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What I think about common gold coins/ CoinWeek

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cc99999
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 Posted 10/30/2012  01:01 am Show Profile Check cc99999's eBay Listings Bookmark this topic Add cc99999 to your friends list Get a Link to this Message

http://www.coinweek.com/featured-ne...coin-market/

I'm not shy about my opinion about common date classic gold. I think that its a poor investment unless you are sure that bullion will keep going up. As a numismatic item- it's worthless.

Even when gold was cheap(er) in the 1990s and early 2000s, there wasn't much of a collector market for run of the mill eagles and double eagles.

In this article, I explain what rising bullion prices will do to gold coins.

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 Posted 10/30/2012  08:58 am  Show Profile Check stewart's eBay Listings Bookmark this reply Add stewart to your friends list Get a Link to this Reply
Excellent Article Charles

Makes some very good points as to people and numismatic premium
being priced out due to rising Gold prices.
I have thought about this exact thing for quite a few years
especially since 2008. I have been worried that future beginning
collectors would be unable to purchase certain series of coins
just because of the rising prices of the precious metals
they contain.

I believe David Halls thoughts on how high Gold will go
are actually a little on the conservative side.
(Probably to play it safe publicly)

Also if you and Mr.Walker could do an article on the same
subject, but concerning Silver coinage. I believe in researching
the subject for an article you may be surprised at what you find
concerning Available Above Ground Stocks of Silver
(much, much smaller than Gold stockpiles)and
Energy Return On Investment (EROI) in the mining of Silver.
Also that there are no large stockpiles of Silver left.

I have thought for years that the same thing will happen
with Silver coinage as has happened with Gold coinage,
that people will be priced out of the ability to collect
series that contain Silver.

This may be a positive development for moderns though.


Edited by stewart
10/30/2012 09:00 am
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 Posted 10/30/2012  10:26 am  Show Profile Bookmark this reply Add mds308 to your friends list Get a Link to this Reply
I do see the point, however, if you can buy these, or any collectible for less than market value, it is almost certainly a good/great investment. I realize the average collector at a show or controlled sale will not find such a bargain but when you hunt like I do, occasionally one falls into your lap. I've had people show me an older US gold coin and have no idea as to what it is or where it came from. My brother-in-law found a late 1800's Gold Sovereign on a stick pin for 5 dollars at a yard sale. There are bargains out there but you have to be creative in your hunt.

I had a lady drop in front of me a handful of junk foreign coins and numerous Wheat-back pennies. Mixed in the batch was an early 1900's five dollar US gold coin. That baby stood out like a scab on your dates upper lip. I offered her just below spot for the coin. She panicked, wrapped up her stuff and headed for the hills. Sometimes being too honest won't pay off.
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 Posted 10/30/2012  11:12 am  Show Profile Check barryg's eBay Listings Bookmark this reply Add barryg to your friends list Get a Link to this Reply
If I understand the argument against buying common gold coins correctly, the point is that it's perfectly fine to buy gold as an investment if you think that gold prices will continue to rise in the future, but it's not worth paying a premium for common numismatic gold coins since any increase in value will be entirely (or primarily) due to their gold value and not because of their numismatic value.

