Gold is one of the oldest means of financial exchange and has a long history of being both a valuable metal and form of currency. Its history, unlike that of other forms of currency, is unique in that it also doubles as a commodity with impressive properties; it is malleable, soft, relatively rare, and simply brilliant.
As a currency and commodity, however, the relationship between gold and the U.S. dollar is an interesting and uncommon one. The two were once associated when the gold standard was being used. With the gold standard system, the market value of a currency was defined in terms of gold. This system was disbanded in 1971 and proceeded to separate the U.S. dollar and gold, making the U.S. dollar a flat currency and gold subsequently based on supply and demand. When the two were separated, they took on their own unique relationships as a currency and commodity and went through an evolution over time.
As with any currency and commodity, relationships and trends can be formed between these two tradeable items. When the U.S. dollar shows indications or signs of potential weakening, it is interesting to note the potential impact on the market and other related coin movement. These relationships and subsequent trends, often referred to as cause and effect, have long existed in global markets.
The Federal Reserve raised interest rates for the fourth time in December of 2018, though it has recently shown signs of slowing hikes in 2019. This fourth move in December of last year resulted in market volatility. Historically, a decrease in the market value of the U.S. dollar has resulted in an increase in the market value of gold coins. This could continue over time, as we enter 2019 and move into 2020 with a market that has recently been in a period of volatility and flux.
It is interesting to note the relationship between multi-dimensional activities on the market. As someone who might show interest in either governmental decisions, the stock market, or perhaps a bit of both, you might find the coming year an interesting one to watch. The relationship between gold coins and the U.S. dollar is therefore one that anyone, from the day trader to the everyday American, could find intriguing.
With the historical relationship between the two currencies, gold coins could serve as a hedge to preserve buying power for anyone who enters the market ahead of time. As news regarding the Federal Reserve’s movement on monetary tightening comes in, this might be the time to start – or continue – paying attention to gold coins.
Plenty of information is circulated around such currencies, with speculation about the Federal Reserve profiled on mainstream news every day. As you are reviewing your own portfolio for 2019, you might consider expanding your horizon to include a coin option like gold from U.S. Money Reserve, America’s Gold Authority®.