WHY SHOULD YOU BUY GOLD & SILVER COINS & BULLION?

MINIMIZING RISK AND MAXIMIZING REWARDS

- BY SCOTT A. TRAVERS

Gold! From time immemorial, that word has been a clarion call summoning mankind to pursue dreams of fortune embedded in shallow streams or buried beneath the surface of the earth. Once recovered and refined, the metal has been fashioned into objects of consummate beauty and singular value - necklaces, bracelets, diadems, rings - and gloriously glittering coins. The first of those coins were minted more than 25 centuries ago in an Asia Minor kingdom known as Lydia. They were readily accepted as units of exchange by tradesmen who were limited prior to that time to the cumbersome practice of barter.

Gold in the earliest coins was mixed with silver in an amalgam known as electrum. Ancient artisans learned how to separate the metals so that coins containing just gold or silver could be struck.

GOLD’S HISTORIC ROLE

Gold's chief function is to serve as a store of value. If we go back to the creation of the Federal Reserve in December 1913, the dollar has lost over 98 percent of its value and purchasing power. One of the mandates of the Fed was to preserve the value of the dollar, so it’s been a dismal failure in that regard. In 1913, the official value of gold was fixed at $20.67 an ounce. Since then, its value has risen to about 100 times that amount and pretty much matches the 1913 value of the dollar before that 98 percent loss of value. Gold, unlike the dollar, has preserved the purchasing power it enjoyed 100 years ago.

Over the years, you can point to specific periods when gold lagged a bit. It’s undeniable, though, that from the year 2000 until now, gold has made up for the previous 20 years’ lack of performance.

Gold’s value is based partly on its beauty, partly on its indestructibility, partly on its malleability— and mostly on its rarity. It is generally accepted that throughout human history, only about 244,000 tonnes of gold have been mined. That comes to about 7.8 billion ounces.