Gold, Gold Gold
Last month’s political pendulum took an unexpectedly sharp right turn, and thus the economy has settled down in the forefront of many a shareholder’s mind. With stock markets rising to historic heights, the effects of a business-centric president-elect are already showing. For now they’re headed northbound, but the overall question we as a country should ask is, Will the spikes last? (If Newton’s law of gravity applies to stock markets, the answer is blatantly obvious.)
Nevertheless, while the stock market theoretically doesn’t affect your coin collection, the gold market certainly does. And to say that the gold market isn’t affected by stock markets, oil markets and the almighty dollar, would of course be preposterous.
With that said, let’s learn a little bit about gold, the gold standard, and how its market affects your coin collection. But don’t worry, we’re not opening up an investing firm, so our coin collection cases aren’t going anywhere!
The Gold Standard
Like many other nations, the United States has a long winded and complicated relationship with mankind’s favorite precious metal. We went into a gold standard officially in 1900, but bimetallism existed for many years beforehand—meaning we were essentially in a pseudo-gold standard long before 1900. The relationship between gold and the economy was at its best during those days, when the country was smaller, along with the scale of our economy. But things changed for the worse with a Great Depression on the horizon.
It’s true that since the gold standard ended in the early 1970s (officially, however, it was unofficially abandoned in the 1930s so the government could pump more money into the economy during the Great Depression), the national debt has skyrocketed—without a commodity like gold to attach the economy to, the floodgates opened up for it to float freely and take on a lot of debt. That doesn’t mean it was a mistake to sunset the gold standard. We had to. Our economy became too big for it to make sense to feasibly attach to a very limited commodity.
Why Are My Coins Affected By Gold?
If raw gold rises in value, your coins do too because they are among the few vehicles for maintaining an investment in the material, whether or not they’re bullion or numismatic. Just like how you can hold your money in a variety of vehicles, like cash, CDs, bonds, stocks, etc., coins are one of the forms in which to hold your gold. The name of the game is picking the vehicle that gives you the best mileage—in other words, yields the highest and safest returns. If gold coins are the vehicle, then think of our coin holders as the garage!
As much as president-elect Trump loves everything plated in the stuff, we’re probably not going back to a gold standard anytime soon. Nevertheless, if you have a serious coin collection, you should also seriously pay attention to the gold market. Happy collecting!