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Gold Coin Values in Valueless Currencies

Gold coin values have been rising steadily and strongly in recent years, partially due to the relative problems experienced by sovereign nations and their currencies. There has been a great deal of media concerning the problems with sovereign debt in the country of Greece, but several other countries have just as much toxic debt on their balance sheets. The value of gold coins in such countries is difficult to measure, though it can be done with regard to historical situations.

Most presciently in recent history is the case of Robert Mugabe’s Zimbabwe. Under the rule of Robert Mugabe, the value of the Zimbabwean note plummeted to the extent that they were printing billion dollar notes. A wheelbarrow of Zimbabwean notes, literally, were necessary to purchase a single loaf of bread.

During this period of complete devaluation in the Zimbabwean note, gold became the best and most recognized currency of exchange between people. Zimbabwean people relied on gold to purchase the necessities of daily life.

This should be taken as an example the relative strength of the most tangible commodity we have, gold, when the underlying instability of governments and countries completely devalue its currency. There are many people who foresee the same type of devaluation scenario occurring in the United States, particularly since the trouble in the financial sector that initiated in 2008.

Gold coin values are particularly strong in these scenarios because gold coins are a very recognizable form of gold. Additionally, rare gold coins, which are often passed down between generations in families, hold their historical importance and value in these types of events.

A complete devaluation is not even necessary. We have seen a significant decrease in the purchasing power of the US dollar over the past years that partially propelled the price of gold from $681 per troy ounce post Lehman Brothers collapse to its current spot price just below $1,600 per troy ounce.

In the current US market environment, possibly the only logical thing that can be expected by investors and market participants is that there will be further instability. With each instance of instability, the case for gold gets stronger and the relative purchasing power of gold increases in the marketplace. Based on sentiment alone, gold coin values are sure to increase over the coming months and years.

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