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.
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
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.
INVESTMENT and DIVERSIFICATION
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