Occasionally brokers or executives from the Certified Gold Exchange corporate office will ask me to write a blog covering a topic that come up during a discussion with a client or prospect. Such is the case today. As the Federal Reserve continues to relentlessly print up billions of unbacked dollars each month, some gold investors have started to wonder what Americans would use to buy food, fuel and other essential items should the greenback collapse completely.
One of the most common lines of thought is that gold and silver will be used as currency in the near future. This sort of thinking prompts investors to buy fractional-weight gold coins and lots of one-ounce silver coins, but this strategy makes no sense because the day that we are buying things with only gold and silver will almost certainly never come. It almost happened in 1933, during the Great Depression, but the U.S. government prevented such a catastrophe by confiscating gold, thus forcing American consumers to use dollar bills.
Collectible coins, also known today as certified coins, were exempt from President Roosevelt’s executive order. However, holders of such coins hoarded those coins and did not spend them as they were worth much more than their face value. The same is true of certified coins today, so although one could technically spend certified gold coins doing so would cost the original owner of the coin a lot of money. It is extremely unlikely that the government would stand idly by while U.S. citizens dump the dollar in favor of gold and historical precedent tells us that our government will go to extreme measures to keep that from happening. Thus, those who believe the dollar will collapse would be wise to invest in certified coins not for spending, but for exchange into whatever new currency the government announces following the crash of the dollar.