Gold Coins as Investment

Bothuwui

My boss wants to buy some gold as an investment, and he knows I collect coins. He asked me what I thought would be the best investment. He likes the look of the proof Golden Eagles. I suggested a ST Gaudens $20. They seem to be just a little more than the modern Gold Eagles, and are considerably older. What do you guys think? What is the best Gold coin investment for under $600?

AbesNeighbor

I like older $2 1/2, $5, and $10 gold pieces...Readily available and still highly collected by some.

baccaruda

I think it would be difficult to choose an investment coin for less than $600. If a coin at that level rose in value I think it would be more luck than anything.

On the other hand if he wants to buy a $130,000 coin, those will always be going up in value.

Higashiyama

As a store of value, I agree, I would rather have very carefully selected MS63/64 St. Gaudens $ 20 gold than current American Eagles. They will be the best store of value if your colleague learns about coins, becomes an entusiast, and can spend some time selecting high end attractive specimens. Such a coin should retain numismatic value in the event that gold drops in price. With deflation creeping into the US and global economies -- 10 year treasuries today are yielding 3.1 %, productive capacity is high, even service jobs are being trasferred to low cost areas -- there is a material risk that gold will fall well below current levels.

Bothuwui

I think he is looking to "Get his feet wet" with a lower cost/more commen coin first, and then looking to add on to it later. Canadian Maple Leafs have a higher gold content, I believe. Do you think that has much of an impact on their value?

baccaruda

If I were him I'd buy a 1935 MS66 Connecticut Commemorative for that money.

Higashiyama

Yes, a maple leaf (and an American eagle) contains slightly more gold than a US $ 20 gold. As such is it slightly more convenient as a bullion coin. For the US $ 20, there is some risk that numismatic interest, which does create a significant mark-up over bullion value (about a 50 % mark-up at MS63/64), will decline.

BigD5

Bullion gold as an "investment", is a loser in my book. That includes ST. Gaudens, $20 Libs et al.
Now, early, rare, gold coins that are truly rare, and have a strong collector base (is that possible? ) would be different, but $600 isn't going to get you a down payment on that type of material.
To collect the "bullion" items is one thing, to actually expect an "investment" type return on those items is a whole different ballgame.
MY OPINION.

Bothuwui

After speaking to him some more, I think he is trying to mix the sexiness and flash of gold with his investment. He basically said he really likes the look of many of the gold coins, and would like to own some. As he isn't sure what his finances will be in the future, he wants to be sure he can at least get his money back out of it at a later date, if need be. I guess this isn't really an "investment" per se. It sounds like this could spur an interest in collecting a particular series of gold coins though.

paigowjohnny

Think numismatic rather than bullion. Forget the American Eagles and Maple Leafs and Pandas and all that. If he wants a return, the better GAMBLE is to go for rarer date gold.

baccaruda

You don't "invest" in gold per se. "Investing" suggests growth. The pile of gold you buy today will be the same pile of gold in 100 years. It is a hedge against inflation however. Think of it this way - in 1920 a $20 gold bought you a nice man's suit, today it would still buy you that same nice suit.

As long as he doesn't make a foolish purchase he shouldn't have any problem getting his money back in the future plus a modest 2-3% annual inflation adjustment.

Bothuwui

I like the way you stated that, Barracuda. Thanks for the perspective! I think I'm just going to encourage him to get whatever he likes the look of. Hey, if you can't enjoy what you buy, why buy it? He is smart enough to shop around and make sure he gets a good deal for whatever type he decides on. I can sense he is on the cusp of becoming a collector. I'll try and push him over the edge.

Bothuwui

Sorry, for the mis-spell, baccaruda.

longtimecollector

How 'bout sinking that 6 bills into silver ???? Maybe a 100 oz and 2-3 10's??? less premium, the ability to average down if necessary, and you can sell in dribbles rather than an all in/all out position ????

baccaruda

no prob man, happens a lot. He should look into the classic commems (1892-1954). Not only are they beautiful, but most are very limited (roughly 20,000 minted compared with millions today). So not only do you have a coin with profit potential, but they're gorgeous too. The entire set is also attainable in uncirculated condition.

oldcameoproofsguy

Really nice territorial gold is one area that I know that I will always be able to get at least close to what I paid for it. It isn't cheap, but most of the time it's extraordinarily rare and it is finding a greater collector interest base.

The first 1854 $20 Kellogg in really nice AU-58 that I find is mine. I kind of doubt your boss wants to fork over five figures for a coin though.

baccaruda

If Barbers ever catch on, the proofs are a monster bargain. You're talking about mintages of what? 1,000 or so for each year for what? $500?

topstuf

Stop.....stop.....STOP !!!!!

I can't take another NEW SUIT analogy!

PLEASE!!!

Have pity.

How about a new GUN? Or LAWN MOWER? Or trip to DUBUQUE?

ANYTHING.....BUT.....THE.....NEW SUIT !!!!

I wish Seinfeld had been a coin collector (actually I know the guy who was interviewed to purchase some coins but was rebuffed at the suggestion that they would not be GUARANTEED to rise 10% per year) just so they could have had a ........... GOLD COIN/NEW SUIT ......episode.

Bothuwui

Hey, where can I get one of these $20 suits?

baccaruda

well, in 1920 they would have been using one of those manual push-mow things, so technology has advanced and it's not a good comparison. The trip to Dubuque likely would have been much different than today, another bad comparison. The gun would be the closest in that Auto-Ordnance produced the MI Thompson then and now - don't know the prices however. The difference being the 1921 would be a 100-round automatic while today's would be a 10-round semi.

Now, suits are the same today as the were in 1920.

MrEureka

Hey, where can I get one of these $20 suits?

I have a few in my closet. What size do you wear?

MrEureka

cladking

There are many gold coins which would be selling for about the same price
even if gold dropped significantly. Many of these are world coins which were
made in very small quantities or in popular series. Get an old Krause from
before the gold spike of '79, or a CDN and do some comparisons. It's easy to
spot the coins which were not dramatically affected by the value of gold going
up.

These are now tied to the value of gold so any drop in gold price might have
the short term effect of lowering their price. They should recover quickly. These
coins will do at least as well as gold on the upside and any real increase in de-
mand can have a large increase on price. Many of these world coins have mint-
ages of a few hundred and are extremely attractive. They also come with themes
which could interest Americans or American collectors.

Some are also issued by emerging countries with large populations. Domestic de-
mand in these countries could easily swallow up the entire mintage if the people
had the money and desire to buy them.