Question about US Gold coin collecting

Hello there!

New member here. To give a brief background years ago I began stacking American Silver Eagles to have some diversity in my portfolio in a tangible asset. I then shifted to gold bullion as it was less premiums, easier to store etc.

Eventually I purchased a few sovereigns near melt from LCS. I became intrigued with the design, history, and character of older gold. This led me to picking up a $5 Liberty Head. I really love this coin. Great size, great history, long series. Especially working in finance I developed a certain connection to early US coins. I'm starting to go from a bullion "investor" to more of a collector.

I have been seriously considering starting to build a date set of $5 Liberty Heads. I know it's a big commitment; but I do believe I'm in a position where it could possibly be done.

I'm in my late 20s so I will (hopefully!) be collecting for many decades. I have a few questions I would like to get experienced collectors opinions on.

- Is it reasonable to believe with US gold coins the value will at least keep up with inflation over say a 35-40 year timeframe? Assuming I buy at a fair price. I worry in the end all the time, financial resources ends up with a collection 20-50% of the value I paid for it. I'm thinking US gold coins tend to be a "safer" bet?

- If holding value is quite important to me (and emphasis on holding value, I don't expect to make a killing) is it okay to pursue AU coins or should I really focus on MS? For example, my first was a 1907 I would give it an AU 55 but as it's a common date maybe I should really have aimed for an MS coin here.

- I heard it's best to focus on the rarer dates at the start so you get those out of the way while a collection like this will take me years to put together. That seems like pretty sound advice?

- The more famous collectors like most recent the Pogue collection, obviously I know the collection went for crazy money. Do you think in the end though he made out well versus his cost? Kind of to my second question, it looks like if you're going to do it, do it right and focus on MS?

I want to be clear in that my aim isn't to make money on the collection; but given the significant investment I want to at least give it the best shot of retaining it's value. In the end I love the history and looks of the $5 Libs.

Thanks all and happy collecting.

 

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If you're looking to maintain value and avoid high premiums, I would lean towards XF & AU gold instead of MS. Many can be had just over melt. $10 gold pieces in particular seem to be trading with minimal markups right now in those grades. While the very highest grades have seen steady appreciation over the last 20-30 years, that's no guarantee of future performance.

It's reasonable to ask where the deep pocket coin investors will be coming from in 30-50 years, when you're in a position to sell. Will they be interested in key date Carson City half eagles? Or will today's unloved coins (ie; proof sets that dealers wont ecen waste storage space on or mint grade Presidential & Sacagawea dollars) be the "hot" item?

I'm in my 30s, and (beyond what I enjoy for interest & artistry's sake) I'm focusing on where I expect value growth and where scarcity will act to preserve buying power (US territorial rarities like the US Philippines proof only issues & world platinum/palladium coinage).

I also see what happened to the stamp collecting community as a cautuonary tale. If collectors don't focus on passing down their interests to the next generation, there will be no market to sell to down the road.

 

I've heard the same thing, and I think it's terrible advice. "Buy the keys first" is a misconception based on reading old Red Book prices and wishful thinking. "Look at this 1965 Red Book! Gold eagles were going for $20 each! Boy, I wish I'd bought a bunch at those prices!"

I bought some rarer dates early on when I got back into the hobby. Problem was, I didn't know squat about picking a coin that was "good for the grade", avoiding coins that had been cleaned, and so on. If I'd gone after real high-value coins like $5 Eagles or the over-popular 1916-D dime and 1909-S VDB cent, I would've lost my shirt.

Yes, rare coins go up over time. But sometimes they go down, too. So does your disposable income. Yeah, I'd love to be able to buy rarities at 1965 prices -- but not on a salary of $7000 a year, never mind my childhood 25-cent-a-week allowance.

Welcome to CoinTalk!

 

Welcome to CT!

May I strongly advise that you buy slabbed old gold coins? Counterfeits are all over the place. PCGS tells of receiving a complete set of $2.50 Indian golds — and each and everyone of them was fake.

Certified coins also will enable you to avoid cleaned coins and those that have been tampered with.

Good luck! Collecting old gold is fun.

 

I wish you well and welcome to CT.

 

I don't see collectible gold coins as a financial plan. That's what Real Estate and your 401(k) are for.

