About Gold Coins

About Gold Coins
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ABOUT GOLD COINS is a guide to buying gold coins as a portfolio diversification. Our goal is to provide you, the gold investor, with key information to establish the best diversification position. As an investor you are besieged with an array of gold investment alternatives (mining stocks, futures, options, and gold itself) but history teaches that the most versatile and cost-effective choice is gold itself in the form of coins and bars as the following discussion explains.

Why Gold?

Gold serves the investor on several levels in terms of portfolio diversification, capital appreciation and risk management. Gold is a long term, reliable store of value depending on the performance of no single government or corporation. Gold is the world's single most recognized and liquid asset, and is traded in global markets around the clock. Now discounted after a 22-year bear market from the all-time high price of gold at $850 per ounce in 1980, gold offers excellent opportunities for capital appreciation in a new global setting where the euro may challenge the status of the widely-held U.S. dollar. Above all is gold's role for portfolio diversification. Its value is negatively correlated to most financial asset classes, offering much-needed security in times of currency instability and stock market volatility.

Why Gold Coins?

While all gold assets provide diversification benefits, the uniformity of size and fineness in gold coins makes them the asset of choice for many investors. Purity and gold content is guaranteed and eliminates any difficulties in exchange such as independent assays that might be required for investors re-selling gold bars. Of the two -- bars and coins -- gold coins better serve the investor through liquidity and ease of exchange.

Why Pre-1933 Gold Coins?

Historically, collector gold coins have been treated differently under U.S. law than bullion and that treatment generally has been favorable. Pre-1933 gold coins afford the investor an additional layer of protection, not available in bullion coin ownership against confiscation and other privacy intrusions. Happily, these coins need not cost the investor substantial premiums over the gold content.

Gold coins minted during or before 1933 carry a legal precedent of exemption from U.S. government confiscation under the 1954 amendments to the gold regulations. (Under the Roosevelt administration, in 1933 by Executive Order and subsequent act of Congress it became illegal for American citizens to own gold bullion. Under Eisenhower these gold ownership restrictions were extended to American holdings overseas, and were not relaxed until the Ford Administration in 1975.) It is not unimaginable that future government action will repeat the stop-gap measures of their predecessors during times of financial crisis.

Pre-1933 gold coins also carry privacy benefits. The IRS requires a Form 1099 to be filed when investors sell a threshold value of gold bars, gold bullion coins, silver bars, and silver coinage. There are no similar reporting requirements for the sale of pre-1933 gold coins.

The added collector value of these coins may vary above bullion prices by only a little or a lot, depending on rarity, quality, and general market demand -- something that offers an additional avenue for capital appreciation, independent of bullion, yet frequently compounding any gains to the price of gold.


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