Posts Tagged ‘$20 Liberty’
Gold Price Correction
Gold is down for the second day in a row. As of this writing the gold spot price on the Comex is $1,181.10. That is down from an all-time intra-day high of $1,265 posted a month ago. Gold is trading in a range of $1,185 to $1,250. The price action has been pretty volatile inside of this range, closing up one day and down the next. This is typical action in any bull market, but is characteristic of a second phase. Traders are capitalizing on profits before the next big move in gold.
The price of gold has fallen for four straight weeks, over concerns of deflation. The CPI has declined for three consecutive months and has not dropped four months in a row since the Great Depression. Look for Unemployment to increase, retail sales to remain weak and consumer confidence to wane further. These factors have contributed to temporary deflation giving many gold traders an excuse to liquidate gold investments tied to the gold price.
With the entire stimulus the US government has put into the system, these deflationary pressures will begin to turn into extreme inflationary pressures. This is the main reason why many experts believe that the gold price has a long way to go before reaching an ultimate record price, before suffering a major correction. Some experts are calling for $7,000 to $15,000 gold prices before it’s all over.
July and August are typically softer months for gold followed by a rise in prices during the fourth quarter, signaling a good time to buy in. This has been true in eight out of the last nine years. Further analysis of the gold market is showing that right now is a great time to buy rare gold coins. Prices are down across many areas of the asset class and are creating great opportunity and extreme values. In fact some coins are estimated to be undervalued as much as $1,400 per coin. These prices are down from December when gold broke the $1,200 mark. Values are best in the MS63 & 64 $20 Liberties.
What is the Value of a 1904 Liberty $20 Gold Coin?
The $20 Liberty Head was the largest denomination ever minted when it was released to the public in 1850. It was designed by James B. Longacre and it contains 90% gold and 10% copper and contains .9675 ounces of gold. These coins were minted from 1850 to 1907 when the design changed to the $20 Saint Gaudens (there was one coin minted in 1849 for design proofing). The $20 Liberty is one of the most popular rare gold coins to investors and collectors alike.
The 1904 $20 Liberty coin was minted in Philadelphia and it is the most common Liberty coin minted. The original mintage was 6,256,699 and there are many in existence in mint state grade available for purchase. Compare that to the 1882 $20 Liberty of which only 571 were minted and there are very few in existence. The 1904P in the rare coin industry is considered a “common date” coin. If you call a broker/dealer and ask to buy a common date Liberty this is what they will sell you.
Its value tends to fluctuate more so with the spot price of gold than other coins because rarity plays a minute role in its value, although the higher the grade the higher the value. For example (approximate pricing):
MS61= $1,530
MS62= $1,600
MS63= $2,100
MS64= $2,600
MS65= $4,400
The lower you go on the grading scale the closer to the spot price the coin will be and vice versa. This coin will be the lowest valued coin of all liberty head $20 coins. Thus all other coins will go up in value from these prices. For example, a 1903 $20 Liberty in MS65 condition sells for around $5,100. The original mintage on this coin was 287,270. The rarity factor for this coin is higher than the common date coin and therefore it is worth more money. If a coin is in mint state 65 grade and only one is known to exist it will be far more valuable than $4,400 and will probably only be found at auction.
Liberty head $20 gold coins are great for investing and collecting. Whether you are looking for asset protection, growth or historical significance and beauty there is a coin out there for everyone.
Performance of Bullion and Numismatic Coins
No one can deny that we are currently experiencing a gold bull market. The spot price of gold has been increasing for the past nine years. It came off a low of $272 per ounce in 2001 to where it sits today at $1,158 per ounce. The following graph depicts the percentage increases per year for the last nine years and gives an average. The average gain for the last nine years is 17.1%. Not bad at all. Anyone would be happy to get 17.1% per year for nine years straight. Since this blog is about owning rare gold coins let’s look at what numismatic/U.S. rare gold coins have done in that same time frame.
|
|
USD |
|
2001 |
2.5% |
|
2002 |
24.7% |
|
2003 |
19.6% |
|
2004 |
5.2% |
|
2005 |
18.2% |
|
2006 |
22.8% |
|
2007 |
31.4% |
|
2008 |
5.8% |
|
2009 |
23.9% |
|
Average |
17.1% |
I took the most common mint state 64 grade $20 Saint Gaudens to achieve a very easy to understand baseline figure. Over the past nine years that coin has achieved an average appreciation of 31.8% per year. This is almost twice what bullion did over the same time frame. Who wouldn’t love to get 31.8% per year return on their money? In addition, most better dated coins have performed even better.
