There are many compelling reasons why everyone should buy some gold for a rainy day. But why buy gold coins and bullion now when the price of an ounce of gold is hovering well over $1,100? There are many compelling reasons, besides Glenn Beck and others telling you to buy gold. Speaking of Gold Line International which Beck and others push, they have simply ridiculously high prices on gold coins and bullion. I should write an article why you should not buy gold from Gold Line. The premium they charge of the spot price is around $200, depending on the coins you buy. We touched the topic of the premium in What gold to buy – gold coins to buy. But back to the main topic and let’s start with several key observations.

1. Gold is the best hedge against a declining U.S. dollar. The value of the U.S. Dollar declined by over 30% from 2001 through 2004. With the massive growth in U.S. government deficit totaling trillions of dollars, with the cost of ongoing wars, a massive trade imbalance and huge recent bailouts by Bush and Obama administrations, this U.S. dollar depreciation trend is bound to continue and likely more rapidly. So your dollars will be worth less and less every day. Gold has its own purchasing power and is universally accepted. To put it plain, someone who doesn’t like you for whatever reason, still will gladly take your gold in exchange of what you may need. And since you buy and sell gold coins or bullion with US dollars, the more the US dollar depreciates, the more of those dollars you can get for your gold. That is why, gold is a defensive hedge against depreciation.

2. Another reason why buy gold is that it is a proven safe haven and insurance in times of war, political turmoil and uncertainty. The 9/11 tragedy clearly demonstrated that modern financial markets are increasingly at risk from terrorism, political instability and war. Continues terror incidents can potentially cause much more severe disruptions in financial markets, banking and commerce in the future. Whenever and wherever tension or hostilities break out, there is typically a flight to quality assets as investors seek to protect their capital by moving it into assets considered to be safer stores of value. In volatile and uncertain times, over the centuries of political strife and warfare, buying gold was that asset. After all gold is one of a very few financial assets that do not rely on an issuer promise to pay, and is very portable. Carrying just few coins or bars will take you a very long way.

3. Gold coins and bullion can now offer two things for investors – outstanding price appreciation and profit potential. Gold basically has tripled since 2001 and current economic conditions create a very pro gold environment. With stock and bond market uncertainties and continuous global economic instability, gold can produce impressive investment returns. Many financial experts predict far higher gold prices in the months and years ahead. So why not to buy gold?

4. The very question why buy gold coins was answered by the failures of Lehman Brothers, Bear Sterns, stock market crash, mortgage crisis and housing value letdown – all of which caused tremendous loss of confidence in conventional assets like stocks, bonds and real estate, and subsequently forced many people to turn away from paper assets and buy a physical asset, gold. More importantly, gold. Called the Crisis Commodity, cold often outperforms other investments in times of economic and social instability.

5. While the recent rumors about dollar demise may seem quite exaggerated to many, the threat that U.S. dollar will lose its coveted status as world reserve currency becoming more real. So instead of asking why buy gold, go and just buy some bullion. Consider your gold coins an insurance policy, and the one you don’t have to renew every 6 months. You pay the premium only once and it is always there for you and your family.

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