Gold is a precious metal that is used in currency for several very good reasons. It is corrosion-resistant, easy to turn into coins, and it is simply a very aesthetically pleasing metal. While it may not be the single most monetarily valuable kind of metal anymore, its public reputation as an object of desire is still unmatched. The price of gold varies over time, but a shrewd investor has a decent chance of turning a profit. Even between different kinds of coins there can be price variances for different reasons, so here are a few things to help you appraise potential investments.
What Kind of Coin?
When it comes to coins, there are a couple different kinds that you can accumulate for separate reasons entirely. As an investor, you will usually want to buy bullion coins that are usually sold through private businesses that have themselves bought those coins from the mint that produced them. Proof coins are also usually produced by the mint, and they tend to be higher quality and more expensive coins as they are not mass-produced in the way bullion coins are. This means that they are less practical for investment, however, and they tend to be of greater value to collectors. If you are interested in investing or collecting proof coins, you will generally want the coins that are “uncirculated” as they will have the least amount of wear.
The Price of Gold
Trading in gold is not unlike trading in the stock market in that the price will go up and down from one day to the next. In fact, the price of gold is actually negatively correlated with the price of stocks. As of this writing, the price of American Eagle 1 oz gold coins is around $2,108 per coin, which is slightly higher than the price of one troy ounce of gold to reflect the cost of the process of minting gold coins. The price of gold has actually been going up in light of the coronavirus, and some would argue that the price is going to climb further. In short, it seems that economic uncertainty increases the price of gold. Whether or not investing now is worth the high cost of the initial investment remains to be seen, but there is no doubt that gold is more expensive now than it has ever been in recent memory for the United States.
Why Gold?
Gold itself provides a sense of stability stemming from its intrinsic value, and this gives it value over other kinds of assets that require recognition by a single government currency; gold is always gold, and it is valuable to everyone and it changes very little. It is far more durable than paper, and so it doesn’t need to be replaced. It will be accepted by pretty much any governing body, and it is an actual physical object you can hold rather than an intangible number on a bank account that could lose value by virtue of inflation alone. For these reasons, among others, gold has remained a staple in currency for thousands of years.
Whether you like gold for its value or just because it’s pretty, there is little reason to believe that gold will ever become completely worthless in the foreseeable future. If you are interested in investing in gold and have the capital for it, many experts would recommend doing so. Investments are always a risk, of course, and responsible trading is paramount to a long-term investing strategy, but if you are looking for a good way to diversify your portfolio, you would be hard-pressed to find a better option than gold.