Collectible gold coins are better viewed as a prestige hobby, that you really shouldn't tell people about, but you will. Additionally, collectible gold coins might serve as a portion of your insurance. Collectible gold coins certainly will serve as your SHTF insurance.

 

Gold is not a sound financial plan. It is a superb way to "store" some wealth. And yes, long term holding is your only viable option. I purchased the bulk of my gold in the 1990's when spot prices were well below $400.00 per oz. My thinking at the time was quantity over quality and now 25 year later, it was the wise (lucky) choice.

 

@Steve Lupo, you have raised some interesting questions. I have been collecting U.S. gold since I was in high school in the 1960s. Today I have fair number of better pieces, mostly in early gold (pre 1834) and in Charlotte and Dahlonega (southern mint) coinage. I also have a lot of common dates as type coins.

With that background, I will give you some advice and opinions.

#1. Gold values and inflation.

This is a tough one. There will always be demand for gold bullion. Collector coins might be another story. It seems like many people of your generation are not that interested in collectables. Part of it is a change in tastes, and part of it is due to the fact that many of them have college degrees that have not materialized into careers. Many of them have a mountain of college debt. I am hoping that more of the younger people will get interested in this hobby, but given the attitudes some of them seem to have toward history, I’m not so sure.

#2. What grades to buy.

I have always had the philosophy that I should buy the best grades that I could afford within reason. Therefore, I have purchased the common dates in MS-64 and 65. I have bought a few coins in MS-66 and 67. Most of those purchase have been in recent years, and so far, they have not been great investments. Still, who knows what will happen in the longer run? I would avoid paying huge premiums over market for those in any case.

Just to show you what the "close to the best" can look like, here is an 1881 gold dollar in MS-67.



A 1907 $5 gold in AU is always going to be pretty much of a bullion coin because there are many nice Mint State pieces out there. A series collector will never have much interest in that coin. To him or her, it will be a piece of gold, not a collector coin.

#3. Buy the rare dates first.

I agree with @jeffB. I think that is terrible advice, especially if you are going to collect truly rare gold coins. First, you need to know how to grade coins before you make huge investments. If you screw up on cheap coin, it’s not the end of the world. If you screw upon a rarity, you can lose a bundle of money.

And don't think that the third party grading companies can save you from making mistakes. They can't, not even CAC. There are problem coins in certification holders that can be terrible buys at the wrong price. A lot of times the problem coins are not discounted the way they should be. Too many collectors read the number on the grading label and take it from there.

Rare date gold coins are not like 1909-S-VDB Cents, 1916-D Mercury Dimes or even 1916 Standing Liberty Quarters. Those “rare coins” are frequently on the market. With truly scarce coins, sometimes you have to wait for years to get the chance to buy “the right coin.” Sometimes when the right piece is available, it’s in an auction and sells for a runaway price. Patience is a virtue in the truly rare coin field. You often have wait for your turn.

#4. Did Pogue do well?

I am quite sure that Pogue made out like a bandit. He almost always bought the best of the best, which translates to coins in high grades with great eye appeal.

BUT, you have to remember. The Pogue sales had a lot of momentum behind them that collectors, such as I, would never have. The big players were all there, and some them viewed those coins as unique opportunities all in one place. (See my point #3.)

The same was true for the Eric P. Newman sales, even though a lot of his coins were very nice, but not the best. Newman collected much the same I have. His coins were good, but not the very best. In his case, he had a huge reputation, and the prices were often strong. I tried buy some of his coins in those auctions but got blown out of the water. I did end up with a few ex Eric P. Newman coins on the secondary market, however. After seeing a couple of them in person, I decided that they were worth the money.

For example, I bought this 1788 Massachusetts half cent in MS-64, Brown. You don't see these very often. BTW, this coin was in an NCG MS-65, Brown holder when it was sold in the Newman sales. So much for the grading game.