For a better dated coin I randomly chose a 1903P $20 Liberty in mint state 64 condition, and found that over the same time frame it had appreciated an average of 39.8%. That is 8% better per year on average for the last nine years. That is great.
What this has shown is that during this bull market thus far, it is better to own numismatic gold coins than it is to own bullion based strictly on performance. It is even better to own rarer issues as displayed by performance. It is commonly known in the industry that the rarer the issue the more potential for growth there is. It should be noted that past performance is no indication of future performance and that you should do your own due diligence when investing in anything.
Types of US Mint Gold Coins
When people talk about types of gold coins, the word “type” can have a wide range of meanings. It may mean a U.S. coin or a foreign gold coin, or a rare gold coin versus a bullion coin. Or they may be talking about the specific design of a coin.
The broadest meaning of “types of gold coins” may be coins minted by the United States government or coins minted by foreign governments. Thanks to the size and depth of the U.S. market, the gold coins minted by the U.S. government are by far the most popular “types” of collector and investor coins in the world. Our nation’s pre-1933 gold coins, which were recalled and melted in the mid-1930s, are in great demand from domestic and international collectors and investors. Likewise, our government’s high-mintage post-1985 American Eagle gold bullion coins are the most popular gold bullion coins in the world.
More On Each Individual Gold Coin
1. Liberty $20 Gold Coin
2. St. Gaudens $20 Gold Coin
3. Eight Piece Gold Set
4. American Eagle Gold Bullion
Collecting by Type
Collectors may organize their coins by Type, which in this case means “design.” That means they seek to build a collection with one representative example (or more) of each design in their series. For example, if they collect U.S. $20 gold coins, they may have a basic collection of two coins: one representing the Liberty Head series minted from 1849 to 1907 and one coin from the Saint Gaudens Type minted from 1907 to 1933.
An advanced collection of $20 gold coins might also own all five Type coins representing the design changes within the series. This Type Set of U.S. $20 gold coins would include examples of the following five designs:
Liberty Head Type I Without “In God We Trust” 1849-1866
Liberty Head Type II “In God We Trust” on reverse 1866-1876
Liberty Head Type III Value expressed as “Twenty Dollars” 1877-1907
St. Gaudens Type I Without “In God We Trust,” 1907-1908
St. Gaudens Type II “In God We Trust” on reverse 1908-1933
Another kind of “Type” collection is composed of multiple denominations. A Type collector who is focused on U.S. gold coins might start with one representative coin of each of the following basic denominations: $1, $2.50, $5, $10, and $20. He might then expand the number of designs (Types) to include two examples of each denomination. The Liberty Head design was used on all of our gold coins in the second half of the 19th century and into the first decade of the 20th century. That’s when newly elected President Theodore “Teddy” Roosevelt ordered the designs of our nation’s gold coins to be updated. That’s why Type collectors now seek the Indian Head $2.50 and $5 and $10 gold coins, as well as the Striding Liberty $20 coins struck from 1907 or 1908 into the late-1920s or early 1930s.
A more advanced collector of U.S. Type gold would also add examples of the $1 (which had three distinct Types) and $3 gold coins. Unlike most other denominations in the U.S. gold coins series, the design of our nation’s $3 coins was unchanged throughout the 1854-1889 series.
There are many types of gold coins: U.S, foreign, rare, and bullion. There are even Types of gold coins within each denomination. Because they’re made of gold, all types of gold coins are highly desirable!
Common Date Gold Coins
Common date gold coins are also referred to as Generic gold coins. This is due to the quantity of coins that exist in the market place. These coins are readily available and are traded as like-kind units instead of as a specific coin. Therefore they are less expensive than the better date/rare gold coins. The value for common dated coins is primarily derived from the gold content and values tend to ebb and flow with the spot price of gold. The value for better dated/rare gold coins is determined by quality, rarity and availability. The gold content in better dated/rare gold coins is a secondary factor in the value.
Common date gold coins are available in $1, $2.5, $3, $5, $10 and $20 denominations. This is not the value of the coin but rather the denomination assigned to it when it was originally minted. Gold prior to 1933 was set at $20 per ounce, so a $1 coin was 1/20 of an ounce and a $20 coin was one full ounce. Common dated coins come in the Indian Head design from the $1 to the $10 issues, and then the design changes to the $20 Saint Gaudens design. Liberties are available in all denominations. The most common $20 Liberty is the 1904 Philadelphia mint and in the $20 Saint Gaudens it is the 1924 Philadelphia mint.
