Gold's Value as a Safety Net
The romance and allure of gold is enhanced by its unmatched versatility as an investment vehicle. Gold's value is intrinsic. It is a precious metal that cannot be destroyed or altered.
Gold is highly liquid, has few geographic boundaries and can be bought, sold and stored in most parts of the free world with privacy. Because of its global market, the price of gold cannot be easily manipulated by any single nation or borrower. On the contrary, gold is widely thought of as the foundation of the world's monetary system. In a world where other assets, such as currencies, are depreciated by high inflation or interest rates, gold acts as a superior hedge against inflation.
A common example is the saying that an ounce of gold could buy a quality men's suit at any point in history. Another reason for including gold in your portfolio is its diversification qualities. In other words, the price of gold frequently moves in the opposite direction from equities and fixed income securities. In addition, in times of political and economic uncertainty, gold's value traditionally rises.
Numismatic Coins for Collectors and Investors
There are two types of gold coins that are featured at this site, numismatic and bullion. The chief difference between numismatic coins and bullion coins lies in how they are valued. Unlike a bullion coin which derives its value from its gold content, the value of a numismatic coin is determined by a combination of variables including age, rarity and its condition. Numismatic coins, such as pre-1933 United States gold coins, are highly sought after by astute collectors and investors for their beauty, historical value and investment potential. The growing popularity of modern issue numismatic gold coins is evidenced by the 1.8 million ounces of gold used in 1988 to mint such coins. In 1978, only 600,000 ounces of gold were used for this purpose. There is a gold coin or bar to fit almost every investment strategy. Whether your investment approach is conservative or aggressive, or whether your primary objective is preservation of capital, income or growth, gold can play a vital role in your portfolio.
Gold Bullion Coins
For investors who value the ease with which coins may be bought, sold and converted into cash, bullion coins make an excellent choice. Guaranteed by the issuing nation, a gold bullion coin is usually a legal tender coin and may have a nominal face value. In 1988, 3.1 million ounces of gold were used to meet investor demand for the U.S. Eagle, Canadian Maple Leaf, Australian Nugget, China Panda, Mexican Centenario and English Britannia. The most popular bullion coin was the Canadian Maple Leaf, which used 1.2 million ounces of gold, followed by the U.S. Eagle, which used 680,492 ounces. Bullion coins are also usually issued in convenient troy ounce-related weights, and are bought and sold at prices that include a small premium over their intrinsic gold value. The bullion coin usually has no collector value, with the exception of early-date issues of the Panda coin, which are valued both for their bullion content and numismatic appeal.
Gold Bars -The Traditional Way to Own Gold
If you would like to have physical possession of your gold and you want to pay the lowest possible price for it, you may want to consider gold bars. Gold bullion bars typically trade at the lowest possible premiums over their intrinsic gold value. Although the standard unit of gold in international trading is still the 12.5 kilogram (400 troy ounce) bar with a fineness of .995, known as a "London Good Delivery Bar" most investors deal in smaller sizes. Swiss America offers bars ranging from the petite one gram wafer through the hefty 100 troy ounce gold bar. For those who admire the Statue of Liberty and adore Pandas, don't miss the Liberty and Panda Mini-gram and Maxi-gram bars! They make wonderful gifts! If the spot price of gold is $350, the gold bars described in this file sell for prices ranging from about $35 to over $35,000 - providing opportunities for even the most modest of investors. Spot prices of gold are published daily in most newspapers around the world. It would be easy for you to sell gold bars because each bar bears the stamp of a respected refiner and is accompanied by its assay certificate to prove its authenticity.
The Enduring Value of Gold
By demonstrating an interest in owning gold, you join an elite group of knowledgeable investors who value the tangible and symbolic significance of this treasured precious metal. This brochure pictures and provides technical specifications for the world's most popular bullion coins, rounds and bars. As you admire their luster and beauty, you will understand why the allure of gold has captured the imagination of countless generations. Through the centuries, gold has been an enduring symbol of wealth and power.
Gold's 5,000-year history can be traced back to the Egyptians in 3,000 B.C., when this ancient civilization linked the power of gold to the life-giving Sun God Ra. In ancient Greek and Roman times, gold was used to decorate temples and was offered to the gods. In the centuries that followed, gold's religious and regal uses inspired all of the ancient civilizations to treasure the metal and to use it for personal adornment and as a symbol of power. Then, in 560 B. C., King Croesus of Lydia discovered another use of gold when he struck the first gold coin. The King, stamping gold coins or bars with his personal heraldic device, made gold his king dorrys "coin of the realm" or "legal tender." During the following 2,500 years in the evolution of world trade and commerce, gold emerged as the preeminent global currency as thousands of gold coins were minted by many countries.
Today, gold coins are still highly desirable by investors as a trusted store of value and as a recognized medium of exchange. Many of the rarer gold coins are valued by knowledgeable coin collectors at substantial premiums above their bullion value. Additionally, gold bars are held by central banks to assure their ability to make international payments.
The Fundamentals of Gold
No other substance embodies the unique characteristics of gold. Its luster and beauty are unsurpassed. It combines easy workability, excellent conductivity and virtual indestructibility. And it is rare! During all recorded history, less than 100,000 tons of gold have been produced. Imagine, one could store that amount of gold in a cube with sides 57 feet long!
In 1988, the free world increased its mine production of gold by 11% to 1,538 tons, up from the 1,382 tons mined in 1987. Even with this increase, the mines could meet only 60% of free-world demand. In 1988, the shortfall was met by gold loans and forward selling, gold scrap and gold from Communist countries. The five largest producers of gold in 1988 were South Africa (33.1 %), the Soviet Union (15.9%), the United States (11.0%), Australia (8.3%) and Canada (6.8%). Obviously, if gold production/exports from either South Africa or the Soviet Union decreased, or if existing gold scrap supplies were seriously reduced, even today's demand for gold could not be met. The result would likely be a strong upward pressure on gold prices.
What about demand? Since 1980, free-world demand for gold has increased 116%. I n 1988, physical demand for gold soared 33% from 1,936 tons in 1987 to a record-breaking 2,588 tons. This record demand was sustained by the jewelry industry (57%), gold investors (18%), government purchases (10%),electronics (5%), purchase of official coins (4%), miscellaneous industry (3%) and dentistry (2%).