I heard this argument last year when I was looking to buy some gold coins for my 7070 album and decided to ignore it in order to justify my purchases. Now that I've actually completed the gold page in my 7070 album, however, I wholeheartedly accept it and will not be purchasing any additional numismatic gold coins. Just don't tell my wife...
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 Posted 10/31/2012  7:04 pm  Show Profile Bookmark this reply Add sirdizzy to your friends list Get a Link to this Reply
I agree I have been priced out of most gold coins as a mid level collector (I might still add a 2.5 dollar Indian to my collection) where back in 2001 when I was an advid collector I was actually doing the gold page on the 7070 (I had some 2.5's, some dollars, some $5 and was even looking at adding a Saint Gaudens that sold for around $300 back then). Now I wouldn't even consider the gold 7070 page because there would always be holes (I don't see myself ever owning a double eagle at 2k a pop) but back then the whole set was completable for me.
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 Posted 10/31/2012  8:45 pm  Show Profile Bookmark this reply Add everything to your friends list Get a Link to this Reply
I'm priced out of everything, but I do like buying pre-33 gold, I don't chase the premium stuff, much of it is priced as buillion now.
They did not suggest more coinage possibly being melted and changing the numismatic reality, but I guess the best numismatics would never get melted. I disagree about silver stock piles, investor demand is rated about 15% of the market currently. If we ever have a green revolution as a result of higher fossil fuels the sky is the limit with silver though. Still, we have enough to fry ourselves and mine silver/gold until the cows come home so that's off a bit yet. I also do not understand the silver depletion model as now that silver is more expensive, mining technology to slough it off as a profitable bi-product of any mining process should improve. Certainly, the hunt for the next mother-lode silver mine explorations must have begun by now as well, and why would anyone announce such a thing?, you would be killing the goose that lays the golden egg.
Edited by everything
10/31/2012 8:47 pm
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 Posted 11/01/2012  2:56 pm  Show Profile Bookmark this reply Add mkman123 to your friends list Get a Link to this Reply
I buy classic gold for the history!
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 Posted 11/01/2012  2:58 pm  Show Profile Bookmark this reply Add mkman123 to your friends list Get a Link to this Reply
MDS308, I hope you continue to be honest, yeah that lady bolted, but others will appreciate the honesty and sell you. What goes around comes around. I hate stories of old folks getting robbed of their collections
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 Posted 11/01/2012  9:07 pm  Show Profile Bookmark this reply Add cladking to your friends list Get a Link to this Reply
Excellent article and very insightful but I don't fully agree. Certainly there will be an effect of higher gold prices reducing demand so paying large premiums for gold coins liable to lose their premiums is foolhardy in all probability. But there is a small core of very wealthy people who can put significant demand on a small percentage of the classic gold. I'd guess this demand will materialize at the high end of the grading spectrum and be most visible here and in the rare dates. Buying rare dates at small premiums might be a very rewarding thing at this point in time. Even if demands doesn't materialize you'll still have the gold so all you risk is the premium and the possibility that gold will drop.

This might not be a good area for the typical collector to speculate but anyone buying precious metal coins for their metallic value should be setting aside the best coins for the money. If that's MS-63 gold right now then why not? If gold decreases in value the MS-63 gold should regain some of its previous premium to reduce your loss. You can trade it for a larger amount of junk gold to hold for possible increases.

There is what I consider much wortheir gold available than old US gold. Primarily this is low premium modern foreign gold. Unless you're a collector and know the value you really should keep the premiums you pay quite low no matter what you're buying. A lot of the moderns have surviving mintages in the hundreds rather than the millions. Some had mintages of mere dozens. Premiums can be surprisingly low for very important and beautiful coins.
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 Posted 11/01/2012  9:33 pm  Show Profile Bookmark this reply Add jpsned to your friends list Get a Link to this Reply
What I don't see here is the perspective of a coin collector whose modest means makes owning even one common-date gold coin a stretch. I don't own any gold coins because even the common dates are too expensive for me. But I'm hoping there will come a day when I will be able to afford one. On that day I will feel even better about my hobby because I'll have attained a new level of numismatics.

So I vehemently disagree with your assessment that a common date, classic gold piece is numismatically worthless--on the contrary, it's a wonderful, fanciful thing that tells a whole different numismatic story than a non-gold coin.
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 Posted 11/01/2012  9:37 pm  Show Profile Check barryg's eBay Listings Bookmark this reply Add barryg to your friends list Get a Link to this Reply
I don't think anybody has said that a common date, classic gold piece is numismatically worthless. Just that it's probably not a good option for somebody who is looking to invest in gold.

I agree with mkman123 that these coins should be purchased and appreciated for their history, but buying one for your collection is a far cry from buying them in large quantities thinking they will ever be worth much more than their intrinsic gold value.
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 Posted 11/01/2012  10:27 pm  Show Profile Check basebal21's eBay Listings Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply

Quote:
So I vehemently disagree with your assessment that a common date, classic gold piece is numismatically worthless--on the contrary, it's a wonderful, fanciful thing that tells a whole different numismatic story than a non-gold coin.


Technically the classic gold is numismatically worthless. That doesnt mean its not a great coin, doesnt have a lot of history or isnt collected. All it means is that its sole value is its metal content which is what we see now. Numismatic value in this case would be its price range above the value of the metal which those coins dont have any of.

