There is a right way and a wrong way to invest in gold coins.

May 11, 2011 – There is a right way and a wrong way to invest in gold coins. The wrong way is to tally up your investment’s worth every day and fret about every little dip in the price. The right way is to put the coins away somewhere safe but accessible so from time to time you can take them out, admire them, and then put them back. Forget about the daily prices, unless, of course, they present an opportunity to buy more at bargain prices.

The current price of gold coins is immaterial. The coins don’t leach out their gold content and their number doesn’t grow or shrink at random. The value of their gold content is a timeless and universal constant, a measure of purchasing power against which all other investments can be unambiguously evaluated.

By that measure the returns from traditional investments are suspect. When compared to real inflation the safest traditional investments are now producing negative returns. PIMCO’s Bill Gross, who manages the world’s largest bond fund, has been scrambling to keep his investments productive, upping his short position on US debt and increasing emerging market holdings while decreasing domestic exposure including mortgages, investment grade credit, and junk bonds.

“Treasury yields are … substantially less than historical averages when compared with inflation,” Gross told Reuter’s. “Perhaps the only justification for a further rally would be weak economic growth or a future recession that substantially lowered inflation and inflationary expectations.”

That it would take a recession to change Gross’ sentiment on US debt is a sure sign that the dollar, like every other fiat currency throughout history, is in irreversible decline. His complex manipulations, however, are of interest only to investors who depend on their investments for income. Until retirement the key objective is to preserve the value of the wealth we accumulate throughout our lives.

In comments made last Friday Former Federal Reserve Chairman Paul Volcker warned us in no uncertain terms that we are running out of time to deal with the debt and deficit crises. I believe that was more a polite way to tell us that in the current political climate it is already too late. The dollar is dead and only artificial life support is postponing the official declaration.

While the cash in your wallet is worth less every day, it is comforting to know that the gold coins in your safe deposit box will buy as much or more today as they did when you first bought them.

Kevin Johnson

Senior Staff Writer – GoldCoin.net