Skip to main content

Why invest when you can collect gold?

Do you worship gold? Some might find such a question sacriligious. It can be. But it is one every would-be gold investor needs to ask himself.

If you look at gold with veneration and treat it like an eternal monetary truth, you will get burned.
There are good times to buy and then sell it profitably. There are bad times to buy it.

If you had purchased gold Jan. 21, 1980, at the $850 an ounce peak, you would still be under water 27 years later. Clearly that wouldn’t have been a smart move.

That’s why as editor of Numismatic News I have always recommended that persons interested in gold investment do it the intelligent way: collect it. You can get nearly one full ounce of gold in a $20 Liberty Head gold piece, or a $20 Saint-Gaudens.

If you try to collect one of each date and mintmark of the Liberty Head series, you have 153 coins to choose from. Some are rare enough that you would not consider their purchase a gold investment. Many of the dates though, are little more than metallic value in all grades except the top uncirculated grades.

Using round numbers, 100 Liberty Head $20s would be almost 100 troy ounces of gold worth $69,000 at present bullion prices. That can satisfy all but the richest gold buyers. As an investment, some experts recommend no more than 10 percent of a portfolio in gold. Many others say the cap should be 5 percent. That means 100 Liberty $20s can satisfy investment portfolios ranging from $690,000 to $1.38 million.

The danger, of course, is that once you start treating your gold investment as a collection, you might just want to start buying the rare dates and take your chances with the numismatic marketplace. Is that bad? I don’t think so. My evidence is a lot in the March Heritage Auction Galleries at the American Numismatic Asssociation Convention. An MS-67 1920-S $10 gold piece purchased for $85,000 in June 1979 sold for $1.725 million. That’s a much better performance than gold bullion put in during the period. Think about it.