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Golden memories can mislead

Trade war.

Stock market crash.

What amazing financial headlines to wake up to this morning.

What does this mean for coin collectors and bullion buyers?

Before you believe the headlines about gold being a safe haven and rush in, it pays to refresh your memory.

Gold may be a long-term safe haven, but that isn’t the whole story.

Its price fluctuates.

In the market crash in 2008, gold plunged with stocks.

Basically everything fell as people scrambled to shore up their financial positions.

Collector coin values dropped.

In the spring auction season in 2008, price records were being set at the Central States Numismatic Society convention auction.

By autumn, you could hear the crickets in the numismatic marketplace.

It wasn’t pretty.

The best place to be initially was in cash.

From the high of 2008 to the low of the same year, gold fell almost 30 percent.

On March 17, 2008, gold was at $1,003.20.

On Oct. 24, it was $711.75.

The high point for the year coincided with the initial financial rumblings that caused Bear Stearns to fail and be taken over.

Gold’s low came during the September-October financial panic.

It was only then that the fortunes of stock owners and gold owners began to diverge.

The stock market did not bottom until March 9, 2009.

By then, gold had recovered to $920 – still down from the high of the previous year.

Then began the story that collectors and bullion buyers remember.

Interest rates fell. Quantitative easing arrived. Gold went on steroids.

By the beginning of September 2011, gold had added $1,000 and was reaching its all-time peak of $1,900.

So if you are tempted to jump into gold today, perhaps you should take a deep breath and look at the Kitco price charts, as well as the those provided by other firms.

Coin collecting is a wonderful long-term pursuit.

However, it pays to make decisions based on long-term plans rather than on impulse when the financial headlines and happenings are as crazy as they are today.

Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017 . He is editor of the weekly newspaper “Numismatic News.”

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3 Responses to Golden memories can mislead

  1. sneauman3@gmail.com says:

    I’ve been under the impression for years that owning any US Legal Tender was or is ” CASH “. There is the face Value as well as the Precious-Metal Value, so explain why just holding regular cash is a better idea ?

  2. sneauman3@gmail.com says:

    If in front of you there is a pile of 1 million Dollar bills, and another pile of Silver Eagle Dollars and you could only take possession of one pile, which one would you choose ?

  3. Tom D in SC says:

    OK, suppose I took the pile of Eagles. Now the US dollar is worth the same as Zimbabwe dollars. So now I’m hungry. I take some of those Eagles to my local Winn-Dixie and pay for the pile of food with a batch of Eagles. The Winn-Dixie isn’t going to give me change in 1964 quarters, even if he had them. What I get in change will be the funny money I’m hedging against won’t it?

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