World Money Supply Correlated to the Price of Gold

Many investors are worried about a possible inflation for the US economy. Wealth preservation is correlated to the global supply of money and inflation together with gold prices. The application of quantitative easing by central banks will bring down world currencies which bring on inflation according to history.

Money supply effects

When there is an increase in money supply, there is a tendency for gold prices to increase too; this could be a reason for an increase in gold prices in 2010. The reason for an increase in money supply could be a good economy or an ailing economy; in the latter, central governments attempt to increase the liquidity in the market by printing more money.

With that measure, gold price tends to rise; thus, indicating an impending inflation. There is a close correlation between the US dollar value and gold prices. As gold is seen as an asset, with its correlation to the dollar, gold in any form is a better option than stocks, cash, bonds or even properties. A mere 1% change in the dollar value can raise the gold price by 0.9% in just 6 months. Similarly, any change of global currencies can impact the gold price.

As quantitative easing measures are taken, there will be a stronger demand for all forms of gold, such as numismatic gold and gold bullion. Another factor related to inflation and gold prices is the speed of money.

Recession: cause and effect

The 2007 US property market decline kick started the nation’s financial meltdown. Asset backed securities dropped drastically in their value with the extremely high interest rates that led to the current US recession. Today’s recession is considered the worst in decades as the 2008 GDP achieved only a mere 0.6% growth. With trillions lost, central governments stepped in with measures to stop a collapse of global economy.

Failing financial institutions had to be bailed out by the US Federal Reserve and Treasury with as much as $700 billion. More money was needed later in a second round of bail out as interest rates dropped to 0% to 0.25%, which is a record low. Even other nations were affected as all hurried to find a workable stimulus to boost their own economy.

It is uncertain if these bailouts or fiscal stimulus helped stave off deeper inflation but a price has to be paid which saw a great increase in the global supply of money in 2008, leading to an impending inflation.

There is no accurate prediction over the extent of inflation that can happen later; individuals are concerned over personal wealth protection after experiencing a bad bout of financial meltdown in 2007. We are not out of the forest yet. Hence, gold is the better asset to have currently with its consistent good performance for the past 10 years.

More reasons to Acquire Numismatic Gold Coins

Alternative asset

Numismatic gold coins provide an alternative in an individual’s portfolio. Just as the saying goes, ‘do not put all your eggs into one basket’, it is the same with investments. Diversification in investment assets is the main factor to success in the long run. When an investor puts a mix in his portfolio, there is more safety with the different characteristics to hedge his wealth over adverse trading. Numismatic gold performs independently from paper investments like stocks and bonds.

Liquidity

Numismatic gold is considered one of the more liquid assets that one can own as it is marketable any time or place. You need not worry about getting quick cash when there is an emergency because there are always ready to buy gold coins. The transfer is quick without long legal processes. There are many available traders of numismatic gold, whether collectors or professional traders, with a growing base every year.

Tangible real worth

These numismatic pieces of gold contain a real value that can be felt in your hands. It is a tangible asset. You can feel its worth literally. Paper investments are just promises written on a piece of paper which may carry no worth in adverse conditions as the legal authority may not be able to make good on its surface value. But in contrast, numismatic gold has been mined for many years with an intrinsic value stamped on each piece regardless of its collector or type.

Portable and Available

These special gold pieces are easily available for ownership; you can find some good deals even online and they are also easily portable since they are small. Depending on its current value, a small quantity can come to a substantial amount of wealth which can be transported discretely which cannot be done with bigger tangible assets such as art, classic cars or houses. Coins can range in value from a thousand dollars to a few million dollars.

Affordable to all

Numismatic gold pieces are affordable; it is not true that one must be wealthy before you can own one of these rare gold pieces. Many wealthy collectors and investors of numismatic gold coins started off with a small quantity before growing their quantum and their collection. There are many pieces of numismatic gold that are affordable in the market today.

History in the cast

Owning a piece of numismatic gold is likened to owning a beautiful piece of American history in artistic form. Each piece was crafted by a skilled American goldsmith or craftsman or artisan at the start of American history. These gold pieces embody the history of their time while displaying the fine craftsmanship by famous artists. No other assets encompass this feature.