Generics are typically slabbed in plastic holders in the higher grades in the same way that rarer issues are. They can range now days in the $20 Saints and $20 Liberties anywhere from $1,400 to $6,000 depending on the grade and particular dealer.
Common date gold coins are typically used for their gold content plus a small numismatic premium which makes people feel as though they will not be confiscated. I have read that the Patriot Act III requires the value of a coin to be at least double its gold content to be considered non-conficateable, but I am not positive if this is absolutely true. If this is the case then some common dated coins would not be exempt from confiscation.
Common date gold coins can be a great addition to any well diversified coin portfolio, however it should be noted that rarer issues have performed better in the past.
Sight-Seen vs. Sight-Unseen
When acquiring rare gold coins it is important to understand the difference between sight-seen and sight-unseen coins. If a dealer attends a coin auction and fifty 1903P $20 Liberties in MS63 are up for sale, a dealer may make a bid on those coins sight-unseen. This bid will typically be much lower per coin than if that same dealer were to be able to sit with each coin and examine them. This could be a difference of hundreds of dollars bid on each coin, even when the grade is the same on every coin.
Nicer coins fetch more of a premium. If a customer wants the cheapest coins available, he or she can expect the lowest quality coins. The better the quality the more money a coin will cost. In other words you get what you pay for.
For better dated rarer issues, these coins do not trade on a daily, weekly or even monthly basis. These types of coins trade when a buyer and seller get together. A dealer will pick up that particular coin sight-seen and turn around and retail it to a customer sight-seen. This coin will fetch a higher price than a sight-unseen coin. This coin would be something that a collector would be proud to own and that the dealer would want to buy back at a later date.
Sight-unseen prices do not represent value; they represent quick-sale wholesale prices. At an auction one might see sight-unseen bids at around $1,400 on a particular coin and yet the sight-seen bids may be in the area of $1,700-$2,000. Therefore sight-unseen bids would be taken when a dealer needs quick money. When a dealer sells nice coins they command sight-seen prices. These coins are of the highest quality and thus command the highest prices when being sold back to a dealer. When a dealer knows what he or she sold to a customer sight-seen, he or she should be willing to buy them back at the same level of quality.
What is important to understand is that some companies will sell coins at sight-seen prices but then buy them back at sight-unseen prices. This could mean hundreds or even thousands of dollars based on the coin that is being sold back. Therefore it is important to choose a dealer that will buy coins back at sight-seen prices.
When to Buy $20 Liberties and $20 Saint Gaudens?
The old adage says that timing is everything. Or that one should always buy low and sell high. With rarer issues of $20 Liberties and $20 Saint Gaudens, timing isn’t necessarily everything. Now, you can always buy rare gold coins in the dips in the market which will always produce better results over the long-term, but rare gold coins have proven over time to have performed very well, consistently. It should be noted that if you picked up some of these coins in 1989, which was the peak of the last bull market you would not have recovered yet. But if you look at a chart of mint state rare gold coins from 1970 to present, you can see that if you bought at any other time you would be doing fairly well.
Incidentally, we are currently experiencing what I believe to be a temporary low in these coins, which I presume will be a great buying opportunity. But where we are in the trend cycle I feel that we have many years to go before this market tops out.
Because of the high gold content of these coins, each Liberty and Saint-Gaudens Double Eagle contains .9675 ounces of gold, they will never be worth zero. Gold has never been worthless. This gives their owners an added layer of protection.
In addition, these types of coins are scarce. For example, millions of 1 ounce American Eagle coins are minted each year. Whereas PCGS and NGC estimate that somewhere around 1.5 million 1 ounce Liberties and Saints in a 62 to 66 grade exist today. This adds yet another layer of protection for their owners.
These coins have been excluded from gold confiscation in the past, and with the dollars extreme weakness, it is thought by many that another gold confiscation is looming. Many experts believe that the numismatics will again be excluded from confiscation if it were to occur. This is another layer of protection.
Due to these factors I believe that anytime is the right time to buy Liberties and Saints. They have proven time and time again, that they are a safe and private way to accumulate wealth over time.
