I'm new here and I need some help with a gold coin decision to get me on the right track. Last year, I purchased a number of ASEs and silver Maple Leafs as an investment and inflation hedge. I collected coins many many years ago, and the beauty of the new coins prompted me to get out my old "collection" (such as it is) and take a look at it again. This year, I wanted to buy a couple of gold coins for the same reason, but got to thinking that it might be a better idea to look into the $20 saints and liberty gold coins so that I have two ways to win -- on the price of gold and the natural scarcity of the coins. My initial thought was that for me, quantity was better than quality and that buying a coin in circulated condition for a small premium over the bullion content would allow me to enjoy the history, the hobby, and at the same time have a pretty nice investment. I went to three coin shops to look at the coins and talk to the dealers. To my surprise, two of the three pretty much agreed my plan was a mistake and that it would be better to pay up for quality even if it meant fewer coins (the third really didn't care). So now, thoroughly confused, here I am seeking opinions. What do you think? Is it better to pay up for that one special MS65 better date coin, or grab a couple of VF to AU types? I have no plans to resell the coins, and will probably keep them and eventually give them to my kids, so this is a long term decision. I apologize in advance if this has been addressed before, or if it is too basic.
I can't really be of much help other than to say I'm in a very similar position. Just getting back into coins and considering investing in gold... That being said, it would be interesting to graph the historical price of the coins -vs- gold over some period of time to see if there is any appreciation due to their rarity. Commodity pricing is readily available for gold, but I wonder where you could get it for the coins (back issues of magazines)? I wonder if the "collectors" premium would be roughly equal across grades and dates, or if the rarer ones have a larger % premium. Also of interest would be the rate of growth of this. You could also normalize this with inflation numbers... Interesting thread, thanks for starting it...Mike
Well...now I'm a collector and not a investor but I do know some investors so I think I might be able to help here...maybe not ;--) I think that gold coins would be better than gold bullion but I also think that if you are buying for investment the grade would be a biger thing...yes I think that if you got MS64 or better if would be better than if you got a AU.... Now I would look into not only $20 gold pieces but also the $1 and the $2.50 and so on and so forth...if you are getting them for investment I would get them slabbed for sure...BUT ONLY by the top four...PCGS--NGC--ANACS--ICG and sometimes PCI but only sometimes.... For investment I would research the hobby first and see what is selling the best and what is not...9 to 10 I would go for what is not selling as good as others as that might just be what will go up next. I would keep a eye on the market as best as I could. Welcome to the forum and never apologize for asking a question...you might want to search this forum and see what will come up...I know that we have talked about investing before. Speedy
I have recently gotten the gold bug as well. My first gold coin was a $2.50 indian and I have since picked up a $5 indian and $5 liberty. These were purchased in AU condition and all certified by pcgs or ngc. This is the start of my US gold type set. I, like you, have bought for collector and investment purposes. I don't plan on selling and really enjoy the history of these coins. I have since branched out into world gold. The attraction to world gold is that the french roosters and swiss francs can be had for a small premium over melt and are really beutiful coins. Also look into the british soveirgns.
The way I handle my collection is with the view that the mintage is a fixed amount and the number of coins in higher grades is falling as the coins are traded and handled outside of grading slabs,so I try to locate as high a quality coin as my budget allows regardless of type or denomination and have it slabbed by NGC since I can submit with my ANA membership. This allows me to liquidate coins faster if something should come up that I needed the cash and protect them in a recognized holder for long term storage. I have set budget and stick to it. That allows me to buy more coins or key coins when the market is down and keeps me from getting more coins when the market is high. Long term this should prove to be a good method of investment.
Do yourself a real big favor and DON"T buy $1 gold coins. There are a ton of counterfeits out there and finding a safe harbor for $1 gold is really tough. Actually, for the money, the $5 gold piece is still very affordable. I personally buy both classical gold and U.S. bullion. Currently working on a world gold collection that ranges from 1/20th ounce to appx. 1/4 ounce. Gets me a lot of various designs and provides a never ending lesson in history. Best advice is to collect whatever your heart desires and as long as your happy with what you are doing.....well, it doesn't get any better than that!
