You can think, probably, that this is a story about coins.
However in a world in which rate of interest are minimal – even unfavorable – then the only knock against gold is suddenly neutered.
In a world where interest rates allow conventional earnings investments such as CDs, bonds and money-market assets to start income for which financiers enjoy, gold has little allure.
Gold has always had one shortcoming that gold bears point to with interest and for which gold bulls have no counterargument: Gold produces no revenues and no income. It is, successfully, a dead possession – or, in being a bit more generous – its a hibernating possession.
In particular, its about 2 gold coins that I just recently purchased in London … and why ancient coins such as these not only represent fantastic worth in the market today, but theyre also among the very best assets you can own in a world where rate of interest will remain low well into the next years and, here in the U.S., could slip into negative territory in coming months.
The Low-Interest Rates Conundrum
Thats our scenario today. Ive been writing because a minimum of 2012 that we would remain in a near-zero interest-rate environment through late in the years, if not into the 2020s. Thats looking more and more possible with each passing financial report and each passing Federal Reserve conference in which Fed governors decide to leave rates unchanged.
We face 2 enormous and indisputable issues that have no simple repair:
But thats simply America.
As I pointed out last week, I invested 3 weeks in Europe on a research objective. All the economists, think-tank officials and corporate officers I spoke with said that Europe can not manage meaningfully higher rates for the exact same reason … which is why so much of Europe now runs under an unfavorable interest-rate policy.
Here we sit – a Western world in such alarming financial straits that federal governments (the very cause of the condition to begin with) have no capability to afford higher interest rates, even though its higher interest rates that would cure financial despair by righting so many financial wrongs.
Instead, were looking at years and years and years of überlow and unfavorable rate of interest.
Which suggests theres no factor not to own gold and trillions of factors (Western debt) why you should.
Which is why I was in London including to my collection of ancient Middle Eastern gold coins.
History and Wealth in the Palm of Your Hand.
There are 2 coins Ive recently added to my collection.
The first one is a Mongol coin minted in Afghanistan in 1221/1222 under the rule of Genghis Khan, among about 200 such coins known to exist. If this were a U.S. coin of comparable rarity, it would go for 10, 20, possibly even 30 times the $10,000 I paid – and one day Im betting it will.
The 2nd one is a coin minted in 1688 under the rule of Aurangzeb, an expansionary Mughal ruler of an empire that stretched across of parts of what are presently India, Bangladesh, Pakistan and Afghanistan. This coin cost me simply $900 – a deal when you consider that its nearly 330 years old, it looks as though it was minted the other day, and India is shortly enabling them out of the nation.
Though theyre not as rare as the Genghis Khan coin, “they are adequately rare that theres a limited supply of them.”.
To me, these are the kinds of coins all financiers and collectors need to own: rare, underappreciated, special and priced well-below what more popular coins of a comparable rarity would bring.
Im not suggesting that these coins will soar in value, though I do think their cost appreciation will be quite remarkable in time. I am saying, nevertheless, that theyre good worth. Whichs what I desire from gold coins today.
Gold Is Not Dead.
The argument that gold is a dead property no longer resonates when cash is just as dead. And in a world where rates of interest will hover hardly above absolutely no for several years – and could extremely well turn unfavorable here in the States – gold is the property to own due to the fact that it will ultimately play a function in revaluing the worlds major currencies.
Picture by BullionVault.
America is developing less jobs for the middle class and above, and is, rather, producing a surplus of low-wage, low-skill service-sector jobs. Thats mostly a function of innovations effect on work (as well as a list of job-killing regulations at the federal level).
Im not implying that these coins will skyrocket in value, though I do think their price appreciation will be quite remarkable in time. And thats what I desire from gold coins today.
I want gold coins that are plainly numismatic rather of bullion, so that in the occasion we do see gold confiscation at some point, my coins are safe. And I want to buy those coins at rates I believe are inexpensive relative to the coin, its history and its condition. To me, those factors all come together in coins of the ancient Middle East and India.
The size of the U.S. debt is so large that if rates of interest go up to just over 4% (which, by the method, is still listed below historical standards), Americas interest expenses will double to nearly $440 billion every year by 2019 … and will leap to more than roughly $830 billion a years from now. Thats according to the nonpartisan Congressional Budget Office.
As I have actually pointed out many times, you want to own physical gold, not paper gold … and you wish to own coins that will escape confiscation orders if those emerge as part of a currency refloat.
So, I desire gold coins that are clearly numismatic instead of bullion, so that in the event we do see gold confiscation at some point, my coins are safe. And I wish to buy those coins at rates I believe are low-cost relative to the coin, its history and its condition. To me, those aspects all come together in coins of the ancient Middle East and India.