A Savvy and Enjoyable Way to Protect Your Wealth
In 1688, somewhere in the city of Agra, a metalsmith placed a gold nugget on a die, set another die atop the nugget… and slammed it with a hammer, fashioning it into a beautiful gold coin.
The coin was minted to commemorate the reign of Aurangzeb, ruler of the Mughal Empire that stretched across South Asia from the 16th to 19th centuries. Aurangzeb’s mother, Mumtaz Mahal, is the woman for whom the Taj Mahal was built as a grand burial site in Agra in the mid-1600s.
All these centuries later, the coin—a gold mohur—remains in pristine condition, like it was minted just yesterday. It now sits in a safe-deposit box in south Louisiana. My safe-deposit box.
I’ve been a rare coin collector for 25 years. As part of that hobby, I habitually wander into rare coin shops all over the world when I’m traveling. I do so looking to grab a gold coin (or silver) to add to my collection at a reasonable price.
That’s how I came into possession of that gold mohur from Aurangzeb’s reign as Mughal emperor. I was in London, not far from Trafalgar Square, and I popped into one of Britain’s oldest coin dealers—A.H. Baldwins & Sons, a staple of the British numismatic community since the 1870s.
In a glass-walled, second-floor room overlooking the Strand, a dealer and I chatted about a variety of coins laid out on a velvet tray. Ultimately, I snapped up the gold mohur and a silver Roman denarius from A.D. 141, the reign of Antonius Pius. As with the mohur, the denarius looks as though it left the mint yesterday.
To be clear, my hobby isn’t so much about coin collecting as it is lifestyle protection.
Gold Protects You From America’s Debt
I imagine that sounds strange. But my concern is that we are living through a time when the government has decided debt doesn’t matter. Which means sacrificing the dollar in pursuit of wild overspending.
That makes investing in collectible gold and silver coins not just a fun hobby, but a sensible financial strategy.
In my 57 years on this earth, Uncle Sam’s debt has expanded from $320 billion, or 40% of America’s economic output, to $31.8 trillion. That’s more than 120% the size of the country’s gross domestic product. Add in all the off-balance-sheet debt various unfunded liabilities like Social Security and Medicare, and U.S. debt-to-GDP is near 600%.
I don’t think it’s unfair to call that banana republic levels of financial mismanagement.
Nor do I think it’s unfair to worry about what all this debt means for the long-term stability of the U.S. And for the dollar and our financial system. So, I buy gold and silver coins as my way of protecting myself against a coming monetary crisis.
Buying Gold Coins Around the World
I hear naysayers panning gold all the time. But since its peak in 2002, the dollar is down 15% while gold is up more than 500%. That tells me savvy investors are buying and holding gold as an antidote to a potential dollar crisis.
Yes, gold is archaic.
It’s old school.
But precious metals have been the solution to every monetary crisis in history. No reason to think this time will be any different.
Plus, there’s a particular, historical reason why owning collectible coins makes sense. In the 1930s, President Franklin D. Roosevelt confiscated gold to stabilize the dollar, then repriced the metal higher, thereby devaluing all the dollars people held. However, while FDR confiscated gold bullion, he did not confiscate collectible rare coins.
Now, I’m not saying confiscation is likely again. But I am also not not saying that. And if it were to come about… well, a nice proportion of my gold holdings is in collectible coins.
I’ve been buying gold and silver coins now for about a dozen years. In that time, I’ve strolled through coin shops in London, Copenhagen, Prague, Moscow, Hong Kong, Singapore. I popped into shops as well in the Estonian capital of Tallinn and the Latvian capital of Riga. I haven’t necessarily bought coins in each location, typically because I found nothing I liked, or the price was wrong.
But in many places, I have been a buyer.
In St. Petersburg, Russia, I found a small coin shop half an hour from the Hermitage Museum. There, I picked up a lovely 5 ruble gold coin from 1898, the reign of Russia’s last imperial ruler, Nicholas II. (He’s the one murdered along with his family by the Bolsheviks).
Gold Coins: The Souvenirs You Keep Forever
In Copenhagen, I walked about 30 minutes from my hotel to the tiniest of coin shops I found online. The owner and I spent the better part of an hour chatting about gold coins from Scandinavia and northern Europe. In the end, I grabbed a shiny-as-new Dutch 10 guilder gold coin from 1897, a very young-looking Queen Wilhelmina on its face.
Wandering around Prague, where I live, I’ve come upon an unusually sizable number of coin shops, all packed with coinage from central Europe, particularly pieces from the Austrian Empire, of which the Czech Republic, then known as Bohemia, was a member state. In those stores, I’ve bought an 8 florin gold coin from 1887, and several Austrian gold 100 coronas from the 1910s, just before World War I ended the empire.
Back at A.H. Baldwins on a different trip through London, I added another mohur from the reign of Shah Bahadur, the last Mughal emperor, from the mid-1800s. Also snapped up a gold Kahavanu from Sri Lanka, circa the 10th or 11th century. And my favorite gold coin yet: from the rule of Mongol Emperor Genghis Khan, minted in the year 1222, one of less than 300 known to exist.
Here’s the big question people ask: Why buy coins when you’re traveling when you can buy then online in the U.S.?
Fair question.
Several answers: I see coins as unique souvenirs from my travels. And they’re much more valuable in the end than, say, refrigerator magnets. I like finding coins unique to the region I’m visiting, such as a 1924 silver 1 ruble coin from the early days of the Soviet Union and designed in a constructivism art style popular at that point in history.
I also like that I can very often find greater value locally. That 1924 silver ruble (in lovely condition) cost me the equivalent of about $37 at a shop in Riga. I’ve seen them elsewhere in the $70 to $90 range. I’ve found extremely nice gold coins priced at just 2% to 3% above the spot-price value of their gold content. More often than not, even basic gold coins are going to cost at least 7% to 10% over spot.
As I always write, everyone should have gold in their portfolio… and everyone’s gold holdings should be diversified across gold funds, gold mining stocks, and a healthy portion of physical gold.
Gold coins are an effective, and fun, way of achieving the latter.
My coins are not only a good souvenir from my travels, they are literally worth their weight in gold. And that promises to protect my lifestyle as inflation and America’s worsening fiscal situation continue eroding the dollar.