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Why Investing in Gold Bullion Could Cost You Everything

I’ve been buying and selling gold bullion since the mid-1980s, and even though gold was in a bear market at the time I was able to realize profits by watching the technical charts, spending hours each day poring over the tiniest tidbits of news that could possibly affect gold prices, and in general doing everything I could to buy as close to the bottom of each mini-market and subsequently sell at the top. It didn’t always work out for me but more often than not I was able to trade gold bullion without pulling out my hair, which was already disappearing on its own.

In 2001 gold bottomed out at $252 per ounce. It was at this time that I decided to reevaluate my portfolio. Over the next two years I sold 90% of my gold bullion. Before you pull out the calculator to see how much money I lost by selling, let me elaborate. I exchanged the majority of my gold bullion for pre-1933 gold coins, mostly $20 Double Eagles. I bought PCGS-certified versions of the coins and I developed a new strategy: buy, store and forget.

Rather than using my days to study the intricacies of the gold bullion market I simply stored the coins in my safety deposit box and used my time to study the U.S. economy, and what I discovered only strengthened my faith in my strategy. In 10 years home prices grew by 60% on average, but income had only risen 2% in that same time. The vast majority of financial services companies were doing well, but I was hard-pressed to find any manufacturing or production data that could justify such growth.

We all know what happened next: stocks and real estate values plummeted and gold rose to over $1900 per ounce. The U.S. government is on the verge of collapse, and our dollar is practically insolvent. In my research I found out that the last time we were in a similar situation, the U.S. government outlawed gold bullion and paid gold bullion owners a fixed rate of $20 per ounce for their metal before revaluating gold at $35 per ounce, where the price stayed for the next 40 years. I didn’t know any of this when I switched from gold bullion to certified gold coins and silver, but now that I do I try as hard as I can to educate investors about gold’s past.

If you plan on holding your gold for any length of time and “flipping” gold bullion isn’t in your plans, do yourself a favor and take a serious look at investment-grade rare gold coins. Nothing exotic, just MS62-MS65 Double Eagle coins and/or Indian Head gold coins. They have a numismatic value that tends to increase over time, and they could be exempt from any future government gold bullion confiscation. Do the research, because those who forget the past are doomed to repeat it.

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