Is The Gold Coin Market The Place To Be If Stocks Crash?

A recent Market Watch article has shocked investors around the nation with its’ prediction that U.S. stock markets will crash before the end of this year. The article, entitled “Doomsday poll: 87% risk of stock crash by year-end” uses data from the stock market crash of 1929, lessons learned during the 2008 financial crisis, and opinions from esteemed individuals such as billionaire investor Warren Buffett and economist Peter Schiff, who more than once has correctly predicted national financial tragedies.

If U.S. stock markets were to tumble by hundreds or thousands of points (depending on the market in question) would gold coin prices go sky-high? Maybe. Then again, maybe not. Let me explain. A tumbling stock market could be due to an overvalued market. If stock markets are a general bubble, then gold could climb to ridiculous heights as investors moved away from paper and into hard assets like gold, silver, oil and so on.

If stock markets fell due to manipulation, either because of black box trading, hackers or the Federal Reserve, gold and other commodities should do well. If, however, a catastrophic world event or breaking news that changed the face of the entire U.S. and/or world economy, gold could fall and fall hard. Remember, the physical side of the gold market is very small when compared to gold derivatives like futures contracts and ETFs. It would still be wise to own gold coins because if the dollar collapsed you would still need gold and silver to buy goods and services for yourself, family, friends and other loved ones, and the purchasing power of gold tends to remain the same whether it is valued at $20 per ounce or $2,000 per ounce. Therefore, whether gold rises or falls if, or in my opinion when, stock markets crash, having some gold coins and silver coins on hand is a solid idea.

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