In any election there’s going to be a sizable contingent that isn’t happy with the result. In the heat of the moment, some vocal losers may make some strong proclamations – in 2004 it was Democrats planning to move to Canada, this time around it’s Republicans petitioning the White House for the right to secede. In the end, it’s just a way of voicing disapproval, but it’s not like most people are actually going to follow through on the promises they make in the throes of political frustration.
But there’s at least one response to the election that is having a real impact: changing investment behavior. Those who fear the market will suffer under President Obama’s 2nd term are aiming to diversify their financial exposure away from equities. In general, diversification is a great idea, and this could very well turn out to be a prescient move – we don’t know anyone with a crystal ball who can say for sure. But what we can say is that many are going about it one of the worst ways we can imagine. Via CNBC:
Demand for gold coins in the US has soared since the presidential election, as small investors fret about the lack of action to address America’s ballooning debt.
The US Mint’s sales of American Eagles, one of the most popular gold coins, leapt 131 percent in November, hitting their highest level in more than two years. The Royal Canadian Mint also had its strongest month of sales this year.
Gold coins? Haven’t we been through this already? (The answer is yes, we certainly have)
The CNBC article does point out that coins are a relatively small part of the overall gold market, but for anyone in danger of being duped by the idea that gold coins are the best way to gain exposure to the yellow metal, we urge you to reconsider. There are some extremely shady dealers out there (Goldline, for one, but they’re certainly not alone). The peddlers of gold coins are notorious for bait-and-switch sales practices, and in our opinion, collecting gold coins should fall into the same category as collecting stamps or baseball cards: don’t bet your livelihood on it.
Even if you’re not getting ripped off by an unscrupulous dealer, why pay the markup on coins instead of just buying bullion? Diversification is great, and there’s nothing wrong with buying gold, but when you’re taking as much as a 40% haircut on your investment up front… This is one bit of election-driven nonsense we could do without.