If gold dropped back down the numismatic value could return in time if it got low enough. Its also possible the numismatic value could be eroded for quite some time. I doubt anyone who bought them when gold was low enough for the numismatic premium to be present is complaining right now though about what its now worth
Edited by basebal21
11/01/2012 10:37 pm
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 Posted 11/01/2012  10:56 pm  Show Profile Check cc99999's eBay Listings Bookmark this reply Add cc99999 to your friends list Get a Link to this Reply
Those that disagree with my assessment of common gold's lack of numismatic value - in lower MS grades - what do you base your position on? emotion? facts other than those I presented in the price analysis?

the market's behavior tells us how big the market is. it is currently telling us that there aren't enough buyers of the common gold coins in commonly found MS grades to give the coins any premium over melt. the premium that is there- is artificial and driven by dealers' need to make a profit.

my advice in the article is- buy classic gold for close to melt and only if you think this gold run will sustain itself or gold will continue to rise. you'd need to be an oracle to predict future commodities markets.
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 Posted 11/01/2012  11:40 pm  Show Profile Bookmark this reply Add GR58 to your friends list Get a Link to this Reply

Quote:
I'm not shy about my opinion about common date classic gold. I think that its a poor investment unless you are sure that bullion will keep going up. As a numismatic item- it's worthless.


As a collector that is trying to finish the 7070 gold page, I have read your opinion and have thought about it
all day.

If I got it right, your concerns are that buying common gold coins at these levels is a bad investment strategy.

I do think this could be said about any common bullion related coin.

With much thought, for me, I am buying coins for my collection, so it being a good .. or bad investment is not a main reason for making purchases at these price levels.
Having a type set with a complete gold page, make this collection my top set. I do think all collectors hope the coins they purchase will maintain or increase in value, even if they have no intention of selling them. So yes, as a collector buying gold at these levels of course is a concern.

My thoughts on buying common gold coin for investment.
If gold prices continue to increase, buying at this level
would be a good investment.

If gold prices go down, and we bought at this level, then
hold on to what you would have, until prices go back up.

Major price drops in the gold .. or silver market is a major opportunity to purchase more gold or silver. The more you purchase at lower prices will help offset the coins you bought at higher levels.

I do not think anyone knows what the price of gold will be in one year from now.

I do feel certain that sometime in the future gold will reach higher prices than it is today. Of course I feel certain that in the future gold prices will be lower than is it today.

The big trick is not having to sell when prices are lower than you paid.

The people I have seen make money on gold have a couple different strategies, one is buy for the long term 20 to 40 years. Another is buy when low or when it is trending up, but sell, no matter what, when it reaches a set profit point.

You can always find a reason to not invest .. in anything.


Quote:
As a numismatic item- it's worthless


edit - I forgot to respond to this statement. I feel even when you buy common gold at high levels, when gold does drop to lower levels .. the numismatic value will kick back in and help you keep a higher amount of your investment, or not have as much loss.
Edited by GR58
11/01/2012 11:51 pm
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 Posted 11/02/2012  08:34 am  Show Profile Check cc99999's eBay Listings Bookmark this reply Add cc99999 to your friends list Get a Link to this Reply
Except for the fact that there is now and will always be many more gold coins than collectors. I wrote a piece a while back about how I traded an MS-64+ Ike for an MS-64 Ike, a Morgan dollar, and $50 cash and then turned what I received in trade into a MS-63 $5 1903 Liberty. PCGS says that the value of that coin is 800+ but you will not see an offer like that unless you find a buyer who is completely unaware of the way the market actually works. That coin is a slightly higher than bullion buy for every coin dealer in the country regardless of grade until you get to some higher grades- and even then- you may be priced out of what smaller shops are willing to pay. There's a collector funnel - but there is also a dealer funnel.

Case in point, for a piece I may or may not write- I took a blue box worth $20,000 (retail) in PCGS coins to various cash for gold "coin" shops. Most of these places did not give me an offer for any of the coins- because they felt that they would not be able to back out their costs and resell the coins. I stacked the deck a little bit with my selections- there were some high end clads thrown in- but when you can't get offers on gold and key date silvers- that should tell you something about the real strength of the market.

common date common grade gold has a silver analog- common date common grade morgans.
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 Posted 11/02/2012  10:52 am  Show Profile Check cc99999's eBay Listings Bookmark this reply Add cc99999 to your friends list Get a Link to this Reply
Merit Gold & Silver is offering a FREE upgrade from MS-62 to MS-64 when you buy a common date St. Gaudens. Come on, now? Point proven.
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