Gold As An Investment is a little controversial. Investors want to know which way prices are going on their investment of choice. There are some vocal advocates of investing in gold coins, bullion, nuggets and even recovering gold from scrap. Therefor it is important to learn about the history of this market as well as that of silver, platinum and palladium.

Gold was one of the first metals known to early man. After several thousand years it is still one of the most important and highly prized substances found anywhere.

Gold is universally known as a precious metal of high excellence. It is unrivaled for its color and luster, and its fine qualities of preservation and ductility have enabled it to be fashioned into many valuable objects of beauty including money.

Gold is seldom found in a completely pure state. It usually contains other metals, especially silver. If this silver ratio is high the alloy is known as electum. This alloy is more durable than gold itself and much more suitable for minting coins than the pure metal.

The various colors in gold coins are due to the different alloys used. Red gold consists of 75% gold and 25% copper. Green gold contains 25% silver. Blue gold has 25% iron.

Gold was discovered in California in 1848, and the first regular gold issue was adopted the following year The Three-Dollar gold piece was first struck in 1853, and despite the lack of popularity – and necessity – for this coin it was continued until 1889.

President Roosevelt signed an executive order on March 6, 1933, which stopped banks from paying out gold and redeeming gold certificates without permission. Gold was to be used exclusively for reserve purposes in bullion form. Imports, as well as newly mined gold, had to be sold to the government.

Gold was thought to be hoarded in many countries, especially in France and India. From 1933 until 1975 it was illegal to hoard the metal in the United States and coinage of virtually all gold coins was suspended.

Gold dollars were first struck in 1849, and were, known as the Liberty Head or Small-Sized type. The piece was soon made larger in diameter and thinner. Design changes included a feather headdress on the female, and it was then known as the Indian Head or Large-Sized type. The coin was changed again in 1856 by enlarging the head.

Gold coins also struck were Quarter Eagles ($2.50), Three-Dollars, Four-Dollars or Stela, Half Eagles ($5), Eagles ($10), and Double Eagles ($20), The Double Eagle has two main varieties: Liberty with Crown, and the Saint-Gaudens, type, with Liberty standing. A few experimental pieces of this type were struck with extremely high relief, and 11,500 were later issued for general circulation.

One fine specimen of this extra-high relief variety brought more than $18,000 at a sale in 1961. The regular high-relief variety has 13 rays extending from the sun, while the experimental variety has 14.

Gold coins became extremely scarce because of the presidential order of 1933 which removed them from circulation. The small remaining supply was reflected in the high premiums which most gold coins carried during the years when U.S. citizens were prohibited from accumulating gold. Coin collectors carefully and legally preserved what was left of the colorful early era in our monetary history.

What touched off the so-called gold stampede of 1968?  Britain’s devaluation of the pound on November 18, 1967 sent tremors through the international monetary world. Faith in paper currencies, including the keystone dollar, suffered a blow. Hoarders saw gold as a haven from paper currencies, especially in nations where devaluation had occurred frequently. Speculators bet on a rise in the gold price and gobbled up large amounts of gold.

Internationally, gold is money. It is the one always acceptable medium for settlement of international debts. Because of the limited world supply of gold, most nations abandoned the gold standard in the 1930s. The United States more or less followed suit in 1934, keeping the money system partially linked to gold.

This partial linking meant that gold acted as a ceiling on the money supply. The three main types of money are coins, paper bills and commercial bank deposits. By law the Federal Reserve Bank could not create paper money and bank reserves in excess of four times the value of its gold. For example, at the beginning of 1965, the Federal Reserve had about $15.4 billion in gold bullion, which was 27.6 per cent of the total currency and reserve deposits.

So buying gold as an investment requires the investor to consider a rather dynamic marketplace.