A Brief Overview of the $20 Liberty and $20 Saint Gaudens Rare Coins
These two types of coins are some the most readily available and most sought after of the U.S. gold coins minted. The United States minted gold coins for circulation from 1795 to 1933. The $20 Liberty coin was minted between 1849 and 1907 and is available in 3 types. The $20 Saint Gaudens coin was minted between 1907 and 1933 and is available in 3 styles.
The $20 Liberty coin was designed by James B. Longacre with the head of lady liberty on the face with the word “Liberty” inscribed on the coronet. The Type I was minted between 1849 and 1866 and was minted without the motto “IN GOD WE TRUST,” and “TWENTY DOLLARS” was expressed as “TWENTY D” on the reverse side of this coin. The Type II was minted between 1867 and 1876 and included the motto “IN GOD WE TRUST.” Another Type II design change involved modifying the shield device on the reverse side from straight into the curved “rococo” style of that time. Again, “TWENTY DOLLARS” was expressed as “TWENTY D” on the reverse side of the coin. The Type III was minted between 1877 and 1907 and the only real difference with this coin than the Type II is the Type III was minted with “TWENTY DOLLARS.”
The $20 Saint Gaudens was designed by Augustus Saint-Gaudens with a striding lady liberty on the face. It is said that the reason for the design change from the Liberty coin is because Theodore Roosevelt thought that the Liberty coin was ugly compared with other gold coins from around the world, and therefore commissioned the world renowned sculptor Augustus to create something beautiful. The first style was the High-Relief coin minted only in 1907. Due to its raised characteristics bankers complained that they wouldn’t stack properly and thus in 1908 the U.S. went to a flat style. The 1907 also was minted without “IN GOD WE TRUST.” This was balked at by U.S. citizens so therefore half-way through 1908 the motto was put back on the coin. To be more clear, there are the 1907 High-Relief without motto, the 1908 no motto (now in a flatter style) and the 1908 with motto. All coins minted after 1908 contained the motto.
Both the $20 Liberty and the $20 St. Gaudens contain .9675 troy ounces of gold and are 90% gold and 10% copper. They are both considered to be U.S. rare gold coins. The relative rarity of each coin minted depends on where they were minted (Carson City, New Orleans, Denver, Philadelphia and San Francisco), the year they were minted and the quality grade assigned to them. Generally speaking the rarer a coin is the more valuable it is.
Reasons to Own Rare Gold Coins
Acquiring rare gold coins offers its owners many benefits that make it very appealing for any portfolio. U.S. rare coins were minted from 1795 to 1933, with your most typical coins being the $20 Liberty (minted 1849-1907) and the $20 St. Gaudens (1907-1933). They are beautiful, and sure they do contain an ounce of gold, but why would you want to own them. There are 9 reasons to own U.S. rare gold coins:
Outstanding performance: Rare gold coins are just that, rare, no one is minting any U.S. coins prior to 1933 anymore. Whereas new bullion is being added to the world supply everyday. As more demand comes to the market, supply is limited thus increasing value. PCGS maintains indices that track performance and have shown that over the past 38 years rare coins have outperformed bullion by a nice margin.
Privacy & Confiscation: Many who acquire rare coins do so for their status as a collectable which makes them non-reportable (confidential) as well as non-confiscatable by the government. Numismatic coins (another name for rare coins) were excluded from the last gold confiscation in 1933.
Diversification: Rare coins can play a useful role in any portfolio as a diversifier, since they tend to move in the opposite direction of typical paper assets. However we have seen them move together in the past. In fact, we saw the Dow rise from 2002-2007 while gold rose as well over the same period. A lot of people use rare coins in their portfolio as a hedge against inflation.
Liquidity: Rare coins are some of the most liquid collectable assets available. They trade on markets around the world on a daily basis.
Intrinsic value: Rare gold coins contain gold. So therefore they can never go to zero value. In a worst case scenario they will always be worth at least the amount of gold contained in them.
Portability: Rare coins are a perfect place to concentrate a large amount of wealth into a small number of tangible items. These coins can then be transported very easily, making it easy to move wealth without unwanted attention.
Affordable: Rare coins can be afforded by most budgets. As opposed to other tangible assets like real estate which can be expensive, many portfolios of rare coins are started with less than $5,000.
Historical beauty: Rare coins are apart of our American history. They are appreciated by many for their artistic beauty as well as their rarity. Because they are coveted by collectors, which add demand to the market, it helps add value for those who do not wish to become collectors.