When people decide to buy gold coins, it is usually as a form of investment. For example, among the most popular of the bullion quality coins are those known as the gold American Eagles. These come in a range of denominations and weights and can be added to the portfolio in a very controlled manner.
Why do people opt to buy gold coins such as this? There are a few reasons that people are purchasing bullion-quality coins like never before, and among them are the facts that gold is a form of “real money”, that coins come with a two-fold value, and that gold is one of the most reliable of all the hard assets available.
Let’s first look at the way that gold is a form of real money and why this might serve as an incentive to buy gold coins. Throughout human history, there has always been some sort of documented currency, and one of the first metals used as coinage was gold. Even today, when most of the world’s major economic systems are based on the fiat design rather than being backed by assets, gold is still viewed as a store of value. For example, with a pure gold coin in your hand, you could walk into almost any shop, in any part of the world, and exchange that coin for a large amount of merchandise or even services.
People will also buy gold coins because they are a very rare form of investment that offers them more than just a single value. The coins come with both “extrinsic” and “intrinsic” values, and these are actually quite substantial in their own right. The intrinsic value tends to be the largest because it simply means the value of the coin based on the gold it contains. This is a figure that is always in line with the current market price on an ounce of gold. The extrinsic value comes from the denomination or currency imprinted into the coin by the government mint or treasury. This is a static or permanent value, which serves as a sort of insurance against loss of the initial capital used to purchase the coin.
Lastly, gold truly is a reliable vehicle. A look at the performance statistics on gold for the past ten years would show that, although there may have been periods of fluctuation in an upward or downward manner, the price of gold tended to persistently climb.
These are all somewhat rare opportunities and make it easy to see why so many investors are turning to gold coins.