I love gold bullion coins. There's no doubt about it. I'm sure you can sense that from the other
articles on this site. Whether we're talking about
Gold Maple Leafs,
or even fractional gold bullion coins,
I love them all. The topic of today's article is my top 10 list. These are the top 10 reasons why
I personally believe it is important to buy gold bullion coins. As you will see from some of the bullet
points below, this list is personal. Your own top 10 list may be a little different, but overall
I feel these points are relevant to everyone.
©iStockphoto.com – JerryPDX
Reason 1: Gold Bullion Coins Are A Pure Asset
Gold bullion coins are perhaps the only true asset in the world. This is a novel concept. Let's
think about it. It's probably easiest to attack this one by looking at other "assets". The
US Dollar Bill: This is not an asset because it is a promise by the US Government. Your US Dollar Bill
"asset" is the government's liability. Another example, your house. The "asset" of
your house takes money out of your pocket each month. You need to pay a plethora of bills on it and
moreover are permanently taxed on the property by the government. If you don't pay your property tax,
you may lose your "asset". Let's look at another, your savings account at the bank. This
"asset" is actually the bank's liability. They take your money and lend it out to others.
If all the loans go bad at the bank, the bank will need to rely on the US Government (via FDIC) to
insure your "asset". Now, let's look at gold bullion coins. Gold bullion coins are
a pure asset. They have intrinsic value and are nobody else's liability. You don't have to pay tax
on them (or any expenses on them). As a side note, I do urge you to store them in a
safe deposit box
but this is not an expense imposed on you by the government. Overall, gold bullion coins are the only
pure asset I know of that contain real intrinsic value. (Well, actually I just lied to you. Coins
of other precious metals
and base metals such as copper bullion are also
assets.) This is a very powerful concept.
Reason 2: Gold Bullion Coins Are Forced Savings
There's nothing wrong with
investing in shares of gold mining companies.
However, if you're like me, you will be tempted to trade. A few years ago, I bought
Gold Corp in the low $20s. It's now at around $40 per share.
I unfortunately sold in the low $20s because I got scared out in a volatile market. I have had some
major successes in gold stocks also but overall face a problem that many investors face: emotions.
I like gold bullion coins because they are more difficult to trade. I cannot just log into my online
trading account and sell them. They are a physical asset. I need to go to my safe deposit box, go to the
gold shop, sell them, and take the money back to the bank for deposit. This is a lot of work. I like that
fact and call gold bullion coins forced savings because I'm not likely to sell them and they force me
to stick to my guns and hold on. This is great!
Reason 3: Gold Bullion Coins Are Rare
The US national debt is spiraling out of control. According to Galmarley,
all of the gold ever mined above ground is worth approximately $1.8 trillion dollars. All the gold below ground
is about 40 percent of the gold above ground, bringing this number to about $2.5 trillion dollars. I believe
Galmarley did this study before the
price of gold
rallied. Let's say in current dollar terms that this $2.5
trillion dollars has doubled to $5 trillion dollars. Now, let's look at the US national debt. The
US national debt
is $9.3 trillion dollars. This does not even factor in the debts of other countries. We have a
serious shortage of gold and this should propel its price up substantially in years to come.
One of my favorite authors is Robert Kiyosaki, author of Rich Dad, Poor Dad. He believes that gold coins
(and silver too) bring good luck to their owner. I read an article by him explaining how he acquires more
gold coins before any large business venture because he believes that gold coins are Spiritual Money that
bring their owner good luck. Moreover, he explains that he believes his annual income is a multiple of
how much gold he owns. I truly believe what he is saying. It's hard to understand if you have never
held a gold coin in your hand. Once you have, however, you will understand exactly what Kiyosaki is saying.
Gold coins are magical. They are simply amazing to hold in your hand, especially pure 24 karat gold coins
such as The Canadian Maple Leaf. Gold coins
have a magical force around them and I believe they bring their owner good luck.
Reason 5: Gold Coins Are Fun!
