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why aren't old generic gold coins more popular
BigRed
Posts: 716
I mean you can get a old historic gold coin a century or so old in AU to lower grade unc. for close to melt value for gold in most series if you stay with common dates. It seems like a good way to own gold and have some collector appeal to. Of course I would love to collect rare gold but it is out of my reach,but I really like gold coins because of its duribility and intrisic value. any comments?
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Because they are so abundant the premiums are very small. Just be careful if buying circ $2.50 or $5.00 Indians as there are a lot of fakes around.
AL
Any $20 gold piece is still going to cost $650+ right now, which is a large chunk of many many collectors yearly budget.....
<< <i>Its not much different with common date silver circulated coins......
AL[/ yes that is very true and they are also widgets, but a lot of coins are widgets in the time span of say the 1880's to the early 1900's and in the grades of AU to lower mintstate they can cost quite a bit, where it seems to me that when you purchase a gold coin that you are paying for the gold and getting the coin almost free.q]
Personally, I think it's a sleeping area of numismatics. The rarity and the collector attention don't balance out. For my part, I'm buying as much of the stuff as I can afford. I started assembling a nice slabbed AU/BU gold type set back when gold was in the $300 range and besides being very attractive/fun, it's done quite nicely for me. It seems now like no one was paying much attention when gold was so cheap, some mines had to close because they couldn't make a profit.
Thirty-five years ago when I was a kid I would visit the local coin shop and scour their scrape silver. It was chock-full of seated liberty and Barber denominations. Granted they were ag to fine but for me they were a blast. That stuff is still being sold today but it's slabbed and it ain't for scrap prices! I think the same thing will go for "generic gold" sooner or later.
As for the price being a factor, that doesn't jive to me. Many collectors, myself included, are dropping $200-$300 on a nice 19th century silver coin and not thinking about it. The ratio of numismatic value to inherent bullion value is HUGE! For many gold coins of the same era it's only slightly larger than 1.
I try to keep Warren Buffet, the very rich contrarian, in mind at times like these: "Be brave when others are afraid, and afraid when others are brave."
BTW - the modern commemorative market is in the same position. I bought a 1989 $5 Congressional PCGS MS69 this week for the bullion and slabbing fees ($170 or so).
Hi AnimalKeeper:
Good points...I'm a baby buffett myself.
<< <i>
The ratio of numismatic value to inherent bullion value is HUGE! For many gold coins of the same era it's only slightly larger than 1.
>>
Curious...what do you mean by "numismatic value"? How is this determined?
-JRR Tolkien
Curious...what do you mean by "numismatic value"? How is this determined?
Numismatic value is simply that value we the collector place on it.
As an example take a generic Morgan. Numismatic value say $50. Inherent bullion value at $13 per oz. is $10.05. So the raio is ($50/$10.05) or slightly less than 5. On better date coins that ratio is much larger, and on key date coins it's out-of-sight.
Try the same with generic gold - say an XF/AU Liberty $5. Numismatic value about $170. Bullion at $630 is $152.40. Ratio is 1.1. Hard to lose money on such a coin except if the value of the bullion drops significantly.
For the most part, they did not circulate and were maintained in bank vaults to meet the reserve requirements of the banks. Remember, paper money did not come into vogue until the late 19th century. Before that you needed to have metal in you vaults. Thus, many of them survived.
I think they do not exist in the quantities that some believe and their eventual collectability will increase over time. Just MHO.
For the first point lets assume collectable value is similar to nickels of the same era. The way you describe it, a common date nickel in AU condition should be worth perhaps $20. Add $300 to $600 in bullion and now the collector has to pay $620 for $20 worth of "collectable" value. Thus, low demand so there may be even less than $20 in collectable demand.
Second, we tend to think of gold as an investement that will go up. As many have pointed out here, it is more of a hedge and although long term the direction is up, it does go down and often stagnates. So if you buy one of these coins for $600 and hold it for 5 years and it is still worth $600 while rarer coins in your collection have gone up 20 to 50%, that might sour you on the coins.
Unless you're bullish on gold, then these coins tie up an awful lot of resources for a small collectable value. Now the OP seems bullish on gold so if indeed you are, then this is a fun way to own it. Just don't get married to it.
