With the rise of the Stock Market over last few years a lot of people are getting worried about a major correction. If and when it comes we have no way of predicting, but it is guaranteed it will happen. People buy gold and silver for several reasons. Two of the main reasons are rare coin investing and investing to protect against the drop in the value of your U.S. Dollar, or a correction of the Stock Market.
Between 2008 and 2012, gold rose to almost $1900 per ounce, because of the crash of the Stock Market and the decline in the value of the Dollar. Since 2012 gold has traded between $1200 and $1400 per ounce. Silver has pretty much followed along with a peak of almost $50 per ounce in 2012, and now trades between $15 and $19 per ounce.
The oldest gold jewelry ever discovered is thought to be 8,000 years old. It is likely that early man found bright, shining nuggets on riverbeds and picked them up out of curiosity. They soon discovered it to be the most easily worked of all metals.
Gold was both desirable and rare and it slowly started being used as currency. First Silver coins were made by the Lydians, in what is now Turkey, around 700BC. The Romans developed new ways of mining both Gold and Silver and they soon developed ways to make coins. The Barter system of old soon disappeared and Gold was now accepted as a currency.
In 1821 Great Britain adopted the Gold Standard, pegging the worth of their currency on the value of Gold. Other countries soon followed. Gold was the basis of the international currency system until the First World War when Great Britain abandoned it in order to print more money. The United States maintained a gold standard until 1971, but thru it all Gold and Silver have never lost their value – in many ways they became more valuable.
Why People Own Gold
A History of Holding Its Value – throughout the ages gold has maintained its value, unlike paper currency and coins
The Decline of the U.S. Dollar – The decline of the Dollar occurs for many reasons, the country’s continuing increase in the budget, trade deficits and the increase in the money supply. The Dollar fell against world currencies between 1998 and 2008 causing gold to rise to about $1900 per ounce.
Inflation – Gold is an excellent hedge against inflation. With our economy getting better we may be going into an inflationary period. Gold rises when the cost of living increases and in the past fifty years gold prices have soared when the Stock Market has gone down.
Deflation – During the Great Depression in the 1930s, gold prices increased dramatically, while other prices dropped sharply.
Uncertainty – In times of financial uncertainty or geopolitical turmoil, gold prices increase. It is sometimes called the “crises commodity” because people flee to its safety when world tensions rise. Its price, also rise when confidence in governments is low.
Supply Constraints – The selling of gold by central banks slowed greatly in 2008 because the production from mines had been declining since 2000. Demand from emerging markets and the improvement in the economy of China, where gold bars are a form of savings, led to a large demand for gold. This led to the sharp rise in gold prices in 2008.
Portfolio Diversification – Portfolio Managers will tell you that a strong diversification of Stocks, Bonds, and precious metals will reduce volatility and risk in your IRA’s and 401K’s. Precious metals are a hedge against inflation or currency debasement. It is recommended not to hold more than 15% of your portfolio in metals.
Investing in rare coins is both very interesting and intriguing. The history of Gold coins minted during the 1900s portrays American Indians. There are several Indian head coins that were made – the Indian Head eagle ($10 gold piece), the quarter eagle ($2.50 gold piece), and the half eagle ($5 gold piece) all have a compelling and interesting history. Most all the Indian Head Gold coins have either held their value or substantially increased in value.
The best way to buy Silver is in the form of Silver bullion bars, Silver coins also, are widely available. They are affordable, they normally hold their value, and are easy to buy and sell. Take a look at the value of these Silver Dollars now:
- 1901 Morgan Silver Dollar – Worth $425,000.00
- 1893 S Morgan Silver Dollar – Worth $300.000
- 1889 CC Morgan Silver Dollar – Worth $280.000
- 1884 S Morgan Silver Dollar – Worth $215.000
- 1893 O Morgan Silver Dollar – Worth $150/000
I just wanted to throw that in so you can see the value of rare coin investing.
If you are like me, an ex-truck driver, you don’t have the money to invest in some rare coins. A person should invest some of his money in Gold Coins or Silver to be sure you have access to money in case something serious happens. We are reminded every day of the frailty of our banking system. The digital-only pay system and digital banking systems, gain more traction every day. You never know when you could get locked out of your bank.
Fortunately, a small investment in Gold American Eagles or Silver American Eagles over time can give you the insurance and peace of mind needed in case of a major problem. Our money system has never been more vulnerable, just about every week we are waking up to a new glitch.
It is only a matter of time before big money disappears. You will be glad you had a backup system, by investing in a little Gold or Silver.
Most people have some type of savings, rather it is a 401K or an IRA, these are vulnerable to substantial losses. Let history be your guide, when you lose money in your 401K, Gold and Silver investments will go up. It is recommended, you have enough saved up to six months of expenses. If you don’t have any Gold or Silver set back for an emergency, start shopping around today. We are going to have another money crises!! No one knows exactly when!!
Look forward to hearing from you! COMMENT below! Wayne