Why Invest in Gold Coins?
There are a lot of things that you can invest your money in. Of course, the main reason you're investing is to make sure that inflation doesn't destroy your money. Make no mistake about it; inflation will destroy your money if you just leave your money in the bank.
Think about all those hours it took to earn that money, think about all the sacrifices to earn that money, wouldn't it be tragic for all that hard work and time to just go up in smoke because you didn't invest your money?
This is precisely the dilemma many savers find themselves in. You have to invest your money. Otherwise, you're just wasting your time. Otherwise, you're going to face an uncertain retirement.
The reality is that the amount of money you save today will not buy much in the future. You have to invest. Savings and investment go hand in hand. You cannot just save; you have to invest that money.
As I mentioned earlier, there are a lot of investment options out there. However, just like with many things in life, some options are better than others. Other options are really not options at all, and they are that horrible. You have to be very clear as to your investment choices.
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While it is very easy to get caught up in the hype regarding stock investments, there are a lot of dangers to the stock market. You have to understand that the stock market goes up and down. It is not a sure bet, but besides being averse to risk, the big danger people should consider with stocks is that the market might go through a down cycle right at the time you need to pull out your money.
It's not a problem when the market is going through a bull run when you need to cash out. You take out more money than you put in. You are a winner in that particular situation. However, what if the market was going through a tough time right at the time you retire, you get sick, or there's some sort of emergency, and you need to pull out your money? This is the big downside to stocks.
I am not of course, advising that you don't invest in the stock market. However, you need to balance that with an investment that you can cash out immediately and that would preserve the value of your money. There are really only very few investment options that have these features.
The best investment option that has this feature is gold. Gold retains its value. Inflation picks up, gold price picks up. The stock market goes down, gold prices spikes up. The economy tanks, gold skyrockets. That's how effective gold is in protecting your wealth. It is also very effective in protecting you against inflation.
With that said, you need to understand that there are many different gold investment options out there. You can invest in gold mining stocks, Gold Exchange Traded Funds (ETFs), and you can also buy gold in physical form. However, if you are looking to invest in gold but also you want to invest in the collector value of gold, you might want to consider gold coins. Here are just some of the reasons why you should invest in gold coins:
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1) Shelter your savings against currency devaluation
Why invest in gold coins? The list is endless. However, one of the top reasons given by many gold coin collectors is that the dollar is losing value.
If you whip out a value chart of the U.S. dollar and look back over the past sixty years and thirty years, you would see a downward progression. The U.S. dollar is worthless and less. There is no way around it. Why? The U.S. dollar is no longer backed by gold. There's really nothing of value backing up that green piece of paper called the U.S. dollar.
The only thing that props up the value of the U.S. dollar is the legal tender printed on that piece of paper. If you are a government and you can print that statement on a piece of paper, you magically transform that piece of worthless paper into something that is worth money. Why? People trust that the U.S. government will back up their money. Of course, we all know that this is a limited promise.
The U.S. government is limited in the amount of money it can borrow. Still, the trust people have in the power of the U.S. government ensures that it can continue to borrow despite its limited capacity to pay.
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To lower the value of its existing debt, the U.S. government can continue to print billions of dollars. When this happens, the price of the dollar goes down. This makes existing U.S. debt cheaper but it also increases inflation. There is no other word for this than currency devaluation. When the price of the dollar goes down, it is able to buy less and less of things.
So when you are looking for investments that would shelter your savings against currency devaluation, you should look to invest your money in assets that increase in value. When you do this, in a very real sense, you are investing against inflation. Currency devaluation, make no mistake about it; is a form of currency inflation. To make up for the shortfall, the Central Bank has to print out more money. So if you're trying to figure out the answer to "Why invest in gold coins?", think about the very real threat of currency devaluation.
Unlike other countries, the United States' currency devaluations are not very pronounced. They don't happen overnight. You don't just wake up and then see that the dollar is worth half its value the day before. Things don't happen like that here in the United States.
However, in emerging countries like India, the Philippines, Mexico and others, that is precisely the case. You can start out with the peso being worth one hundred on Monday and then wake up Friday morning and realize that it's worth fifty. That's how abrupt the changes are, but make no mistake about it; when you look at a long enough timeline, the U.S. dollar is going through those downward changes as well. It just doesn't happen overnight.
Still, the threat of currency devaluation is real whether you're holding the U.S. dollar or the British pound. So if you are trying to answer the question "Why invest in gold coins?", always keep currency devaluation solidly in mind.
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2) Two forms of appreciation
In most cases, your investment option appreciates in one way. Either the stock price goes up or the base value of the metal goes up, it only has an appreciation and value coming from one source. The great thing about gold coins is that the appreciation comes from two sources.
First, gold coins are obviously made out of gold so when the price of gold goes up, the price of your gold coin will go up. However, that's not the only source of value of gold coins, if you are trying to figure out "Why invest in gold coins?", you have to look at the secondary source of value.
Gold coins are also collectible items. People collect them. When people collect them, they bid for them and the price goes up. If you put these two factors together, you have a solid formula for beating inflation, beating currency devaluations, and staying ahead of the game when the market collapses or the economy goes on a tailspin. You are protected both ways. If you are trying to get a solid answer to "Why invest in gold coins?", collectability provides one of the most solid answers you will ever find.
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3) Personal value
Gold coins are works of art. Seriously, when you look at a gold coin, it looks great. It's a work of craftsmanship, it looks good in your hand, you can use it as a conversation piece, there's a certain social status that surrounds people that invests in gold coins. There are a lot of intangible and personal benefits to it.
Although if you are trying to figure out the answer to "Why invest in gold coins?", personal questions might be the lowest on your list. Never underestimate it. The reality is that there are many powerful and wealthy people that invest in gold coins because of these personal considerations. Don't write them off. That way, you can see the complete picture and you can see why there is such a demand for this interesting form of gold investment.
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