--Jerry
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
<< <i>Like I said I am a relatively poor collector and I like to get the most for my money and gold coins offer the old type coin side along with the bullion. For instance,I was at a coin show a few weeks ago and saw a 1882 $10 gold coin graded by PCGS and it was a very attractive original PQ coin, the coin was graded MS 62. Now I know thats a common date but I believe gold was around $630 an ounce then, that is about $305 in gold this coin had,the price of the coin was $365,that means the coin itself cost about $60.There aren't many type coins you can buy in this era for $60 in a MS 62 PCGS holder. But I guess I could be missing the boat somewhere along the line and these are just my thoughts , it seems like lower grade gold does not get much respect. >>
A 125 year old gold coin in MS62 PCGS holder at about 20% over melt sounds like a really good value to me.
Worry is the interest you pay on a debt you may not owe.
Voltaire: Paper money eventually returns to its intrinsic value---zero.
I doubt the premiums will expand. There are lots and lots of these old coins. For folks looking for bullion plays, the more metal the better. Also, the old coins often have larger buy/sell spreads, often double the spreads on the modern bullion. This costs the collector more each time in and out. Those points can often make the difference between profit and loss. Spread out over many coins, it adds up to real money.
Gold often does not look that attractive in the circulated grades. Therefore since there are loads of Mint State pieces around, the demand for circulated common date gold coins will be limited.
BillJones makes a good point. Perhaps there aren't enough "gold coin collectors" to support both MS classic gold and circulated classic gold. Given that MS classic gold is generally available, the collectors will go there. For people that are primarily "gold investors," modern issues may be more convenient.
Great spirits have always encountered violent opposition from mediocre minds.-Albert Einstein
<< <i>Think about it this way. The low demand makes collecting circulated classic gold more affordable
BillJones makes a good point. Perhaps there aren't enough "gold coin collectors" to support both MS classic gold and circulated classic gold. Given that MS classic gold is generally available, the collectors will go there. For people that are primarily "gold investors," modern issues may be more convenient. >>
You allude to the point that I think answers the original question. The fact is, many collectors simply can not afford the cost of the bullion in the 19th century gold coins. I believe this fact has also driven Morgan collecting for a generation or more: A collector with a small amount of money could buy this big hunk of hundred-year old minting, often in mint state condition at a very reasonable price. Not so for the gold equivalent. Why didn't that collector buy gold? The cost to enter of course. Most collectors would rather have ten nice coins costing $65 each than one coin costing $ 650. I personally would rather have the $ 650 coin but, especially for young and new collectors, the price of gold collecting is a barrier to entry into that division of the hobby. Perhaps these facts are the reaosn for the significant disparity in the ratios gold vs. silver; what might be the ratios of copper vs. gold vs. silver?
This also goes back farther than with Lightside material. About 2 months ago I was able to purchase an 1817 French 20 Francs, PCGS AU50 OGH, for about $3 under melt at the time.
You really can work on a nice classic world gold type set relatively inexpensively.
1/2 Cents
U.S. Revenue Stamps
When I first developed an interest in gold, the premiums for $5 gold and $10 gold were much higher on a percentage basis, and the Saint Gaudens were just too expensive for my budget at the time. So, I bought silver instead. When the American Arts Medallions first came out, I bought a Mark Twain because I wanted American gold, and when the AGEs first came out, I bought some of them and never looked back.
Why aren't old generic gold coins more popular? I guess it's because the new bullion coins are competitively priced and in better condition (prettier) for the price. They are also minted in common-sense divisions of 1 ounce, which does make the accounting simpler if you are buying gold. If the AEGs had never been created, the old generic gold coins might have remained more popular, but the premiums would have increased - which would have still been a dis-incentive for me.
This response is intended solely as an answer to the OP, and is not to be construed as an endorsement or hyping of any product or products. It is my strict policy to state the obvious and to argue with anyone who may disagree, in spite of the fact that I am a newbie on this board. Thank you for your time.
I knew it would happen.
<< <i>Thank you all very much for your replies,There is a couple more small points I would like to make and that is; Lets dream for a minute and say that some of these forecasters who predict that gold will go to the moon because of the dollar are right. I would much rather have a few generic gold coins on hand than a few generic type coins. One other thing and this is a question. Would not gold coins be more liquid than type coins in this grade range? >>
You have to look at what your goals are. If your goal is to have liquid gold, AGEs would be the logical choice since they are in minted in modern weights and there is a bullion market for AGEs. jmski52's post above highlights this. There have been a number of posts here from people saying it is harder to sell classic gold bullion. You can buy classic gold at bullion prices but selling them may be harder so there is a trade off.
