Open pretty much any newspaper and you're sure to find ads from coin dealers and related merchants offering to buy gold. You name it, and they'll make an offer, be it rings, necklaces, watches or, naturally, coins or gold bars.

The surge in buying started about six months ago when gold topped $1,000 an ounce. Since then, gold lost a bit of its luster due to factors in the financial markets. I'm not a financier, and I don't play one on TV, so I can't say for certain whether the strength of foreign currencies, the mortgage crisis or the stock market are reasons that gold recently dropped as low as $750.

Just as people were wondering if they should sell what gold they had before the metal dropped even lower, news came out about the collapse of Lehman Brothers and the bailout of American International Group. Because of Lehman the ripple effect spread to the solvency of money market accounts in which many people are invested.

Understand money markets aren't really bank accounts. The money isn't actually held by a bank but invested in short-term vehicles such as "commercial paper" from companies including Lehman Brothers. Worse still, because they aren't technically bank accounts, the FDIC doesn't insure money markets. If they go under, investors and we ordinary non-financiers could lose everything.

So, what does all this have to do with the price of beans — or in this case gold? Some wary investors began taking their cash out of money markets. Within a week over $89 billion had been withdrawn. At the same time, an analyst on a major network news programs suggested that many were turning to gold as a safe harbor. I can't say that one comment did it, but gold quickly soared to over $900 an ounce — an increase of 20 percent in a matter of days.

According to coin dealers, a flood of new buyers concerned with the safety of their money are buying gold. That begs the question what form of gold might be best to own?

First, forget jewelry. It's rarely pure, and the markup is substantial. The final nail in the coffin is that you have to pay sales tax on jewelry. For gold coins no tax is levied.

Far and away, the most recognized and tradable gold coin is the American Eagle. A close second would be the Canadian Maple Leaf. Other countries also produce gold coins, but the Eagle continues to be the international "gold standard." As ailing as our economy may be, the world still looks to the United States as a financial bellwether. So, too, with gold coins.

Gold Eagles are minted in four sizes — 1/10-, 1/4-, 1/2- and one ounce. Because of minting costs the smaller the size the greater the premium over the price of gold. For instance, if gold is $900 an ounce, a one-ounce Eagle might cost $950. In turn, a 1/10-ounce Eagle might sell for $110 — the equivalent of $1,100 an ounce. However, dealers also pay a hefty premium, so you get much of that back when you sell.

Some retailers advertise gold at "the lowest prices." Maybe, but the gold market is highly competitive, and rarely are prices dramatically different from one dealer to the next. One caveat — when buying from out-of-town you may incur shipping costs. As with most anything it always pays to shop around.

Editor's Note: A JPEG visual of a U.S. gold Eagle coin has been sent with this column.

To find out more about Peter Rexford and to read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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