Howdy Cloudsweeper - Welcome to the Forum !! Boy Howdy I gotta tell ya - I've seen more people interested in collecting gold in the past 3 months than I have in the past 10 yrs ! It's just amazing. Don't get me wrong - I collect gold myself. But usually I couldn't convince folks that's the way to go if I beat 'em with a stick. Anyway - to answer your question - ALWAYS go for quality over quantity, especially if you want to be able to get your money back out of it at a later date. And unless your dead set on US gold coins - I wouldn't recommend buying them. They are overpriced. As a genral rule world gold is the way to go. Until a couple of weeks ago anyway when they held the Eliasberg auction. Since then things have gone a bit crazy in some areas of the world gold market. I don't know if it's gonna last or not - but even if it does, it's still cheaper than US and its got a lot more room to appreciate in value.
Cloudsweeper99,if you want to invest in gold coins,you can put your money into buying the British Sovereign & 1/2 Sovereign,the Canadian silver & gold Maple Leaves,or the Krugerrand & its fractions (1/2,1/4,& 1/10 Krugerrand).I am personally a collector. I have very little in terms of gold.My favourite gold coins are South Africa's 1/10 Krugerrand dated 1984 & 1990,which I have got in my collection of British Commonwealth coins. Aidan.
Interesting logic. Why world gold as opposed to US gold? I thought the darkside (note noob use of terminology -- ) was traditionally a weaker market, particularly if long term is the intent. I'm not interested in buying gold for face value -- I could do this directly via more traditional investment vehicles. Is the market so "overpriced"??? Wouldn't the influx of new gold "blood" as you mention tend to continue the upward pressure on prices? I would really appreciate your insight. Thanks...Mike
I've given this some more thought -- by purchasing gold coins, you have the double whammy whereas your profits/appreciation is dependant on both "commodity" value of gold and the "collection" value. In order to make lots of money you have to have them both come through. On the other hand, it is a kind of diversification as losses on one side could be cancelled out with gains in the other. Taking GDJMSP's advise that world gold may be a better idea, perhaps a hedge against the overprice in US markets by adding a few nice world gold pieces makes sense. Both of these ideas beg the question of some serious statistical analysis.... If I only had more time!!! I'll have to give it some more thought....Mike
You're kinda getting the idea. But you need to consider a couple other things as well. The value of gold coins is due to 2 things - metal value and numismatic value. Metal value is rather simple - not much to explain there. But numismatic value is a bit more complicated. Numismatic value is based on several things, but primarily they are the date and mint mark, scarcity and the condition of the coin. But then there is also popularity - demand. For even if something is rare - if nobody wants to own it - it won't have much value. Now consider what we have going on with gold coins. The price of gold in US dollars has been going up the past 4 yrs. But the value of US coins has been going up as well, pretty much across the board not just with gold. Many US coins have increased in value by as much as 400% - some more. So with US gold coins - both sides of the equation has risen. And as they say, sooner or later - what goes up, must come down. Now with world gold, the value of the metal has gone up the same amount in US dollars. But the numismatic value has not increased anywhere near the same amount as US coins. But US coins have become so expensive that many collectors can no longer afford them. As a result they have turned to world coins. This started slowly about 2 years ago and has increased much more in the past 6 months. So demand for world coins is increasing. Next we have to think about another factor like scarcity. And in this regard world coins often beat the US hands down. For a great many world gold coins are many times more scarce than US coins of comparable age and condition. So on one hand we have an item that has recently undergone sizable increases on both sides of the value equation - but has decreasing demand because of these increases. On the other hand we have an item that has an equal increase on only one side of the value equation and has increasing demand along with greater scarcity. It aint rocket science
