The Simple Facts About Gold, Rare Coins, Inflation And The Dollar

The Simple Facts About Gold, Rare Coins, Inflation And The Dollar

Numbers out today show inflation rising at the fastest pace in six years. Also, the point has been made that recent gains in income and salaries have been eroded by the increase in inflation. What is the result of higher inflation? Higher inflation is caused by the rise in the cost of goods and the dollar having less buying power. Another outcome of inflation and a weakening dollar has always been a rise in gold price based on the same factors. If dollars by less goods they also buy less gold. Since gold is (for now) primarily traded in dollars the rise in gold price represents the increased amount of dollars needed to buy an ounce of gold. Make sense?

Another point of pressure on gold is another predictable result of inflation, rising interest rates. The Fed to cool inflation will raise rates. Over the last ten years or so the price of gold has reacted by going down when interest rates rise or even the Fed implies interest rates will rise.

If you look back further, back to the 70’s and 80’s inflation is the strongest driver effecting gold prices. Short term gold has been trading up and down against implied or real rises in interest rates merely because hedge fund speculators have been like a herd going long and short paper gold contracts as somewhere to park investment money. After all, they are supposed to know what they are doing so staying in motion like they are reacting to market conditions must look good, right? Wrong, they have done nothing more than create noise and distort a real gold market. Now with the real possibility of inflation on the horizon and the dollar suffering with its buying power, makes a bull market in gold possible regardless of rising interest rates by the Fed.

How do rare coins fit in to this story? Let’s assume over the past few years you have done well in the stock market parking your portfolio with your standard portfolio manager. Typically, they have you diversified in your paper dollar backed stocks and bonds in enough places in a market like this that you can’t help but show gains. On paper month to month your portfolio looks great. The problem is when the next unavoidable correction happens (not if, only when) that paper statement will reflect a loss. After all you only had a perceived profit on a monthly statement, not in real money. So now, while your paper statement reflects profit, and before the profit disappears, take some of that paper profit out of the stock market and put in something else before you lose it. Gold, like bullion gold coins are good. Gold Eagles or other monetized gold coins add privacy like all money because Gold Eagles have a face value that means it is just like a dollar bill. When you turn Gold Eagles into paper money that is like giving someone a twenty dollar bill for two ten dollar bills. No reporting required. Even better is the upper end of the rare coin market in U.S. Coins.

Rare coins are known as Private Portable Wealth. The rarest like early dollars or early gold from our first years coining our own money, 1793 into the early 19th century are at the top of their market. Other coins throughout all years of minted U.S. money that are “better date” coins or coins that few examples exist are also performing very well. Remember an early dollar from our first years might be worth $100,000 in a very transparent and recognizable market, but, it is money, it is still a dollar, so it is Private Portable Wealth. If you had a collection of rare coins that you accumulated as legacy wealth, meaning for the next generation. When you pass, that collection is handed to your heirs with no estate tax or earnings event. This is one of the reasons so many wealthy people add rare coins to their portfolio.

Diversify when and where you can. Do not leave all your eggs in any one basket. If you add rare coins to your portfolio you will find learning about them is a fun and rewarding hobby. Buy Rare Coins from LCR Coins. Call us at 800-830-5578 or email us at to find out more.

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