There's no doubt about it. Gold bullion coins are a lot of fun. There is just so much variety in the types
of coins you can buy. There are so many great looking coins that you can spend hours admiring. What other
investment has this power? (This ties a bit into the last point.) Gold coins are a great investment and
hobby because they are fun. Check out a great store like GovMint.com
and you can spend hours looking around and finding amazingly neat gold and silver coins.
Reason 6: Gold Coins Are A Timeless Store of Value
Companies go in and out of favor. There are few large companies that have transcended time and generations.
This means a stock investor has to trade and shift funds between companies that are going in and out of
favor. This is not the case with gold. Gold bullion coins have been in favor forever. Gold coins are
just as respected today as they were several centuries ago. Buy gold and you're buying a timeless investment
that can be passed on forever to future generations.
Reason 7: Gold Coins Are A Hedge Against Inflation
Inflation is out of control. Oil prices are hitting new highs and there is no sign of relief in sight.
Interest rates are at all time lows to protect banks who made terribly risky loans. The interest rate
cuts of the 90s have created a monumental inflation problem and it will be difficult
if not possible to climb out of the hole. What is someone to do who wants to protect their hard earned
savings? It's easy, buy gold coins. Gold coins are the ultimate hedge against inflation. This is
evidenced through the recent rally in the
price of gold. Let me qualify, however, that
even in the absence of inflation I still believe gold is a tremendous investment because of
reason number 3 above. Gold coins are extremely rare. There are not enough to go around. Due to supply and
demand, this reason alone is enough to propel gold prices (inflation adjusted) to amazing heights in my
Reason 8: Gold Bullion Coins Are Small And Portable
This is the crazy one! You can store all of your wealth in your pocket with gold coins. They are very
small and very valuable. If you want a discreet way to hide your assets and protect them, gold coins
are a super idea. Do I recommend keeping you life savings in your pocket? Absolutely not. It makes the
most sense to store you gold coins in several different safe deposit boxes and vaults. However, should
you need your coins in an emergency, you can withdraw them and carry this wealth on your person. This
is a powerful concept in the event of an emergency. Want to keep a few gold coins close to home? This
may make sense depending on our situation (for just a few coins) and you may want to check out my tips on
hiding gold coins.
Reason 9: All Fiat Currencies Come To An End
Fiat money refers to money that is not backed
by precious metals. The US Dollar is a great example of fiat currency because it is only backed by faith
in the government. Throughout history, all countries that have based their monetary system on fiat currency
have come to an end. Gold is the ultimate way to combat an inflationary environment and fiat currency.
While inflation on fiat currency spirals out of control, gold retains its value. I think it's fairly
certain that the US Dollar will continue to devalue and that inflation is here to stay. This makes gold
bullion coin ownership a must.
Reason 10: Developing Countries Love Gold
Let's fast forward 50 years. Is the United States going to be the same global superpower that it is today?
Probably not. Developing countries such as India and China are thriving. They bring an immense amount of
intelligence to the table, low priced labor, and surging populations. They will be replacing US jobs over
the long term more and more. There are two tangents here. The first is directly related to gold. Citizens
of India and China love gold. It's part of their culture. India is the top gold consumer of the world. If
their country is doing so well, gold will certainly rise as more India citizens have funds to acquire
more gold. The second tangent is not related to gold but I wanted to qualify this all that I'm not trying
to scare you. Knowledge is power and this is a long term trend. Armed with this knowledge, why not
use the trend to make money through gold and also by acquiring stocks and businesses that profit from the
rise of India and China. You want to have these very intelligent and hard working countries working
for you as an investor!
Bonus Reason 11: Gold Bullion Is Extremely Liquid
You can sell your gold anywhere in the world. Gold is universally recognized as a valuable store of wealth.
Want to sell your coins right here in the good old US? Not a problem. Want to sell your gold in Australia?
Easy. Want to sell your gold in Paris? Go for it! Gold is accepted everywhere and is one of the most liquid
financial markets in the world.
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