Methods of Investing in Gold

The number of people looking to invest in the precious commodity of gold is increasing with time. This is because more and more people are becoming aware of the undying value of gold and its many advantages, especially when it comes to securing the rest of one’s portfolio. It is no wonder that this commodity is referred to as the wealth protector by buyers.

Gold buyers consist of individuals as well as institutions. There are varying methods of buying gold coins and the one an buyer chooses to use may be influenced by the quantity of gold he or she wants to own, as well as the needs and goals of that individual. This is why it is important for all buyers to make sure they evaluate and analyze their gold investment strategy.

This form of acquisition should be given the same importance and consideration as any other type of purchase. One of the worlds’ most recognized ways of buying gold is using gold bars. Although only a few countries still make this method easy, it is still preferred by many, especially investment institutions.

Another popular method of buying is gold coins which are characterized as bullion coins. Such coins include the American Eagle, American Buffalo and the Canadian Maple leaf. Although these coins are not found in all countries, their use is largely preferred in the countries where they are available. Gold certificates are also used in gold investing. In this case, a gold owner gives the commodity to a bank; it is then kept in a vault and the owner is given certificate of ownership.

Gold accounts are almost the same as gold certificates, only in this case, the owner can control the buying and selling. There is no need to make a real physical gold transfer in this case. Exchange traded funds is another method of gold buying. The funds are traded just like mutual funds in the stock exchange. Although this method incurs some commissions and fees, it still comes in handy for most investors.

Another way a buyer can purchase gold is by taking up shares in a gold mining company. Although not very popular, some larger institutions give this method a try fully aware of the risks involved in it. There is a chance of making great profits and returns when times are good and the market is doing well.

Gold Bullion vs Numismatic Rare Gold Coins

Many people are starting to get interested in how to buy gold. For those that are new to buying gold it can be confusing on the best way to own gold. Buying gold is an important decision and finding an experienced gold brokerage firm can be a good idea to get your questions answered.

The true benefit of owning gold comes from owning physical gold which is different than gold funds, gold mining share, and other gold accounts which leave you vulnerable to downward trends in price.

For greater understanding which is the best way to buy gold for yourself you have to understand the two basic types which are gold bullion and numismatic gold coins.

There are many different forms of gold bullion coins or bars which are issued by countries around the world. The most popular gold bullion coin is the American Gold Eagle. Others forms of gold bullion include Canadian Maple Leaf, Austrian Philharmonic, and the South African Krugerrand.

The price of gold bullion is determined by the spot price of gold plus a small premium for the purchase of the physical gold. Gold bullion can be purchased in 1/20, 1/10, 1/4, 1/2 and 1 ounce sizes.

Numismatic gold coins which are also called rare gold coins have a few advantages over gold bullion coins which adds to their value. Numismatic gold coins are not minted any more unlike gold bullion coins which are minted every year. The scarcity of rare gold coins adds an intrinsic value beyond the just the gold content. Numismatic gold coins are what is called a private position in gold which allows sale of these coins without a 1099-b IRS reporting.

How to Determine the Value of Gold Coins

Although there is a lot of buzz in the online world about gold coins these days, most people are disappointed with the returns that get from this precious metal. The main reason behind this is the lack of proper knowledge regarding the value of a coin. Several factors influence the value of gold coins. Let us briefly look at some of these factors.

Rarity

This is one of the most important determinants of coin value. The rarity of a coin depends on the limited number of coins originally minted and the surviving population. In general, the rarer a gold coin is, the higher is its value. For example, a rare 1933 Double Eagle Gold Coin was sold for $7.59 million at an auction in New York in 2002. Rare coins can be obtained from auctions, coin shows and dealers.

Grade or Condition

The condition of a coin largely influences its value. If a coin is in better condition, it is assigned a higher grade by the Professional Coin Grading Service (PCGS) and the Numismatic Guarantee Corporation (NGC). The higher the grade of a coin, the higher will be its value. On the other hand, if a coin’s condition has deteriorated over time, such as scratches on the surface, damage of any kind or wear over the years. it is assigned a lower grade by the authorities.

