If you are an Indian, then the lure of gold needs no explanation to you. No wedding, no occasion is complete without the glitter of gold. However, what about the uses of its more practical form – the shiny venerated gold coin.
Did you know that gold coins were a medium of commerce for several centuries before they were completely stopped as a token of currency in 1933. When paper currency made its appearance in the 11th century in China they initially denoted the worth of the physical coins. Gradually, it moved away from the validation of physical metal. Gold however, still carries its weight in gold in commerce!
Michael Belkin reflects the sentiments of investors who swear by gold when he says, “Borrowers will default. Markets will collapse. Gold (the ultimate form of safe money) will skyrocket.”
With a host of investment options available in today’s world, gold is, well, still ‘Gold’. We bring you 5 reasons why the humble gold coin has never been, and will probably never be, out of fashion.
Protects Against Economic Instability
As mentioned earlier, the value of gold does not depend on government regulations and market conditions. If the political or the economic condition of the country is unstable, then gold becomes a reliable asset that can give you returns. For this reason gold is also known as free money, meaning free from regulations and rules, with its worth remaining the same across borders.
Historically, gold has consistently given good returns. While it may not have outperformed stocks and real estate in terms of ROI, most gold owners have not made a loss; which is possible with other forms of investment. To know more about investing in gold in other forms click here http://www.gold.org/investment/how-invest-gold.
Most of the investment options like bonds, securities and funds, peg their worth to someone’s (financial institution) paying liability. Investing in gold coins on the other hand, is worth the physical quantity and will never default. The other investment instruments stand the risk of depreciation or even default in times of financial crisis.
Experts consider physical gold to be immune to inflation over the long term. It is regarded as one the few assets that act as an inflation hedge. <Link to http://www.investopedia.com/terms/i/inflation-hedge.asp>. If you have made investments elsewhere, it may be a good idea to have some investment in gold for balancing and diversifying your portfolio.
Gold bullion bars seem to be the best form of investment in physical gold. However, they require a huge amount to be invested because of their size and weight. Gold coins on the other hand are easier to manage because of their small size and do not require a lot of monetary commitment. With standardised coins now available, they are easy to re sell and hence can be easily liquidated. This makes gold coins the convenient mode of investment for investors who are just starting off.
Gold coins offer several benefits but also have some shortcomings. A careful study and understanding of one’s financial situation and future goals is essential before making any investment. We conclude with a quote by William Rees – Mogg, a strong advocate of physical gold. He says, “To prefer paper to gold is to prefer high risk to lower risk, instability to stability, inflation to steady long term values, a system of very low grade performance to a system of higher, though not perfect, performance.”