Which US Gold Coins Are Investors Seeking?

Although the actual gold markets lie oceans apart, the gold activities in the various markets impact gold prices. Gold is normally traded in gold bullion in these markets, but investors are also interested in the common date gold coins of the U.S.

The October 2010 Financial Times report stated analysts’ opinion that gold prices are skyrocketing in the midst of the bearish economy as well as the poor level of confidence in government policies.

Bullion Gold versus Common Date Gold

Common date gold coins do not enjoy the same fanfare as gold bullion coins. The former are scarce classic gold coins known as “generics.” These were minted in the 19th and 20th centuries by the millions for circulation. But most were lost or melted and only a few hundred thousand are left for trading.

Bullion gold pieces on the other hand enjoy trading as a financial market commodity. The government minted these for investment purposes. They are valued according to the gold content within them.

But coin buyers are interested in the US common date gold coins because of their scarcity, classic nature, and they can perform better is some instances than bullion coins.

Gold coins that were minted for circulation are hard to find as most of them got lost or melted; some may be hoarded without anyone’s knowledge. Similarly for US common date gold coins; their “scarcity” increases their investment value. There is no reproduction, unlike gold bullion.

Many coin collectors want to get a piece of the US common date gold coin for its “classic” value; the coin was minted only at a certain period of time; namely, in the 19th and early 20th centuries.

US common date gold coins are of more value than what their metal is worth; their price never dips but rises even when the gold price dips.

There is no legal accountability in the purchase or sale of US common date gold coins unlike the bullion gold. Meaning they are privately traded daily without any reporting.

The $20 St. Gaudens, $20 Liberty, $10 Indian and $10 Liberty, $5 Indian and $5 Liberty all have some dates that are considered to be common.

Rising Popularity of the Gold American Eagle

The American Gold Eagle coins are investors’ favorite gold coins although their sale was modest upon their introduction. The US Mint sold 165k oz. of gold eagle coins in 2000 but in 2001, the sales rose to 325k oz. despite bearish markets. When the gold price was low at $272, American gold eagles recorded $88 million sales.

The demand for American Gold Eagles soared during the 2008 summer even when a global recession was rumored. When the panic began in the later part of 2008, the American Gold Eagles were selling at an average monthly price of 111k oz compared to its earlier 33k oz. When the gold price hovered around $1350 to $1399, the American Gold Eagle Proof 1 oz. gold coins were sold at $1635 while the 1/10 oz. gold coins at $180.00 in October 2010.

Transitional Gold Coins

United States gold coin production has produced several instances of two different designs being produced simultaneously, or within the same year. These are scaled transitional coins and they make for a very interesting collecting focus for the gold coin buyer.

The one dollar gold dollar denomination, the most obvious transitional issue occurred in 1854 when both the Type 1 and the Type 2 gold coin issues were produced. Both of these are relatively common although the Type 2 becomes scarce in the higher grades and rare in MS64 or better. In 1856 two designs were produced: the Type 2 and the Type 3. Since the Type 2 was only made in San Francisco during this year and there are no 1856-S Type 3 gold dollars this isn’t a transitional issue in the sense of the 1854.

There are many other transitional issues, such as the quarter eagle denomination. In 1796 2 coins were minted, one with No Stars and With Stars in the designs. Both of these are rare in all grades and because of price constraints they could be considered one more difficult coins to acquire in a transitional set. The next transitional issue occurred in 1834 when both the Capped Bust and the Classic Head quarter eagles were struck at the Philadelphia mint. The former is an extremely rare coin in all grades while the latter is common in grades up to and including MS63.

The largest group of transitional issues exist in the early half eagles. The reason for these transitional issues tends to be different than, for the 1854 Type 1 and Type 2 dollar when the design was changed to facilitate improved striking.

The twenty dollar U.S. gold coin contains more interesting transitional coins for the specialist. The first of these is the 1866-S No Motto and With Motto. The former is a very scarce coin in all grades and it remains unknown in Uncirculated. The latter is fairly common in circulated grades and scarce in Uncirculated with nearly all of the two to three dozen known in Uncirculated grading MS60 to MS61.

The termination of the Liberty Head design in 1907 meant that an interesting group of transitional coins from this year are available. The 1907 Liberty Head issues were produced at the Philadelphia, Denver and San Francisco mints and all three are common in grades up to MS63. The 1907-S is very rare.

Augustus St. Gaudens’ redesign of the double eagle was introduced in 1907. Most transitional collections would include a High Relief from this year as well as a 1907 No Motto. Both of these coins are readily available in Uncirculated grades and the No Motto is abundant even in MS65 to MS66.

How to Buy Rare Gold Coins

Buying gold coins requires preparation and learning. Before you buy your first coin, you should commit yourself to learning as much as you can about coins, so that you can make an informed buying decision.

This won't guarantee that you will make a profit from your investment in rare gold coins, but it will increase your chances greatly.

There are many resources available in print and online to help you educate yourself about rare gold coins.

You should start with The Guidebook of United States Coins, popularly referred to in the industry as the "Redbook." This book lists every coin ever minted by the U.S. mint which will enable you to know what's out there. It also gives brief histories and descriptions of the coins and lists their original mintages.

A couple of notes of caution are in order, however.

First of all, original mintages are not always indicative of current rarity. The key to current rarity is the number of surviving specimens believed to be around today. In some cases, issues with small original mintages have high survival rates, making them relatively less scarce today. Conversely, some issues with very high original mintages have experienced huge attrition rates, primarily due to meltings, and thus are very rare today.

Second, the Redbook lists prices which are not at all reflective of current market value. This is because the Redbook is published annually and the coin market trades actively throughout an entire year. There is simply no way for an annual guidebook to accurately indicate the current price of a rare gold coin.

We will let you in on an important fact now, before you embark on your education process (you will discover this on your own later anyway): you should only buy rare gold coins which have been graded and certified by Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). PCGS and NGC are the two leading independent coin grading firms whose standards have been accepted industry-wide for many years. Buying rare gold coins which have been graded by lesser services creates too much risk and should be avoided.

Just as is the case with any major purchase, you need to know what you are acquiring. Make sure that you are getting advice based upon your goals and objectives. There are many ways to acquire gold across that asset class. Therefore you need to make sure you are applying the right tool to the right job. Lower graded, higher population type coins will tend to perform more like asset protection, whereas higher graded rarer issues will tend to grow more over time.

In addition to buying the right coins for you, you should also compare coin dealers. You will want to buy coins from a dealer who is reliable and can provide you with the level of service and education that you desire. Not all dealers provide ongoing client education in the form of newsletters, special reports and periodic, complimentary portfolio updates. Before you decide to buy a rare gold coin from a coin dealer, you may wish to know what your relationship with that dealer is going to be like.

One final note in comparing dealers: you should check to see what each dealer's rating with the Better Business Bureau is before making your final buying decision.

ITM Trading offer expert advice on how to buy gold coins including rare gold coins.