It is first important to distinguish between bullion and rare gold coins, which you can read more about in this blog or click on the rare gold coins link. Owning gold coins for long-term appreciation has proved to be lucrative in the past. It fact PCGS, one of the top two grading companies in the world has documented rare gold coin performance since 1970. They claim in their mint state rare gold coin chart (which is an index of coins) that since 1970 a $1,000 initial investment would be worth roughly $115,000 today. When comparing this chart to the DJIA (Dow), mint state rare gold coins have outperformed the Dow close to 11 to 1. You can do this calculation yourself to check out this comparison.

Rare gold coins have been accumulated by investors and collectors alike for many centuries and some collections have been documented as performing very well. Check out these examples:

1. Harold Bareford reportedly bought a collection of American gold coins for $13,832 in the early 1950s which was resold at auction in 1978 for $1.2 million.

2. Louis Eliasberg, built a collection that cost approximately $300,000. In 1982, it sold for $12.4 million at auction.

You can see that rare gold coins have performed well in the past, and it should be noted that past performance is no guarantee of future performance. We are currently experiencing a bull market for gold. Gold has gone from $252.85 in August of 1999 to $1,113.20 where it is now, at the time of this writing. That is a 340% increase in ten years. Gold bull markets make all gold boats float higher, and as a result we have seen rare gold coins perform very well and I fully expect them to go even higher as we enter the final or third phase of the gold bull market.

The third phase is the speculative or panic phase. This is where everyone wants in and everyone is putting their money into the asset driving prices above its fundamental value and usually very rapidly. We have not seen this third phase yet in gold and I believe it is still a few years out before we will.