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 Replies: 19 / Views: 3,379 |
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Pillar of the Community
United States
5853 Posts |
All right, I suspect this has already been debated to death in the past, but I'm new around here...
[Feel free to skip ahead a few of paragraphs if you don't want all the background.]
I never had much spare money to invest before (always saving toward a house, putting money toward my son's college education, etc.) and I also figured that investing in precious metals was a pretty lousy investment anyway since the price was pretty flat for 30 or so years.
Well, now I do have some money to spare (not a lot, mind you, but some) and the price of gold is obviously anything but stable. Obviously, I wish I had a time machine to go back a few years, but don't we all? Anyway, I'm still really torn about actually buying gold right now. Part of me thinks that, with the way the economy has been going lately, the price of gold is going to just keep rising and even buying now at $1800/oz will end up being a good investment when it hits $3000/oz.
The other part, however, thinks that the worst possible time to jump on a bandwagon is after it has already hit the stratosphere (pardon the mixed metaphor) and I would be a fool to invest in gold right now since it could very well drop back down below $1000/oz and stay there for another 30 years. Of course, this is what I told my wife when she wanted to buy gold at $1300/oz a few months ago...
ANYWAY...
I'm thinking that the safest bet is to buy old coins in good condition (Liberty and St. Gaudens Double Eagles). Yes, they cost more per oz. than straight bullion coins, but they have a numismatic value above and beyond their gold value. Which is to say that they will hopefully hold their value better if gold does actually drop back down below $1000/oz.
Is this true, though? If I buy, say, a $20 Liberty Gold Double Eagle in AU or better condition for $2000 and gold drops to $1000, how much is my coin likely to be worth at that point? Still just 15% above spot value? Or will it be worth more simply due to being a rare old coin in excellent condition?
In a similar vein, I recently purchased a few BU rolls of Morgans from years other than 1921. I paid about $45 per coin, but I'm hoping that condition and collectibility will preserve some value even if silver drops back down to $5/oz (e.g., I'm hoping they would still be worth $15-20 each, whereas pure silver bullion would only be worth $5).
Sorry for the extremely long post, but I'd really like some advice before I do something stupid.
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Pillar of the Community
United States
3184 Posts |
I think getting both numismatic gold close to spot and bullion would be a good combo
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Pillar of the Community
 United States
5853 Posts |
Yeah, but is that even possible if we're talking investment grade old coins and not bullion grade?
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Pillar of the Community
United States
870 Posts |
Yes, it's possible. I'm actually thinking about doing the same thing. I've picked out series that I like and I'm planning to get one or two of each - one that was so heavily minted that it's really bullion, and it will be in a medium grade, and one that is a bit more rare in a slightly lesser grade.
I don't want a huge exposure to gold, but I think it's a good idea to have some. =)
That said, if you really want to be safe, I think there are Morgans that will continue to make good "investment" sense. Of course, my favorite thing is (really) old copper...
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Pillar of the Community
United States
5853 Posts |
Well, I guess here is my real question, in a slightly smaller nutshell... As I said before, I know that high grade Morgan dollars were selling for at least $15-20 apiece back when silver was only $4-5/oz. At least, that's what I used to see them selling for at the local coin shop years ago. So if I buy them now at $45 apiece I won't get totally skunked if the silver price goes back down. I have no idea what high grade double eagles used to sell for back when gold was only $300-600/oz, however. I just wasn't paying attention back then. Obviously, if I buy straight gold bullion for $1800/oz and gold crashes back to $600/oz, my bullion will only be worth $600/oz. If I buy high grade double eagles at $2000/oz, however, what are they likely to be worth at that point? |
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Pillar of the Community
United States
667 Posts |
Now you moved into speculation on two market pricing factors. I don't combine both but their certainly are people that do. If you want it to work the way you are thinking you should be buying all MS 65 plus coins for classic silver & gold.
My feelings are that as the largest group of coin collectors have started to age and will over the next 10 years plus we may see more and more great but ungraded coins in the market place. This may drive the price down on everything but the higher graded and slabbed coins.
Just remember it has been the rare coins that have outperformed bullion close to 4 to 1 since 1971.
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Pillar of the Community
United States
2661 Posts |
Shop around, a lot. There are still rare opportunities out there where $2.50 & $5 gold pieces can be had for well below there melt and numismatic values. With these it is a matter of being in the right place at the right time.
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Bedrock of the Community
Australia
21786 Posts |
barryg: I think you are right.
But just for the near future, I think gold has zoomed up a bit too much, and will fall back. I can't say how far back, but I feel that it won't be too much below the long term trend price line this time around. Gold is often regarded as a safe investment haven, but it is a rather bumpy haven when it comes to pricing!
Review the long term price graph on an often and regular basis, before committing a decision to buy. Really, it becomes just a decision like any other investment, and your decision should be an entirely rational one.
Have a look at the theories of 'dollar cost averaging', and 'moving averages'. Knowledge of these theories should make your buy and sell decisions more rational and impassionate. Gold, like the stockmarket, has a history of being highly price volatile, and you need to defend yourself against this.
