Gold appeals to investors who recognize it not as a commodity, but as a universal currency in a dangerous world and the chaotic United States. This appeal has been enhanced over the last year as the glamorous yellow metal’s spot price has increased to $1,773 per troy ounce as of June 2020.
This appeal isn’t new. Gold has always held a tremendous fascination for humanity. Its beauty, rarity, and durability combine to give it a timeless appeal and great value. Coin collectors appreciate this combination of attributes even more than most, for they share special insights into the glorious history of the metal itself and the time-honored coins produced from gold.
Gold coins, like all coins, are hand-held pieces of history. They outshine virtually all other coins, however, because their main component is so coveted, so admired and so prized. Many U.S. gold coins rank high on collectors’ wish lists and want lists, especially since gold is now glittering brightly, almost like never before. I say “almost like never” because the last time gold was $1,790 per troy ounce seems like an eternity—over eight years ago. The modern high for gold was in September 2011, when gold hit $1,923 per troy ounce in overseas trading.
Some analysts are exhorting us to climb aboard and strap ourselves in for a rocket ride to the Moon. Before we get too comfortable on the launching pad, we ought to reexamine the events of recent years, especially within the gold coins market. It will soon become apparent instead of embarking on a non-stop rocket trip, those who buy gold coins today will likely be in for a roller-coaster ride. This is a real possibility even if the ultimate destinations are high, higher, and highest as multi-trillion-dollar deficits and record low-interest rates ultimately push the metal to $10,000 or more per troy ounce.
Some of my fellow gold analysts are forecasting $9,000 per troy ounce gold by 2030. And I have been telling attendees at my seminars held at coin conventions until the global pandemic hit that I expect $3,000 gold by 2025.
There’s no way of knowing with complete certainty how high this hopeful boom will carry the yellow metal. We are currently experiencing a tug of war between inflationary forces (money printing and anticipated velocity of the currency) and deflationary forces (high unemployment and money hoarding). But the fear of domestic monetary inflating, an eroding dollar, civil unrest in American cities, a high deficit, and the potential for financial chaos combine to make gold more attractive than ever before.
MINDFUL OF GOLD PRICE PATTERNS
The fact of the matter is that the history of gold—even in roaring bull markets—is to rise in price dramatically, and then to abruptly retreat. The gold market historically has been shattered by volatility and by sharp ups and downs. These events have served to magnify the risks for those who venture into this market. But at the same time, it also has created opportunities for those with the savvy and wherewithal to use the peaks and valleys to their advantage.
For those of you buying physical gold coins, it’s crucial to understand the difference between “generic” gold coins and those that are genuinely rare. Generic coins exist in sufficient quantities to be traded as like-kind units—very much like commodities. These coins may be in high levels of preservation; more often than not, in fact, those traded frequently in the current marketplace are in mint-state condition. But they’re readily available in those grades, so buyers and sellers have quick access to supply sources. And one is treated much like any other so that these coins are interchangeable.
Common-date Saint-Gaudens double eagles ($20 gold pieces) are viewed, for example, as generic coins.
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August - September 2020