Posts Tagged ‘numismatic gold’
Why do Investors Prefer Semi-Numismatic Gold and Silver Coins?
To answer this question we must first define numismatic. Numismatic is defined by Wikipedia as the study or collection of currency, including coins, tokens, paper money, and related objects. The government defines numismatics as gold coins having a recognized special value to collectors. This is the definition that is important when acquiring gold coins for your portfolio. This definition tells you what is and what isn’t subject to confiscation, which brings us to the question in the title of this blog.
People in the industry sell certain coins under the name of semi-numismatic. They claim that these coins have some recognized collectable value (even though they are quite common) and therefore would be excluded from confiscation should it occur. It should be noted that no one knows for sure if they would actually be excluded if the American people are subjected to confiscation again. On the other hand, many would agree that graded rare coins again would be excluded. Semi-numismatic coins have high bullion content and are older coins. These types of coins are typically gold Swiss francs, British sovereigns and French francs. The gold content is close to a fifth of an ounce.
The reason that people prefer them is that they are more affordable than graded rare coins and they are smaller in size. You can pick up a gold Swiss franc for around $275-$300 today depending on the dealer. I personally don’t think that investors prefer them; they are just more affordable than an ounce of gold or a rare coin. They have not performed as well as graded $20 Liberties and $20 Saint Gaudens over the long-term, so to say that investors prefer them would be a false statement (if you agree that investors always want the best rate of return). These coins are more approachable to new investors in the gold market and therefore are sold as such.
I personally feel that it is important to establish your goals and objectives and acquire the right coins for your portfolio. If that means gold Swiss francs are a right fit then so be it. But don’t just buy them because they are more affordable or the sales person tells you to. These coins are very easy to check prices on so do your research. Some companies sell these coins for far more than what they are worth in order to make huge profits. As with everything do your research and make sure you acquire gold for your portfolio that supports your goals.
What are Numismatic Gold Coins?
First let’s define numismatic in two ways, the academic definition and the government’s definition. The academic definition is how Webster’s Dictionary defines it, and that is, of or relating to currency. Wikipedia defines it as the study or collection of currency, including coins, tokens, paper money, and related objects. So numismatic is the study of coins and paper money. It can also be applied to anything that is related to currency, like the study of bartering systems of the old days when people used items of value for trade, like cowry shells. Numismatists are experts in the area of coinage and paper currencies. This is typically important if you are a collector of coins. Numismatists can be very helpful in assembling large collections of gold coins.
What is important to the gold coin industry and gold investors alike is the government’s definition. The government’s definition is what has kept certain coins from being confiscated throughout history. This excerpt was taken from executive order 6102 which dealt with the confiscation of gold bullion in 1933: All persons are hereby required to deliver on or before May 1, 1933, to a Federal reserve bank or branch or agency thereof or to any member bank of the Federal Reserve System all gold coin, gold bullion and gold certificates now owned by them or coming into their ownership on or before April 28, 1933, except the following: Gold coin and gold certificates in an amount not exceeding in the aggregate $100.00 belonging to any one person, and gold coins having a recognized special value to collectors of rare or unusual coins. So to the government any coins that have rare or special value to collectors that are rare or unusual were exempt from confiscation. Therefore any gold coin that a person owned that had value that exceeded the actual value of the gold content, could be considered numismatic. This premium above the physical gold content is called the numismatic value.
This is the importance for investors in the gold market today. In order to be considered numismatic, the coins must be more valuable than the gold it contains. This can become a fine line though. No one really knows how much more valuable they have to be. So could gold Swiss Francs be considered numismatic because the come at a slightly higher premium than bullion? No one knows for sure. But it is widely accepted that Liberties, Saint Gaudens and Indian heads are considered numismatic coins and would be exempt from future confiscations. This is one reason why so many people like these types of coins, they are considered to be non-confiscateable.
If you are a collector then the academic definition is probably more important to you because you are a student of rare coins. If you are an investor the government definition is probably more important to you because you want your money to be as safe as possible.
The Elusive Proof Gold Coins
Proof gold coins are among the rarest numismatic coins available on the market today. They offer a unique combination of beauty and extreme rarity. Because of their rarity they command attention and demand from well established collectors worldwide. This not only makes proof coins hard to come by, but also makes them very expensive. Some rare gold coins can easily run into the six figure range. Although there are some pleasing issues that exist for a few thousand dollars.
Proof gold coins were struck in the United States between 1820 and 1915 and promoted to collectors starting in 1858. Because they were not marketed to collectors until 1858 mintages prior to that year are very small and hard to find.
Proof gold coins are set apart from business strike coins by the care taken to mint each coin. Each coin is struck multiple times on high polished planchets, compared to only one time with business strike coins. This may not sound like a big deal, but it is an attempt by the most skilled engravers and pressmen to create a flawless coin of perfection. Gold is one of the softest metals further complicating the minting process. This factor in combination with extremely low mintages, sometimes only 50, makes finding pristine examples very difficult.
Because of this difficulty to locate proof gold coins, collectors sometimes wait years to find the coin they are looking for. Unlike business strike coins, proof coins were rare the day they were minted. With original mintages of around 50 examples, and typical survival rates of around 50%, a slight increase in demand can create dramatic run-ups in value. If you are enthralled with owning a significant piece of history, and admire beauty and craftsmanship, then owning proof gold coins might be the right fit for you.
Does Buying Bullion Mean the Same Thing as Buying Gold Coins?
This is a very common question that gets asked everyday, and it is a tricky one to answer, because the answer is yes and no.
Bullion is gold that tracks along with the spot price of gold. It can come in coin form like American Eagles, South African Krugerands or Chinese Pandas to name a few. So the answer here is yes, bullion can be bought in coin form. Bullion can also come in bars or ingots in various sizes.
Here is where it gets tricky, because buying bullion isn’t necessarily the same as buying gold coins. Buying gold coins would most commonly be buying numismatic gold, also called U.S. rare coins. This type of gold has different benefits and should be used as a different part of your gold portfolio strategy. Numismatic gold can be bought in bars (very rare) but it mainly comes in coin form, therefore buying gold coins would be associated mainly with buying numismatics.
So you can see if you were going to buy gold you would need to be very specific with what you want to acquire. You can buy bullion coins or you can buy numismatic coins. Do your research first to determine which is going to be the best fit for you. Bullion is considered to be confiscatable, and reportable in some instances. Whereas numismatic coins are considered to be non-confiscatable and non-reportable but will cost you more as they are more valuable. However, the cost can be well worth it as time has shown that numismatics tend to outperform bullion gold.