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Posts Tagged ‘PCGS’
Can I Profit from Owning Gold Coins?
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It is first important to distinguish between bullion and rare gold coins, which you can read more about in this blog or click on the rare gold coins link. Owning gold coins for long-term appreciation has proved to be lucrative in the past. It fact PCGS, one of the top two grading companies in the world has documented rare gold coin performance since 1970. They claim in their mint state rare gold coin chart (which is an index of coins) that since 1970 a $1,000 initial investment would be worth roughly $115,000 today. When comparing this chart to the DJIA (Dow), mint state rare gold coins have outperformed the Dow close to 11 to 1. You can do this calculation yourself to check out this comparison.
Rare gold coins have been accumulated by investors and collectors alike for many centuries and some collections have been documented as performing very well. Check out these examples:
1. Harold Bareford reportedly bought a collection of American gold coins for $13,832 in the early 1950s which was resold at auction in 1978 for $1.2 million.
2. Louis Eliasberg, built a collection that cost approximately $300,000. In 1982, it sold for $12.4 million at auction.
You can see that rare gold coins have performed well in the past, and it should be noted that past performance is no guarantee of future performance. We are currently experiencing a bull market for gold. Gold has gone from $252.85 in August of 1999 to $1,113.20 where it is now, at the time of this writing. That is a 340% increase in ten years. Gold bull markets make all gold boats float higher, and as a result we have seen rare gold coins perform very well and I fully expect them to go even higher as we enter the final or third phase of the gold bull market.
The third phase is the speculative or panic phase. This is where everyone wants in and everyone is putting their money into the asset driving prices above its fundamental value and usually very rapidly. We have not seen this third phase yet in gold and I believe it is still a few years out before we will.
What are the Best Gold Coins to Buy?
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If you have been doing research you probably know by now that there are a couple of different ways you can acquire physical gold. Now you are trying to determine which type to buy. This decision should depend on what you are trying to accomplish with the gold. So what are your goals? This should be the question you ask yourself. Only then can you approach the gold market for an answer.
There are two types of gold that you can acquire which will do different things for your portfolio. Bullion gold is used purely for speculation and as a hedge against inflation. 1 ounce of gold 100 years ago could buy roughly as many loaves of bread as 1 ounce of gold today. Therefore over the long-term gold keeps up with inflation. With gold now in the second phase of the bull market you can also speculate purely on the price of gold hoping that it will enter that third and final phase and explode in value.
You can also acquire rare gold coins, which by many standards is considered the best way to own gold. Rare gold coins from the U.S. were minted between 1795 and 1933. They are non-reportable, so the transactions are private and confidential. They are also considered to be non-confiscateable. Bullion has been confiscated in the past while numismatic or rare gold coins have been excluded. History has also shown that rare coins have outperformed bullion significantly in the past. This can be best measured over the last 38 years on PCGS’s index for mint state rare gold coins.
In my opinion the best gold coins to buy are $20 Liberties and $20 Saint Gaudens minted between 1877 and 1933. These coins are highly liquid and affordable to most portfolios and can add great privacy and protection for your assets. Liberties and Saints are easy to track and have a market in which coins are traded every day. These coins can be bought in very common dates like 1904 and 1924, or they can be bought in very rare dates like 1861 and 1933. Acquiring these coins in my opinion should be done between the grades of mint state 62 and mint state 66 as these are the most sought after, thus increasing the demand.
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