The market for gold coins seems to be jumping around in a box lately.

March 05, 2011 – The market for gold coins seems to be jumping around in a box lately – just when it looks like it will jump out of the box something slams the lid back on. Wall Street gleefully declares that is proof that gold has hit the ceiling, but still it’s just the lid of a box sitting on the floor of a very tall room.

Still, powerful forces must be at work to maintain the strength of the dollar and the safe-haven status of US Treasuries when the rest of the world can plainly see that the US economy is mortally wounded. The simple truth is that in the short run it is in the best interest of the global economy to make the dollar appear healthy.

The US economy was so vast and powerful for so long that it earned a reputation for stability and resilience unparalleled anywhere else. The dollar was a natural to become the world’s reserve currency. Other more prosperous economies, such as Switzerland’s, just didn’t have the necessary bulk. Treasuries soon became the investment of choice among foreign nations and eventually they came to represent the lion’s share of global reserves.

That represents a mighty big chunk of sovereign wealth and dumping it would be disastrous. With the emergence of a viable alternative reserve currency still years – or even decades – away, gold is the most logical asset for nations to hold while the dollar declines. The world can’t hold up the dollar forever, and in fact the transition is already under way.

Most notably China has significantly increased gold imports while their central bank has begun its gradual divestment in America, Inc. Others are following suit and sooner or later the lid will come off the box for good.

When it does, the true potential for gold coin investments will be revealed.

Kevin Johnson

Senior Staff Writer –

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