I think GDJ's point about the distinction between metal value and numismatic value is key here. While there may be "two ways to win," remember that there are also, then, two ways to lose. You are simply investing/speculating with two variables to consider rather than one. Any approach here that fits in with your preferences, style, and risk tolerance is of course just fine, but as GDJ's email makes clear, be careful not to think of the numismatic side of the issue only as a potential "adder" to any gain or loss you see on the metal value -- it is also a potential "subtractor" in its own right, even if the price of gold keeps rising. I also buy gold as an investment/speculation/inflation hedge, which you indicated was your goal, but my own style dictates that I keep things (relatively) simple by sticking with recent bullion coins -- I simply do not have the knowledge or insight necessary to make me comfortable putting money on how collectors will be treating collectible gold coins down the road. In my opinion, all advice on these matters gets more hazy as you merge the collector in you with the investor/speculator in you. If buying older gold coins scratches the collector's itch in you, then hard rules about investing -- even those you establish yourself and apply in other areas of investment -- become somewhat less relevant. Dymaxion
Thanks a lot for the replies. This is extremely helpful. Based on this discussion, I'll stick with third party graded coins. I never thought about foreign coins, but I guess that's another area to explore. I definitely prefer old to new, and something with low enough mintage that someday it might be more difficult to find. I'm not overly concerned about the price of gold falling over the long run because of the natural inflation built into our monetary system. I had planned to minimize the numismatic risk by sticking to coins with a reasonably small premium over bullion value, but now I understand that there is no clear-cut right answer. I'm a bit concerned with stereotyping. Gold investors are "supposed to buy" high grade common date gold coins. Collectors are "supposed to build" type sets or date and mint mark sets. The $20 coins seem to carry the smallest premium over bullion value, with some $10s a close second. I agree with the observations that this sort of thing lends itself to statistical analysis, which I don't have. For what it's worth, this is what I've found out so far from reading. For a long time, common date uncirculated gold coins were priced around 48% over melt value. This old rule changed when gold went thorough the roof around 1980, but seems worth keeping in mind. MS63 $20 liberties have ranged from $385 to $1,600 since the mid 80s and are around $785 now. MS63 $20 saints have ranged from $350 to $1,250 since the mid 80s and are around $650 now. Maybe I should buy one saint and one liberty and see where things go from there. Maybe it will turn into a type set. Maybe I'll mix a couple of lower quality coins with better coins. It seems that as long as you don't overpay, there's no such thing as "bad gold." I'm sure I'll run out of money before I run out of things to buy.
Cloudsweeper...Going for the gold! As some of the replys suggest there are two sides to every situation, and you must consider your motives, tolerance for risk, and long term/short term investment goals. Having invested in some World Gold coins in the past introduced me to many wonderful and beautiful coins, however, like any commodity you must find a buyer for your goods. The lesson I learned from that was that when in Rome do what the Romans do! If your collection travels carry you into pools of World Gold Coin Traders then by all means do so..if not, you must be willing to accept the risk of holding on to those coins. The US Gold coins (modern eagles) are really considered bullion, however, down the road in years to come the numismatic value of the lower mintage coins may be a potential. I am partial to US Coins because I live in the US and for the most part they are liquid as is any other gold coin for its bullion value. Be really sure of what you want to do and then set your goals. For me putting together the entire uncirculated and proof series of AGE's for my young son to have when he becomes a man 15 years down the road is purely based on speculation. The way our country is going into debt..hell, they will be worth a fortune in 15 years hahahahahah..again my narrow opinion. Good luck and remember that there is always something available to buy..be selective!
I can't really afford to buy lots of gold, I am assembling a type set of US gold coins ( for a dansco type coin album ) I am activly collecting world gold though, mexican, chinese, etc. the 1/20 oz chinese pandas are my current fav... I actually kick started my panda collection by purchasing the 2005 and 2004 pandas in china!!!! Work sent me their and i found a reputable coin shop, i was able to get the 2005 silver and gold pandas about 2 months before they where available in the US BUT here is the interesting part... gold and silver prices are universal, they cost me the same as buying them here!
I'm surprised at how many people collect world gold. I don't know where to look to even see what is available out there. Are there reliable websites to look at where they are sold at reasonable prices? Do they come graded and slabbed like US coins? Not knowing what they look like makes me more afraid of counterfeits.