 

I agree with USC96 - coins are more of a prestige hobby than an investment, although that's not to say you couldn't break even or make a profit on the eventual sale of your collection when the time comes. As a collector of better date gold $5s, I'd say that if you are determined to put together a set of Liberty/Coronet half eagles and you have the $$ to begin your pursuit in earnest, I'd start with some of the more rare dates. Gold is trading at near all-time highs right now, therefore the premium on common/bullion-tracking dates are higher than they'd normally be. The price of gold doesn't typically affect the value of rare-date coins, since their premiums are not affected by the bullion market. If you do jump in, my best advice would be to Be Patient - don't buy cut-rate examples. Insist on original, unmessed-with, minimally-marked coins. Early/classic gold in the XF/AU and even lower MS grades should not be bright and shiny. They should have a measure of oxidation/patina on their surfaces. They're not .9999 gold, but 90% gold w/a measure of silver and copper mixed in. These two additional elements oxidize over time and can give the gold coin a layer of patina or even "crust" which savvy collectors love and are willing to pay premiums for. The trend over the last couple of decades has been for the 'coin doctor crowd' to take an original coin with a nice layer of patina and then to dip or even lightly scrub them up to brighten them in an attempt to attain a higher grade with the TPGs. PCGS and particularly NGC "awarded" a lot of these submissions, giving a brightened XF coin an AU grade. While the coin upgraded, the result was a overly cheesed up, unnaturally bright coin with little/no character. Those are the coins I recommend you avoid.

 

Thank you so much for the thorough input. Based on the advice so far I believe I'm going to:

- Not necessarily focus on the rare dates first; but focus on quality.

- I will likely shift to buying PCGS slabbed coins going forward. One of my biggest fears is buying a cleaned or counterfeit coin. I have been studying up on these two areas to get better at grading myself.

- Patience is key. That's a-okay with me as I'm hoping this is a hobby I can enjoy over decades and slowly build the collection.

- Yes we need to better engage the younger generation like myself for the long term health of the hobby. Maybe one day I'll start a YouTube channel on my collecting journey so I can share my experience as a younger collector.

I really appreciate all the feedback so far.

 

Welcome onto the boards !

If you are a professional person , in finance , then there's very low probability of 'advice' here, including mine (but wise men listen even to fools ).

Dad and gramps (gramps more-so than dad) , did pretty well with their choices in Wall Street.

The 1 thing I did learn from gramps was that Dow returns 11% from beginning to end .

(and the 'end' might be soon , with Fed printing $$, dispensing it, and allowing late payments for bills, penalty-free).

I think investiture [/sic] today , if inclusive of precious metals - STRICTLY AS A BROAD-MARKET INDEX , should include junk Silver , as opposed to Gold .......

 

This is an excellent point. As gold gets higher, the difference in price between common and better dates (or conditions) shrinks.

But, again, beginners can find this hard. The more advice like yours they read, the better they'll do, but there's no substitute for looking at lots and lots of coins over time.

 

Exactly.....Steve L., you should look at both bullion and numismatics as like buying art. Whatever it is worth in 30 or 5o years, it's worth.

 

' trading ' ?

OP ' s thread title says ' collecting '.

If OP is a professional in finance , he probably knows difference between collecting , and investing .

Very few collect , for investment .

I venture NONE invest , as a hobby [collecting].

(of course , all know what is said about RULES , and exceptions thereto )

 

There are lots of good books on US gold. I actually have multiples of the Smithsonian one with Doty. I would HIGHLY HIGHLY recommend, especially if getting into gold, to buy a few good books on US gold coins and read about each date/mm. Best "coin money" you will EVER spend.

 

Steve, Before committing significant funds into a $5 Gold Liberty collection, you need to learn a lot about grading. When I started, I ended up with a couple PCGS MS graded gold coins that I later discovered had putty on them to cover scratches. The grading services often make mistakes. You should be able to look at a coin and know what grade it should be before paying high premiums over the melt values. Also, you may find that an AU58 coin is much more attractive than a MS63 graded coin. So if you are collecting to complete a series, don't overlook the AU coins.

 

Welcome to CT.

 

I've seen a few of numbRmatist's posts, and I concur never take advice from him.

 

I would say collecting coins is the worst investment decision you can make VERSUS REAL INVESTMENTS. That is because collectible coins is NOT an investment, its a collectible. Versus other collectible fields, coins I would say are middle of the market, I would say areas of art might be better and man others like postcards worst.

Even if the market was flat or up, its hard to profit on rare coins. Even ignoring dealers, if you do all your business at auctions you pay a 20% premium both buying and selling. 40% is a MASSIVE headwind to overcome. Most never will.

Collect coins for what they teach you about geography, history, art, and economics, as well as great comraderie. Its a fantastic hobby, but its a hobby not a good investment vehicle.