When world economies shiver and shake, gold stands alone and prospers.
This is in no way breaking numismatic news that gold prices can be a staple in revealing the true state of the United States’ economic health. When gold prices are high throughout the country, this has been a telltale sign throughout years of history that the economy is not healthy. This is because investors and coin collectors alike will buy up gold coins and bullion as protection from either an emerging economic crisis or spike in inflation. Gold can’t go out of business due to poor sales. It can’t lose value due to a huge new supply being printed (or mined) out of nowhere. These are just some of the reasons why investors turn to buying gold when more traditional assets start to fall.
When the prices of gold are lower, this shows promise that the economy is entering a healthy state. This is due to investors dispersing their funds throughout other more profitable investments like stocks, bonds, or real estate. Gold serves more as a safety net for many investors as they only result to buying gold when they want to secure their financial assets during a period of extremely fluctuating monetary values. It is much more of a long-term investment compared to most other types you can dabble in.
While most numismatists already know how gold influences the U.S. economy, not many are aware of the reverse scenario, as they both can equally have an influence upon one another. There are also a wide variety of other factors that can play into the current standing of gold’s value in society, and if you are interested in determining when the best time to invest in gold is, they are crucial to know.
If you’ve been trying to determine when is the right time for you to buy into gold, using the value of the U.S. dollar is a great starting point. Gold prices are, historically, almost directly inverse to the value of the U.S. dollar, as compared to other currencies, investments, or assets.
This could be due, in part, to the United States’ greater impact on global markets when compared to other countries. Moreover, do Americans prefer more cash than other assets, and how are trends changing? Whatever the reason, the value of the U.S. dollar versus other countries is a good indicator of the direction that gold is likely to go. There is also a relationship between bitcoin and gold, which is another interesting subject.
As we mentioned, the best time to invest in gold is when the economy is taking an upward turn, if you have the means as a numismatist or investor, simply because everyone else has put their investments back into other forms of proprietary assets.
In fact, while it may seem that the economy isn’t completely healthy in the United States in 2018, the prices of gold would like to state otherwise. Since 2013, gold has been at record low prices and is currently sitting around the $1200 per ounce mark. From this point forward, the economy will begin to fluctuate, and inflation will rise along with it and so will the price of gold coins. So if you have been interested in getting invested into rare gold coins, now is certainly the time!
Collector’s coins, called numismatic coins, are a different game than bullion gold coins and offer an entirely different window of opportunity. They can sell at a very high premium, and their prices are dependent on more factors besides simply the price of gold. In fact, as the prices of gold rise, you can capitalize more so off of a gold numismatic coin that has great historical value, giving it a “premium” on top of its gold quantity.
Historically, a decrease in the value of the U.S. dollar, also known as inflation, has led to an increase in the value of gold. Because the dollar is constantly losing its role as a world-accepted currency, the prices of gold will begin to increase in coming years.
The debt-to-GDP ratio is another valuable key for determining the future value of gold. As this ratio increases, like it currently has been since 2012, the value of precious metals including silver and gold coins increases.
As time progresses, the cost of mining gold is constantly increasing. As more and more mines are beginning to cease operations due to how expensive the endeavors have become, the demand for gold will increase as there will be less and less new gold being funneled into the economy.
When compared to other types of investments, the price of gold can also take a quick turn upwards due to the fact that it only makes up for roughly one to two percent of all market participation. This means that even the smallest increase in gold purchases can lead to a spike in price, meaning that it is good to buy now before everyone else catches onto the bandwagon, making it too late to be deemed a worthwhile investment.
If you decide to buy gold coins, purchase them from a reputable coin dealer. We wouldn’t go searching for or buying gold coins on Craigslist, but that’s just us.
If you buy gold coins from individuals or from anyone else you’re not sure of, have the gold coins’ authenticity verified first. You don’t want a collection of gold-plated lead.
Don’t get carried away buying gold. Perhaps 5 to 15% of your portfolio should be in hard assets like gold coins.
If you would like to receive more information or consultation on investing in gold coins, contact the team at Preferred Coin Exchange to put our years of numismatic experience to work for you. We can help you determine the best gold coins to buy, when to buy, and when to sell. Also be sure to browse our other blog posts for more numismatic news.