Why should I invest in Gold coins?

Hello Guys,

Happy Holidays to all of you!!! I was just watching the recent gold market trends. Me and my friends are contemplating of investing into Gold coins.
Can you give us some good tips, Why I would invest in gold coins?

 

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It's just like any other investment except you are investing in a precious metal over say, the performance of a company through the stock market. I think most people who like to invest in gold or silver like it because holding onto something that is actually valuable due to demand gives them a better sense they'll be getting a return. But I say, only invest in gold/silver if you have the extra funds to do so, that means, out of debt, perhaps already have a portfolio with other investments, etc. I think before diving into a new market, make sure you got your feet firm on the ground before taking new chances.

 

My 2 cent on Gold! Its down a bit & gold will always be worth $ Old & New mintage is the key too. 1999-W 41k in Proof & 22k and the 99 has same gram weight as 1999-W above!

 

Gold is in a long term bull market that has a high probability of continuing, at least for awhile. Owning gold is a lot like owning stock in a company. You have to know what is right about it and what is wrong about it. Every investment has something wrong with it. But if you study it, you can make a determination that the positives outweigh the negatives, and it is okay to buy. But you also have to know that someday, the negatives will outweigh the positives, and if you don't sell you will lose money. Nobody can do this for you. If you wait for someone else to tell you when to buy and when to sell, you will always be late. It's a little late for gold, but not too late.

 

This link goes over one of the biggest reasons, which is monetary debasement:
http://etfdailynews.com/2011/09/09/...d-reach-10000-per-ounce-gld-slv-dzz-gdx-gdxj/

The best reason IMO is that with both gold and silver you have something where the value is contained within the metal itself, not the promise of value by a government or a corporation in a piece of paper or electronic account where the value depends on public faith. Therefore nobody can steal it from you by any means other than taking it from your possession. This may be considered risky by some, but to me it is far less risky than giving your money to someone else and trusting that they are honorable, or putting your money into an investment vehicle that is only valid for as long as that entity is in existence.

 

The rest of your statement was sound, but this particular sentence is not. Stock in a company has no intrinsic value. It has value because the company has value. Gold has value no matter what.

 

who said Gold has value? stocks and gold are only with what someone is willing to pay for them...if gold's price drops to say $300...you think you will find someone willing to pay $1600 for it based solely on metal content?it's all a risk...people decided over the past 11 years gold is worth more then it was in 2000...just like what happens in the stock market...if your worried about protecting "value" you really need to be protected by a basket of investments that counter everything...

 

Who says gold has value? Central banks and governments.

Your argument is that because there is risk to holding gold and risk to holding stock, then these are equivalent investment risks. They are not. The central banks that issue the currency, stockpile gold to use as a currency amongst themselves. They don't hold stocks, they hold gold. They do this because their respective governments require them to hold real assets to back their base currency. Hence, the price of gold is related to the supply of currency. (Unlike Stocks) The real question is whether the circulation currency will fall to the point that $300 of it will buy an ounce of gold. There is nothing to suggest the governments are going to do anything at this point than print more money. Therefore, you are not going to be seeing $300 gold again. A collapse of gold prices will involve global events.

In comparison the value of a stock is worth nothing more than what people think the company is worth. Bad management can make any specific stock close to worthless overnight. A collapse of a stock price can happen in a board room. It's a risk that is several magnitudes higher than that of owning gold.

These are not equivalent situations.

 

Common stocks definitely have an intrinsic value that can be calculated in many cases, and estimated in others. What you really mean is that you, personally, do not know how to calculate the intrinsic value of the common stock in a company.

 

This is a commonly repeated error. The common stock of a company has an intrinsic value that can be calculated, and there are a number of methods of doing so. It is true that the price of a common stock can fluctuate, sometimes to a level below the intrinsic value where a purchase is likely to be profitable. But the price is not equal to value the way you suggest. For example, if a person owns 100 shares of Exxon common stock and the price drops to $1 tomorrow, or even if the stock doesn't trade at all, the stock still has intrinsic value based on the present value of future dividends. I know you and your family have had horrible experiences with Enron and many other bad investment choices, but just because you can't do it doesn't mean investing in common stocks is in any way inferior to owning gold.

 

Stocks offer dividends which is major upside over Gold but however you also stand to lose of money if company under performs (look at oracle) or even great risk from any macro economic factor (recession, currency devaluation check out the emerging markets and see how badly they have gotten pounded thanks to strong dollar etc).

