Gold Prices Down $300 From Highs A Year Ago, So Is It Time To Buy Gold Coins?

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Saint Gaudens $20
1924 Saint Gaudens $20 Gold PCGS MS67. (Image is courtesy of Professional Coin Grading Service.)

As we look back over the past year, we see one definite trend in gold prices -- they're down from where they were in August 2020. Of course, a year ago the nation was experiencing its first major wave of COVID-19 cases during the earlier months of the global pandemic. Supplies of many commodities were falling short and investors were growing weary as the stock market shed many of the gains it had made during the earlier parts of Donald Trump's presidency and unemployment numbers were still shaking out as businesses shuttered their doors. Shaky speculators were turning to the safe haven of precious metals as uncertainty about America's economic future loomed.

Turn the clock ahead 12 months and, yes, we're still experiencing the COVID-19 pandemic, but the nation's economy has sputtered back to life. We have a new president, and under Joe Biden the stock market has hit all-time highs as various COVID-19 vaccines have helped millions return to a sense of normalcy. But that's not all. The U.S. economy is finding a new balance as businesses reopen and both employers and employees face a reckoning on working conditions, wages, and benefits.

As this is being written on August 12, 2021, gold prices hover around $1,750 per ounce. And that figure is way up from prices just a few days ago, when gold fell below $1,700 and made many wonder if the yellow metal was seeking a new floor in the $1,500 to $1,600 range. Of course, nobody has a crystal ball on bullion prices, and it may prove hyperbolic to make grand predictions about gold "going to $5,000" -- a claim that many have widely made for years but is still unrealized.

Gold is not really an investment, but it is rather better seen as a hedge against inflation. And inflation is something that many folks are talking a lot about these days. How much of this inflation is caused by supply shortages and a paucity of workers? Perhaps we will only have the answer to those questions once the manufacturing and service sectors begin filling more positions and moving more deliveries. But at the moment, gold prices are certainly in a softer position than they were a year ago, and this leads many to wonder if now is the time to buy gold coins.

Again, there are no crystal balls here. Yet, gold prices are clearly hovering at levels that are around 15% lower than this time last year -- a heavy discount when comparing prices on an apple-to-apples basis. This doesn't mean that gold prices won't fall lower, but it does suggest this may be a time for people to pick up gold if they feel the prices and the timing are right for them on a personal level. This may be especially true for collectors who are assembling sets of coins involving gold. Of course, collectors are more focused on collecting gold coins for their numismatic merits rather than buying them for any purely investment potential. So, should gold prices drop even lower this is more likely to be seen only as a buying opportunity rather than a signal to sell. Investors on the other hand may consider buying gold on a more circumspect basis, adding to their gold holdings while diversifying their investments into other areas as well.

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