<< <i>Strictly widgets. >>
yeah , but gold is gold
I like old AU gold
Camelot
IMO
Back then it was French Roosters mostly, though also the random sovereigns, and Canadian/Chinese/American bullion products.
A few years back I decided to unload about 12 oz. or so of the Roosters because the spot price was twice my purchase price. Went down to my friendly coin dealer who was more than happy to purchase it but " because that's foreign gold, I can only get you 95% of spot. If that were American eagles, I could do 100%, 19th Century type gold, maybe a little better". I still made a tidy profit but I learned my lesson right there.
Selling the bullion/generic gold is relatively easy. Getting full spot is a little more tricky. I expect to at least get spot on my generic gold but hold out a little hope for some numismatic value. JMHO
I really think these coins are underpriced based on mintages (more appropriately surviving numbers) in many cases!
One way to make the task a little easier is form a one a year collection. That way one can avoid some of the really expensive date and mint mark combinations. Most collectors have not taken to that notion however.
Finally, I think that the obverse of the $5 Liberty is really ugly. Theodore Roosevelt once called the U.S. coin designs that were in place when he became president “atrociously hideous.” I don’t think that comment was appropriate for ALL of the U.S. coins of his time, at lease not for the $20 Liberty. But if he had that weird looking Ms. Liberty with no cheekbones that appeared on the $5 Liberty, I’m right with him.
I would like to add that the slight premium above melt of circulated “generic” gold coins does not only apply to common dates (eg, 1904 $20 and 1908 N/M $20). There are scarcer dates, but not ultra rarities, that carry a small premium over bullion.
Less than 2 years ago, I purchased an 1880 $20 graded AU53 by a reputable TPG for approximately $100 over melt (shown below). This coin is obviously not an ultra rarity, but only 51,420 were minted and estimates are that less than 1160 exist today in all grades (Bowers, 2004) and less than 600 have been graded by PCGS and NGC combined. I believe better date gold coins such as this have very little risk and offer great potential.
https://www.pcgs.com/SetRegistry/collectors-showcase/world-coins/one-coin-per-year-1600-2017/2422
or rare yet they sell for very small premiums. There are even a few with low mint-
ages and high attrition that still get redeemed for their face values. Even in the
light of scarcity and gold content people are more afraid of inflation than missed
opportunity.
It should be remembered though that a small premium to gold value is often quite
substantial where a small premium to silver or base metals is inconsequential.
I do agree that there are numerous gold coins including older US gold that are very
undervalued. In some cases this is not likely to change in the near future unless
there is a substantial change in demand.
<< <i>BigRed,
I would like to add that the slight premium above melt of circulated “generic” gold coins does not only apply to common dates (eg, 1904 $20 and 1908 N/M $20). There are scarcer dates, but not ultra rarities, that carry a small premium over bullion.
Less than 2 years ago, I purchased an 1880 $20 graded AU53 by a reputable TPG for approximately $100 over melt (shown below). This coin is obviously not an ultra rarity, but only 51,420 were minted and estimates are that less than 1160 exist today in all grades (Bowers, 2004) and less than 600 have been graded by PCGS and NGC combined. I believe better date gold coins such as this have very little risk and offer great potential.
This has been the case for a long time and like cladking said it may unlikely change, but you never know what is around the corner.collecting habits do change. Remember there was a time when Morgan dollars were not popular at all. Some coins just seem to me to be a good value like the one above compared to some of the other coins on the market. I'm not saying I am going nuts over these types of coins but having a portion of my budget in them would not hurt, but only if you enjoy them.
<< <i>BigRed,
I would like to add that the slight premium above melt of circulated “generic” gold coins does not only apply to common dates (eg, 1904 $20 and 1908 N/M $20). There are scarcer dates, but not ultra rarities, that carry a small premium over bullion.
Less than 2 years ago, I purchased an 1880 $20 graded AU53 by a reputable TPG for approximately $100 over melt (shown below). This coin is obviously not an ultra rarity, but only 51,420 were minted and estimates are that less than 1160 exist today in all grades (Bowers, 2004) and less than 600 have been graded by PCGS and NGC combined. I believe better date gold coins such as this have very little risk and offer great potential. >>
We have had two threads on this topic in the last year:
This one and that one.
My bottom line point, which remains so today, is that it is fun to pick off the less common dates at little or no premium, but at the same time, I have no expectation for this premium over the generic date to grow.