$5 Indian vs Gold Bullion

Planchet

Opinions sought. At a B&M recently, the dealer expressed his opinion that $5 Generic Indians in NGC AU-58 had a better appreciation potential than bullion. With the melt of the $5 Indian at about $250, he was selling NGC AU-58's at $360. He believed that you get a dual bang for your buck with a generic $5 Indian, gold value and numismatic value. He said if gold goes down, the Gerneric Indian's might hold their value better and if gold goes up they most likely would appreciate at a rate similar to bullion. There is a $110 premium (about 40% of the gold value) on the $5 Indian over the melt. Do you think he is correct or is plain bullion a better way to go?
Planchet

calleocho

what was his buy price on the NGC 58 $5 indians?

Cladiator

It's a common theory. Some subscribe to it, some don't.

PerryHall

In this case, I agree with the dealer. The $5 gold Indian is a neat coin and AU58 is a great grade to buy one at considering low end MS coins are a lot more expensive and may not look as nice.

Weiss

I think it's a fine theory--the equivalent of buying good quality (older, BU) 90% silver over generic rounds or even eagles. Built-in numismatic potential.

However, I think as a gold play, which seems to be your primary focus here, you're spending a lot of your gold money on plastic.

The generic, bullion nature of the coin probably reduces the possibility of buying a fake, and that corresponding risk, to the point that the slab is somewhat unnecessary. For that matter, the AU58 is nice, but keep in mind it's not an MS piece. Is it *significantly* more valuable than an AU55, 53, or even a better XF piece? Gold-wise, not really.

At least I wouldn't pay a *big* premium for the difference, slabbed or otherwise.

Case in point. I posted several weeks back (end of August) that I'd hounded my dealer for fractional modern bullion. After several visits with nothing to buy, I had him pull out his tray of raw classic gold. You can see this one was marked $300. He offered it to me for $260 and that's what I paid for it:






The original thread

IIRC, I paid about 10% over melt for the half eagle. It's graded AU. So is it a 53 or a 58? I'd like to think 58, but it doesn't really matter either way. It's better than XF, it's not quite MS.

So...If you've got a dealer you trust, and you're reasonably sure you're not buying a complete raw dog, I wouldn't pay that much of a premium for the slab. Like some of the others have hinted at: It seems unlikely he'll buy them back at that much of a premium. Classic, generic, AU gold close to melt? Hell yes. But not at a premium, or at least not much of one.

roadrunner

The bulk of the premiums paid on these AU's exists whether you are talking plastic or raw. The buy/sell spread on these coins is often as little as 3-5%. It's an interesting concept and could have merit. The pops on these is comparatively low compared to MS specimens. It's far easier to find a MS62 or MS63 $10 Lib than it is a holdered AU58. If you can buy the things fairly cheap as Weiss did I'd say it's a no brainer. There are plenty of fake $5 Indians out there so don't assume that all raw ones are good. But if you find a nice and lustrous AU+ $5 Indian that looks little different than a MS61/62 except for excessive rub, that's a keeper. But personally I like the AU $10 Indians better at $675 or so. Though I liked them a lot better 2 months ago when they were only $575-$600 each. Still, it's like getting the $5's for $335. I think the $10 Indians offer much better opportunities for promotion rather than the odd "incuse" design of the $5 Indian.

Up until the prices of MS62's were pushed up this year the $5/$10 Libs and Indians were pretty good values imo. I think BU classic gold has more appeal than the AU stuff as it fits both collector and investor desires. But, at some much higher value of gold, I wonder how many people will be willing to pay premiums for AU-MS62 generic $5/$10/$20 gold. At what pog levels would the premiums just basically dissolve? $2000? $2500? $3000? $5000?

roadrunner

derryb

Historically, collectables are not a good investment in rough economic times. With the current and project state of the economy I would not be looking at appreciation from a collectable point of view. I would be looking at gold value only until economy improves.

ttown

I'd say that's a fair deal and those thinking these coins won't go up need to go back to 79/80 peak and see what these did during that time, I think some will be surprised. It also provides a downside risk that just isn't there with bullion.