Washington Irving’s Rip Van Winkle slept for 20 years. Bullion buyers in 1980 had to endure 21 years before the final bottom was put in place for gold in 2001 and the long up market began.
What will happen to today’s bullion investors if there is another prolonged lull in the upward progress of gold?
It is one thing to cite statistics that show the value of the U.S. dollar has declined. It is quite another to live it day to day.
Some refer to the 1913 value of the dollar and compare it to the present value. They correctly point out that in terms of gold the dollar has lost 98.4 percent of its value.
I assume it is because that is the year the Federal Reserve System was established by Congress and signed into law by President Woodrow Wilson. In December we will mark the 100th anniversary of this event.
Opponents of establishing a Federal Reserve said it would lead to an inflation problem. They were right.
There has been a great deal of inflation since 1913.
Having gold helps hedge against it.
Nobody I know is able to buy gold with the intent of keeping it 100 years.
Those who have owned gold since 2001’s bottom have done well, though the peak price was attained in 2011. Owning it was a nice way to ride out the financial crisis.
The question becomes what next?
If you are a coin collector, keeping gold in perspective is much easier because it places the metal in a context of building a set. When prices are high, collectors tend to slow or stop their purchases, when they are low, they take advantage of bargains.
If gold pauses in its upward climb, collectors would take advantage of the hiatus and simply keep collecting.
Investors, on the other hand, might be the Rip Van Winkles, vanishing now only to return to us in a couple of decades.
Buzz blogger Dave Harper is winner of the 2013 Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper “Numismatic News.”