October 9, 2009 – Our dollar has shown some resiliency today, as evidenced by the dollar index, which is up slightly against other major currencies right now. However, the long-term trend of our cold hard cash has not been so hot lately, and is subsequently widening our international trade deficit. Our nation’s weakening dollar could play a major role in the budget discrepancy, and this could increase the price of some gold bullion coins that are imported from overseas. There are a wide variety of international gold bullion coins, such as the Chinese Panda, the Australian Lunar Snake, and the French Rooster. Many US investors use these bullion coins as a short-term investment vehicle, because they closely track the active gold spot price. If our federal trade deficit continues to rise, however, these affordable coins could become more expensive.

When our currency weakens, it makes US-produced goods cheaper in markets that use a currency other than the US dollar. In the same manner, items that have been produced overseas become more expensive when our currency falters. The American Gold Eagle is currently trading at 6.5% over the spot price per ounce, and some gold bullion investors fear that coins that have been minted overseas could soon carry premiums of 9-12% due to our weak economy. Investors who would like to purchase gold bullion, which is traditionally used as a simple, short-term hedge against inflation, are encouraged to research bullion bars, which carry a lower cost that many government-minted coins. Johnson-Matthey, Engelhard, and Pamp-Suisse have 24 karat gold bars available in a variety of sizes.

On the back end, foreign-made bullion coins may not maintain the premium that they carried when purchased, so long-term investors are encouraged to take a position in the certified gold market. Certified US-minted coins have historically maintained their value during high inflationary times, and they provided investors with a privacy benefit that bullion holders could not lay claim to. By contacting a gold exchange that is qualified to deal with a wide variety of gold investments, investors can ensure that a commission-based broker’s self-serving motives do not interfere with a wise purchase. 

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Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org