Many investment advisors warn against the dangers of keeping a highly correlated investment portfolio. There are countless examples, historically as well as recently, of the dangers of narrowly focused investing. When the market begins a downturn, people with undiversified portfolios feel the effects severely. Investing in gold bullion stabilizes the outcome of the economic decline and flow. Although one misses out on potential huge gains, one is spared the potential large losses of a downturn. A portfolio that includes investments in precious metals like gold coins and bars also requires less exhaustive management than one built on stocks alone.
Gold is an excellent asset because it cannot be easily inflated like currency. In times of crisis, the worth of gold increases; we have seen this with the recent rise in the worth of gold. The same cannot be said for the worth of the dollar, which has been falling. This effect can be seen in everyday life as well as on the ticker of MSNBC. What can you buy for a nickel anymore? Simply stated, investment in precious metals is protection against the roulette wheel of stock investment.
Once you have decided to invest in gold, it is important to realize that not all gold is the same. Because gold can be collectible as well, its value can actually be increased beyond market averages. Gold bullion is subject to the market price, which is based, simply, on whether the greater portion of gold is being bought or sold. Collectible coins, however, are not subject to these fluctuations. A historical, rare coin in good condition is worth far more than just the value of its bullion.
The worth of certified gold coins is determined by the combination of three factors: rarity, grade, and historic value. The rarity of a coin is based on how many were minted. Logically, the fewer minted, the more valuable the coin. The grade of a coin is based on an aesthetic scale, and is provided by a grading service such as PCGS (Professional Coin Grading Service) and NGC (Numismatic Guaranty Corporation).
When collecting from a reputable coin dealer, investors can ensure that they are getting the best price on both gold coins and gold bars compared to the spot price of gold and the numismatic value of the coin itself. Then, the diverse portfolio created will consistently bring the investor value through the best and worst times of the economy.
This information is provided for general reference purposes and does not constitute professional advice. For detailed coin collecting or investing information, please consult with a professional expert.