In 1986 the first American eagle gold coin was minted. This coin is based on the $20 gold piece and is indeed beautiful. The Gold Eagle is America’s first gold bullion coin and it has been popular ever since it was first struck. While not currency the coin does hold a nominal face value, but its real worth is tied to the spot price of gold.
By 1968 the Vietnam War had started to seriously drain the gold reserves of the United States. In an effort to protect the gold reserve from wartime creditors President Nixon unilaterally took the country off the gold standard in 1971. The war debts would now be paid in US dollars, not gold. Up until that time gold hovered around $35 an ounce. Since the gold standard was removed gold has soared to around $1600 an ounce, and has hit $1900 per ounce.
When the US went off the gold standard the dollar became a flat currency. In other words, a currency backed with no tangible assets. The dollar is allowed to float against other currencies to determine its worth. Unfortunately the dollar has lost much of its value since 1971, while gold has done the opposite. Currently the spot price of the American eagle gold coin has been around $1500 to over $1600 an ounce, and this is with a recent price correction that lowered gold’s spot.
Gold is the traditional safe haven people turn to during tough economic times. The dept problems in Europe qualify as tough economic times. This has caused the euro to weaken and the dollar to gain strength. A strong dollar lowers the gold spot price. Many investors have sold their gold and are using the dollar as a hedge. Despite the recent strength of the dollar it remains weak in real spending terms. The question becomes, is it better to stock up on paper dollars or tangible gold?
The dollar may look and act stronger, but it is backed by only the paper it is printed on. Paper money can and has lost its value overnight. Yet, some say gold has weakened. This is false. Since 1971 the dollar has steadily gone downhill in value. We all know the dollar does not buy what it used to. Despite gold’s recent and normal price correction gold remains at historical high levels, and the American Eagle offers a handy way to invest in gold. Securing your future with gold is better than betting on paper money.