Gold Bubble Concerns: Should You Buy Gold Coins?

If during 2005-07, you financed housing, you drove up the prices of housing; if during the last few years, you purchased Greek bonds, you propped up Greek spending. In both the cases when the crash finally came, not only did the value of assets fall, but borrowers still remained underwater with lots of loans remaining unpaid. As a result, the values of their houses have sunk lower than their mortgages. This is a long-term drain as borrowers must payoff loans to their lenders who cannot underwrite them. Both sides are hosed down and remain so for a long duration.

But should you be plagued by concerns of a gold bubble? Say for instance, you purchase gold, after which it collapses. What happens next? Well, there is no one on the other side of the fence that you have to be liable to. You will just be left with a bit of less valuable metal. Therefore, when compared to other volatile assets such as bonds, stocks, property etc., it is safer to buy gold coins.

While history shows that prices of assets cannot go on increasing indefinitely and that there will always be crashes, bear markets and pullbacks, it still isn’t clear whether the precious metal is in a bubble. According to Frank Holmes, CEO of U.S. Global Investors and chief investment officer, “Gold’s naysayers have been calling gold a bubble since prices reached $500 an ounce.”

Buy Gold Coins: Gold Report 2011

The demand for gold as an has been increasing worldwide. According to Professor Anil Gupta at the University of Maryland Smith School of Business, for many people gold still remains the least risky option as compared to other alternatives. Gupta said, “If I look ahead at least over the next two, three, four, five years, the likelihood of volatility in world economies, in the stock market, it’s likely to remain high." According to Gupta, gold is more likely to be perceived as a relatively safer option in volatile market conditions.

According to the statistics reported by the World Gold Council’s Q2 2011 Gold Demand Trends –

 Gold demand in China and India, grew by 25 percent and 38 percent respectively over the second quarter on a ‘year over year’ basis. The WGC said that this growth is quite likely to continue because of the high inflation levels, increasing economic prosperity as well as the forthcoming gold buying festivals.

 The quarterly average price of gold increased by 26 percent over the second quarter.

 Global demand for jewelry touched 442.5 tons during Q2 2011, i.e. a rise of 6 percent as compared to the global demand a year ago.

 Demand for gold coins and bars increased by about 4 percent during Q2 2011 on a ‘year over year’ basis.

Buy Gold Coins: The Best Options

Wondering which gold bullion coins are the most popular ones? To name a few, the American Eagle, the Canadian Maple Leaf, the South African Krugerrands and the Chinese Panda are among the popular ones. Gold buffalos are also popular among buyers. Finally, when it comes to finding the best option, it will all boils down to your budget and your personal preferences as well as your goals as to whether or not you buy gold coins.