Also i don't see overall indexes going any higher than where they are. Analysts often point to how DoW has done for last 50 years and make a case we will see similar results in next 50 years inspite of a stagnating US markets for last decade or so. Truth is so much has changed from even 1980: Most Americans are fully invested now, intense competition from overseas companies and of course automated trading. If you are investing stick with strong multinational firms (Coke, IBM, CAT etc) which offer good dividend.

 

Know!? LOL, at least you are good for some holiday humor.

If this "knowledge" of yours is an example of how you reach conclusions on investments, then it's fortunate, I guess, that most pay you no mind. I've never owned Enron stock, nor have I ever had anything to do with the company. This knowledge is as flawed as the rest of what you post.

 

Yes indeed, I agree with you 100%. The message I gave above wasn't a statement on whether one should invest in stocks or not, but that the risks between the two are completely different. In fact, the risks of individual stocks can't really be compared because, as I said above, it depends upon the management of the company. I do think you have a good point to make that companies paying dividends tend to be more stable, and hence have lower risk than those that don't.

 

It's an unusual position for a wannabe entrepreneur. Of course both gold and common stocks fluctuate in value. Stocks have an advantage in that they can be analyzed, and have a growth factor from the reinvestment of earnings to grow. It would be an important skill for you to develop to learn how to value a business, especially if you are an entrepreneur and might be selling or buying a business someday. I don't disagree with your idea about buying large multinational companies, but I do believe the stock market indices will move higher since they are dominated by multinationals.

 

But i think in this day and age it is very hard for anyone to find stocks that are undervalued. Unlike even last decade you won't find companies like Google or Amazon which you can ride as they grow, rather you have companies coming to the market with over valued IPO (LinkedIn, Groupon). Multinational strategy will work as long as BRIC continue growing we already seeing signs of slowdown in India and China and there needs to be strong dollar.

 

I wouldn't, and don't. Liquidated all my gold and bought Silver. Junk Silver coins.

Figure that as insurance in the event of socialeconomic collapse, silver would be a more widely recognized currency medium. The lesser value, would allow me to barter in smaller increments. No way do I want to pay a gold coin for someting like a flat of eggs, when a small silver one moght do the trick. Considered the problem of getting change.

And I felt Silver had a greater potential.

 

I have no problem with someone investing in gold coins but investing into such as a group - well the individual who maintains physical custody of the investment certainly sits in the driver's seat.

 

Gold coins new and old Mintage # may boost gold value.$+@???
*:thumb: Key date & how many were made ,Highest grade & condition of 99.9 what mintage was after complete.
But if you in to new modern Gold that hard to do,mintage can change2010-2011.But 1997-2000 $5.00&10.00 Gold coin mintage # on Robinson & Washington and the Gold&Platinum Library of Congress Are in my book good buy.if metals $$$$ Drop there were I would be looking.

 

If there is such a collapse you may want to look at weapons or buying land rather than gold or silver, which would do you very little in mad max type scenario. Also i think you are confusing gold backed currency with using gold or silver as currency? For scenario you mentioned you are better off using copper for any small denomination trades than Silver..

 

Currency and economic collapse rarely if ever mean that society collapses as well. We won't be entering a Mad Max world of bartering and killing each other. We will get a new (revalued) currency and in the process, lot of people will lose a great deal of paper wealth. Promises made based on paper will be worth less than the ink they were written with. It might also mean more radical government and/or war as boys will be boys, but that's a different issue.

In this scenario, it is the ones holding gold and possibly silver, who will have their wealth preserved. At the time the new currency is established, then the gold and silver can be used to buy it. Why? Because governments hold gold, use it as bargaining chips with each other, and thus the gold will always have value. People view it the say way. It's been this way for 6000+ years of recorded human history and there is no reason to believe it might be different next go around. Note: This only applies to those who hold physical PMs in their possession. As the events at MF Global prove, paper gold, even paper gold registered to you in your own segregated holdings, can become worthless.

This is the only "doomsday" scenario that you should hold gold coins for. i.e. Wealth preservation in a rapidly changing political/economic system. I would not bother to prepare for end of the world Armageddon by stockpiling bullets, lard, and boxes of Lucky Charms. Armageddon has a habit of showing up at a time and form that you least expect so don't bother. The living may be worse off than the dead.

Here's hoping that all have a good 2012. If you have gold, I know you will.