Europe suggested that recently precious
metals fell somewhat due to the quarter-end squaring by funds (that invest
heavily in metals) after the metals failed to break above the resistance
levels. Further the situation surrounding the incident of the seizures of the
British Navy personnel by Iran
continued to fuel safe-haven interests and supply concerns for crude oil should
the situation escalate." For what it is worth most analysts are bullish on
the near-term effects of the bid and ask prices of gold and take the longer
view that gold remains the place for the safe-haven of money during troubled
times. And I might add a worthy asset to your diversified investment portfolio.
Check back if you will to this website because I am going to
continue to read and write about gold, silver, platinum and palladium as havens
for safe money during troubled times. A final thought or two.
Ask any family in Europe whose grandparents had to flee
from invading armies what is the one thing that always has worth and I suspect
they would say, gold. Paper money is easily de-valuated and debased by printing
without pause but gold?
About the Author:
Jim Cone is a retired RN and Hospital Administrator and has
an interest in investing basics. You can visit him at:
Diversified Investor.com
Return to: The Silver Report