Quality

The quality of a coin plays an important role in determining its value. However, it is not easy to determine the quality of a coin properly and an expert’s eye is needed for this. The quality of a coin depends on many characteristics, such as flawless mint state, survival condition, strike, luster, coloration and overall eye appeal, which give it a unique presence among other coins of the same grade or design. The better the quality of a coin, the greater is its value.

Popularity

Popularity also determines a coin’s value. Some coins possess great value simply because they are more popular. For example, the St. Gaudens Double Eagle, which is considered to be an excellent work of art, is extremely popular and thus holds immense value. On the contrary, the coins that are in less demand, such as the US “pattern” coins and half-dimes, possess lower market value. Popular gold coins would therefore offer better monetary value as well.
Price

All the characteristics of a coin including rarity, condition, quality, popularity, and price when combined together provide a coin its true value.

Things to Consider while Buying Gold Coins

Buying gold coins must be preceded by thorough research of ongoing gold prices in different markets. There are a number of factors that affect the value of gold. This makes is important for buyers to gather information on coins, their make, type and amount of fold beforehand. If you are new to buying gold coins, the best way to gain knowledge of the industry is to refer to The Guidebook of United States Coins, popularly as the "Redbook." The book has information on every type of every coin minted in the US.

The value of a gold coin is directly proportionate to its purity. Gold, in its purest form, is measured as 999 gold parts to 1000. Gold that is moderate in purity is measured as 917 parts to 1000. To get the price details of various coins, one could check websites that sell gold coins.

Typically, the value of older gold coins appreciates much faster than that of the newer ones. This is because old coins are generally preferred by hobby collectors.

Buying Gold Coins that are Rare

If you wish to buy rare gold coins, it is crucial to have knowledge of the industry. You can find in-depth information on the Internet. It is important to be careful when selecting the source for buying gold coins. This is because the sale and purchase of fake coins is very prevalent.

You can get in touch with experienced dealers associated with organizations such as the Professional Numismatic Guild. Such dealers must be regular attendees of coin collection events and auctions to be able to provide to sound advice.

Before you buy rare gold coins, ensure that these are graded and certified by the two leading coin grading firms - Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). Coins graded by these firms are accepted universally.
The difference between buying regular gold bullion coins and other gold coins lies in the amount you end up purchasing. The purpose of buying gold bullion coins is not collection, but investment. So, these are typically purchased in large quantities. Those who buy rare gold coins consult with a professional for recommendation on specific coins.

Paper Bags or Plastic bags: Every Thing You Need to Know

You may not know that the question of paper or plastic is a far bigger question for eco friendly conscious people than you would think. The use of plastic bags is much more rampant in the market than paper bags because of many reasons and one such reason is that the cost of plastic bags is much less than the paper bags.

Manufacturing of Paper Bags:

The manufacturing of paper bags is a long and complicated process. These bags are made from the trees and they have their environmental cost as well. The use of trees for making these bags is not good for the environment and the forest habitat. This results into long run damage to the ecology. Also the cutting down of trees and carrying them to the manufacturing units requires the use of heavy machinery and the transportation then consumes much of the fuel. After these trees reach the desired place, there is a long process of drying the trees and extracting the pulp, then bleaching and washing of the pulp and adding the color, etc. This whole process requires a lot of resources which can be otherwise utilized for better reasons.

After Use of Paper bags:

There are different possibilities like either you can compost them or throw them or you can recycle these bags. The recycling is again a complicated and tricky process and requires the use of a lot of resources again.

Manufacturing of Plastic Bags:

Plastic bags are made completely differently from the paper bags. Plastic bags are the side products of oil and are produced by the refining process of oil. The big resource input which is used in the production of plastic bags is the energy in the form of electricity.

Recycling of the Plastic Bags:

Plastic bags are recycled but it is not an easy process and requires the melting and casting of the plastic again. This is also an energy consuming process and after the recycling, the quality of the plastic gets hard and this cannot be recycled again.

Which bag to use: Paper or Plastic?

The comparison between these two bags can be made by looking at the energy consumption, environment emissions and all other costs of recycling and production. According to some statistics, plastic bags are better as they consume less amount of energy and other air emissions while paper bags consume more resources than the plastic bags.

So to support the go green cause, the bags which consume less of the resources should be used.

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