August 10, 2011 – I am totally unabashed in promoting gold coin investments because I am absolutely certain that gold will soon emerge once again as the world’s preeminent safe haven.

August 10, 2011 – I am totally unabashed in promoting gold coin investments because I am absolutely certain that gold will soon emerge once again as the world’s preeminent safe haven. But I must confess that even I am amazed by this week’s surge in the gold price. I knew it was coming, but I never expected such an inconsequential event as a minor credit downgrade would set things in motion.

Whether gold retreats in the coming weeks or not, the seed has been planted and the soil is rich with rotting fiat money. I have always held that the best gold strategy is buy and hold because the goal should be wealth preservation, not wealth creation. The latter is merely illusionary, nothing more than the mirror image of the declining value of money.

Analysts have no shortage of charts and graphs and technical tools to “prove” scores of other investments outperform buying and holding gold, but when it comes to core wealth the assurance of sound returns easily trumps the exchange of greater risk for the possibility of better returns. We all like to gamble, but the guiding rule has always been to wager only what you can afford to lose. In other words, limit risk investing to only excess, or discretionary, wealth.

With that in mind, the current gold price should be of little consequence. Investment averaging, investing a fixed amount at regular intervals, is the best assurance that your money will benefit from long term trends.

Individual investors are at a distinct disadvantage playing short-term movements because those are driven by a vast array of complex automatic triggers. When gold surged to nearly $1800 at noon today, for example, it tripped a lot of triggers and the resulting selloff dropped the price $25 in less than an hour. That is not to say, however, that we should blind ourselves to the signs of a fundamental shift in the long term trends.

This week’s surge has all the makings of such a shift. When put in the perspective of the 30-day charts we see the turning point actually occurred back around the first of August – before the downgrade. Looking back over the year it becomes clear that the first departure form the long-term trend occurred a month earlier than that – now it is just picking up steam.

Investment averaging is designed to protect us from the self-destructive impulse to buy high and sell low, the bane of individual investors. On occasion, however, the prospects of a major shift in trend such as we have today present a justifiable reason to depart from the strategy. You might want to consider buying a few extra gold coins today.

Kevin Johnson

Senior Staff Writer – GoldCoin.net