For me, gold does not shine as much as for other folks. I have quite a few gold coins, but most have numismatic value a good deal above the bullion value. I see it as just another metal from which coins are made, and as such, has a legitimate place in a collection of numismatic significance.
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Pillar of the Community
United States
5853 Posts |
Quote:
But just for the near future, I think gold has zoomed up a bit too much, and will fall back. I can't say how far back, but I feel that it won't be too much below the long term trend price line this time around. Gold is often regarded as a safe investment haven, but it is a rather bumpy haven when it comes to pricing! Quite so! As I said, I've always shied away from investing in pure bullion (as opposed to collectible coins) because the prices were stable for so long. Heck, except for the last 3 or 4 years, you would have gotten a better return on your investment leaving your money in a savings bank over the last 30 years. And I still have a niggling feeling that this current bubble is about to burst and send gold back down well below $1000 to stay for another 30 years. The only reason I am even considering buying gold right now is the sheer number of people who are absolutely 100% convinced that the price is going to keep climbing for the foreseeable future. I didn't listen to them when gold was at $800/oz, and I didn't listen to them when gold was at $1300/oz. Now I'm starting to think I was foolish not to listen and there may still be time to jump on gold train. I want to hedge my bets as much as possible, though, which is why I still don't want to buy pure bullion. But I'm still hoping somebody can at least tell me what coins like these were selling for back when gold was at $300 or $600/oz. If they were selling for, say, around $1000 each back then, I'd feel pretty secure buying them at a premium right now, since presumably they would still be worth $1000 each to collectors even if gold dropped back down. On the other hand, if they were only selling for, say, $400 when gold was $300/oz, it probably wouldn't be worth it. |
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Pillar of the Community
United States
759 Posts |
Here's one hard data set for you: Gold spot Aug 11 $1746, ebay sales price of AU $20 Liberty yesterday $1800, 0.9675 oz of gold = $1689 melt, nominal premium = $111, % premium = 6.6% Gold spot Aug 92 $337, $20 sales price $390 from ad, $326 melt, nominal premium = $64, % premium = 19.6% I actually think you could interpolate between those 2 points for a decent ballpark figure, although I don't believe the relationship in linear. Anyway, if gold hits $1000 an oz, that double eagle is probably selling for about $1050, $83/8.5% premiums. So there is some mitigation of the decrease, but not much. I agree that gold coins can be had at or below spot more often than bullion (not easy though) and with the history component, would be my choice. Note this was for below MS coins. MS price characteristics would, of course, be different. Good luck. |
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Pillar of the Community
United States
5853 Posts |
Well, if you're gonna go all the way back to 1992, I think it fails to take into account the natural appreciation due to numismatic interest since then. Which to say that even had gold remained at $337 until right now, I would expect the worth of high quality gold eagles to have increased due to collector demand. But still, it's not as encouraging as I was hoping... I just hate buying bullion. I like collecting coins because of their appearance and history, which is independent of their metal content. Bullion has no value other than metal content, however, and it just doesn't excite me. Ah well, maybe I'll just keep buying high end Morgans and Peace dollars with my hard earned money and leave the gold coins to the rich folks.  |
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Rest in Peace
United States
4849 Posts |
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I like collecting coins because of their appearance and history, which is independent of their metal content. Bullion has no value other than metal content, however, and it just doesn't excite me. My recommendation to you is to add a small amount of historical gold to your collection. Don't go "all in" on gold, but maybe put together a short type set of saint gaudens and incuse indians (quarter eagle - double eagle). Then you can enjoy them for their history and beauty whether gold goes up OR down. |
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Pillar of the Community
United States
5853 Posts |
Well, I wasn't planning on taking our life savings and turning it into gold...  Actually, I was thinking of buying maybe a roll of 20 to start. Of course, if I really want them to retain their value over and above their gold value, I suppose I should only buy slabbed MS63+ coins. Which, of course, are even more expensive than raw AU-BU coins... |
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Pillar of the Community
United States
2424 Posts |
agree with jonny the $5 half eagles seem to have the smallest premium. AND if you are trying to get the best value( most gold for your money) go for damaged or polished coins. APMEX and MONEX? one other bullion coin site sells pre 1933 coins that are polished for very little over spot. I would check with your dealer as well. mine gets rid of that stuff quick though... |
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Pillar of the Community
United States
5853 Posts |
Do polished coins ever have any value over bullion prices, though? My whole point is to invest in something that will still have value if gold prices crash.
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Bedrock of the Community
United States
20753 Posts |
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Do polished coins ever have any value over bullion prices, though? My whole point is to invest in something that will still have value if gold prices crash. Way to vague a question. An MS-66 coin that has been cleaned or polished may not even be noticed as that. Others may well be ruined. Each coin is different and so is the methods of cleaning or polishing. As to the original post, all I can add is try to remember that coin collecting should be thought of as a hobby, not an investment. Although a great track record in values up, so did many other hobbies at one time. Remember the Beanie Babies? Sports Cards? Hot Wheel Cars? Coins may or may not ever fall out of the money but for sure no hobby should be used as an investment. |
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Replies: 19 / Views: 3,379 |
Posted 08/13/2011 10:03 pm
