Investors buy gold long-term to hedge against inflation and create of wealth, while traders buy gold bullion for short term profits as the spot price of gold fluctuates. Gold is available as bullion, coins and bars, or as rare coins. Gold bullion would seem to be a better choice for short term trading because it can be purchased at 5.5% to 7% over wholesale price. It is likely better go buy gold long-term in the form of rare gold coins as they typically outperform gold bullion over the span of years.
Gold bullion has quadrupled in price over the last ten years and is over thirty-fold higher today that it was in 1973 at $37 an ounce. If, as many fear, the US economy continues to flounder and the dollar continues its long term slide, gold bullion bars and coins will in all likelihood continue to be profitable vehicles for short term investment in gold.
However, investment grade rare gold coins have done even better than gold bullion over the years. The PCGS Mint State Gold Coin Index, a hypothetical basket of investment grade rare gold coins, started at $1,000 in 1970 and is over $110,000 today, a hundred ten fold increase. This is three times the return of gold bullion over the last four decades.
Rare gold coins have a collector value that supports their price when gold bullion prices correct; however, rare gold coins are individual purchases and carry a higher cost to purchase than gold bullion. For this reason, investment grade rare gold coins take longer to recoup the overhead associated with their purchase. As the above figures show, investment grade rare gold coins can substantially out perform gold bullion and are often considered a better way to buy gold long-term.
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