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Good time to trade up on gold coins

This article was originally printed in the latest issue of Numismatic News.
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It’s hard not to squirm a little when realizing the guy who put all of his money into common junk gold coins a decade ago has been rewarded with much larger gains than those of us who invested in rare collector coins. 

But it’s also worth noting that the current anomaly of junk gold coins trading at record prices offers some once in a lifetime opportunities to reposition a collector’s portfolio of coins.

Sometimes it helps to step back for a minute and ask yourself what you would have done 10 years ago. Take, for example, a pair of coins like a raw cleaned common date 1895 gold $10 eagle and a slabbed 1854 PCGS XF-40 gold $3 piece for instance. 

Back in 2000 when the eagle would have set you back about $179 to purchase, would there have been any hesitation at all if someone offered to trade you a slabbed $3 gold coin for your eagle?

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I’m fairly certain most of us would have jumped at the opportunity in a heart beat to make the trade 10 years ago, though no one in his right mind back then would have offered you the $3 piece on those terms. Yet today, thanks to rising gold prices and the flood of neophyte investors into the gold market, this exact same trade is very much a possibility. Assuming, of course, that like me you have some common gold coins already in your collection from 10-plus years ago, you would be nuts not to sell them for something more numismatically desirable.

And it helps to remember that even 90 years ago when the U.S. was still on the gold standard back in the 1920s, the premiums on $3 gold coins were about seven times melt. I mention that to anyone concerned about trading nearly half an ounce of gold for only a seventh of an ounce. But even in the case of coins of the same weight, there are some tremendous opportunities right now to trade up on your existing collection.

Take, for example, $5 Indian gold half eagles. I recently purchased a 1916-S gold $5 slabbed as AU-58 by PCGS for about $25 more than the prevailing price for the much more common 1912 and 1913 examples in the same certified grade.  And these are coins the neophytes aren’t even chasing right now, hence the whole series, even the common dates, is a screaming “BUY!” Dumping modern gold at melt to go Indian is a no-brainer in my estimation.

This exact same phenomenon is also currently affecting world gold coins. If you have common dated gold 20 francs, sovereigns, and 20 lire coins in your collection, you will be amazed at the opportunities to upgrade.

I recently purchased an 1891-R Italian gold 20 lire on eBay, slabbed by PCGS as MS-64. I was the only bidder at $300. Everyone else passed on the lot because the same raw coin dated 1882 can be readily purchased on eBay for about $288.

So, what did I get for the extra $12? I got a near gem BU coin slabbed by PCGS, that is 215 times more rare than the 1882. The 1891 is the second lowest mintage in the entire 17 year series with only 32,000 pieces struck versus nearly 7,000,000 for the 1882. And to fund the purchase, I simply sold off, (you probably guessed already) a nasty looking circulated gold French 20 Francs coin of the same weight.

These sorts of opportunities are out there everywhere right now. The only requirement being a collector with the ability to hit the “sell button” on coins already in his/her collection to fund purchases. For someone without a collection who is just now entering the market, getting as much gold as possible for the least amount of money trumps any other consideration.

This singleness of purpose is providing those of us who are true numismatists with a once in a lifetime opportunity to upgrade our collections for almost free. Any seasoned collector would be making a mistake not to capitalize on it.


This Viewpoint was written by Bruce Walker, a hobbyist who is from Kansas City, Mo.
Viewpoint is a forum for the expression of opinion on a variety of numismatic subjects. The opinions expressed here are not necessarily those of Numismatic News.
To have your opinion considered for Viewpoint, write to David C. Harper, Editor, Numismatic News, 700 E. State St., Iola, WI 54990. Send e-mail to david.harper@fwmedia.com.

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