Why Precious Metal Prices Rise
Real Money Stands the Test of Time!
Thanks for your interest in learning more about real money, gold and silver coins! Swiss America was established in 1982 to assist Americans in planning a precious metals portfolio to help preserve wealth.
Today gold and silver coins represent a timeless store of value in a world of declining paper currencies. Tens of thousands of Swiss America clients have followed our simple 'Swiss Diversification Strategy' road map over the decades.
Before investing in precious metals it is important to understand the times in which we live and the market fundamentals driving the world back toward tangible assets in a world awash in debt and money substitutes.
The bullion and rare coin markets are driven by a variety of complex forces. Since 2001, both internal and external forces have combined to create a major "secular" bull market in all forms of "real" money.
Seven major forces propelling gold and silver prices higher in the 21st century.
1. A Falling U.S. Dollar
- Gold is sometimes referred to as the 'anti-dollar' because it is a perfect hedge against a falling dollar.
- The dollar has fallen 40% since 2001 and 95% since the 1950s. Shocking, yet few Americans understand why.
- Smart investors are moving in droves out of U.S. dollars and into foreign currencies, commodities and gold. Even central banks are divesting dollars.
- The U.S. now borrows $2.5b a day! Devaluing the dollar is one of the ways the market corrects rising U.S. deficits.
- The world's confidence in America's ability to manage our trillions in debt is fading fast.
2. Rising "Real World" Inflation
- The Federal Reserve and the U.S. Government's Consumer Price Index report inflation at 2-3% a year, yet common sense says real world inflation is likely twice that amount.
- When you factor in monetary inflation (printing money), asset inflation (stocks and housing) and price inflation (cost of living) it's clear that inflation is rising much faster.
- Gold and U.S. rare coins historically have an excellent track record as inflation hedges.
- "Inflation is the one form of taxation that can be imposed without legislation," said economist Milton Friedman.
3. Growing Commodity Demand
- A secular bull market in gold, silver and commodities began in 2001, which has driven oil prices up from $25 a barrel to over $80 and pushed gold prices up fourfold.
- According to industry experts, a typical "secular" (or long-term) bull market runs 18 to 23 years. Using 2001 as a starting date, this trend should continue until 2019-2024.
- During the last major bull market, U.S. rare coins outperformed bullion dramatically, but price increases often lagged behind bullion price movements.
- "The commodities 'supercycle' isn't over and prices may rise because of production shortages next year," says Morgan Stanley, the world's largest securities firm.
4. Rising Geopolitical Uncertainty
- Since September 11, 2001 the world has increasingly become an ideological, political and economic battlefield. The threat of a terrorist attack is present every day.
- "Iran, Iraq, Palestine, Afghanistan and Syria are volatile and potentially explosive... any trigger event could send both gold and oil prices soaring," say the Aden Sisters.
- Owning portable, liquid and universally accepted wealth is highly sought after in a crisis. Gold and rare coins offer the safest of havens during global uncertainties.
- Institutional and individual investors are now seeking a perfect hedge of protection, liquidity and growth potential, along with privacy of ownership.
5. The Popularity of ETFs (Electronic Traded Funds)
- A gold or silver ETF is a security backed up by allocated gold held in a vault on behalf of investors and are sold at all major brokerages.
- Gold bullion placed in ETFs has been one of the fastest growing niches in the gold rush despite growing concerns over fund transparency.
- ETFs have siphoned off some of the new investment money coming into the market, presenting an excellent buying opportunity for U.S. rare coins.
- ETFs are not a replacement for holding physical gold or coins in a well diversified portfolio.
6. Increase in Internet Trading
- The educational and entrepreneurial impact of the Internet has dramatically changed the coin market in the last few years, both for the better and for the worse.
- Buying any rare collectible item from an unknown source is not without risks, such as buying counterfeit or stolen coins or never receiving any coins at all.
- The greatest risk is inherent in buying any "sight unseen" coin. It could easily be overpriced unless it is a "sight seen" coin examined by professionals.
- Auction Web sites offer significant risks for the buyer but also offer a new market for sellers; helpful if you didn't buy coins from a dealer who will repurchase them.
7. Growing Interest in Coin Collecting
- The U.S. Mint has heavily promoted modern coin collecting since 2000 with its Statehood Quarter program; adding 140 million new collectors to the market.
- In 2006 the U.S. Mint released its first 24-karat gold coin, the American Buffalo. U.S. American Eagle Gold, Silver and Platinum coins are allowed in a precious metal IRA.
- In 2007, the Mint began issuing new Presidential $1 coins it hopes will "mint a new generation of amateur numismatists." These new coins may never be rare but national promotion by the Mint still has a positive effect on the coin market.
The next step is to review the types of gold and silver products offered by Swiss America that might best fit your investment needs. Go to Products Introduction ...
WATCH: 5 Steps Before Buying Gold or Silver
$20 Gold Coin Investments
Introduction to Morgan Silver Dollars
Brief History of Coins and Precious Metals
Rare Coin and Precious Metal Glossary
Rare Coin and Precious Metal Weights and Measures
Coin Grading Information
Fineness and Karat Weight Chart
* Past performance is no guarantee of future performance. All investments have risk.