Gold Coin Value to Be Reevaluated

The actual value of gold coin in the current market and in real trade is actually very difficult to determine. We have the spot price, which is the raw metal on the market, an additional premium that accounts for gold in its recognizable and authorized coin form, and then we have actual exchange value, which is sometimes very far and removed from the market.

Of all the above, the actual exchange value is most difficult to determine and its effect on the spot price is relatively unrecognized. The goods and services you can purchase for a one ounce gold coin are on an historical scale. In Ancient Rome, a one-ounce gold coin would purchase a year’s worth of food, shelter, and clothing. In terms of this historical index, we are not anywhere near the value a gold coin should convey.

The supply of above ground gold has not really changed, so we must attempt to account for the value difference in other ways. Since the emergence of the paper market, the gold coin value has really decoupled from its market price. As with everything where there is a futures contract, the prices are partially driven by speculation. In some cases, such as wheat, that may drive prices up. In other cases, it can artificially bring prices down.

There has been a raging debate in the gold market for several years now about the gold price and whether it is artificially low for real market value. It seems at this point that the entire market is so saturated with artificiality that speculators, investors, and economists can no longer find the means to argue about the gold market’s fundamental prices. We have divested ourselves from the actual goods associated with price long, long ago.

However, gold still represents one of the last bastions of real wealth and free market capital. The supply of gold cannot be manipulated or regulated nearly as easily and often as the supply of Federal Reserve Notes, for example. We can’t print more gold. Therefore, it is one of the most sound investments we have, given the market.

In this sense the gold coin value has a market value and it has a separate but related real market value that gives it the market power we will continue to see for many years to come.

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