ELEVEN LITTLE GOLD COINS... THE BEST VALUES IN THE U.S. COIN MARKET!

ELEVEN LITTLE GOLD COINS... THE BEST VALUES IN THE U.S. COIN MARKET!

Since governments began minting coins approximately 2500 years ago, there have been two basic types of coins minted. The first and by far most numerous types are those coins made to serve the needs of commerce, i.e. those coins minted to function as money. Beginning in about 300 BC, various governments occasionally minted commemorative coins celebrating people, places, and events. While most commemoratives were legal tender, usually gold or silver, they weren’t used in commerce, nor were they minted in large quantities.

The U.S. Mint first struck silver coins for commerce in 1792, followed by copper coins in 1793 and gold coins in 1795. While many world mints, especially in Europe, were quite active in striking commemorative coins in the 19th century, the U.S. Mint didn’t begin issuing commemoratives until 1892. Between 1892 and 1954, the U.S. Mint struck 144 different types of silver commemoratives, and between 1903 and 1926, 13 different types of U.S. gold commemoratives were struck. Gold and silver commemorative coins have been a significant, avidly collected area of the U.S. coin market for over 100 years. Today, we consider U.S. gold commemoratives the BEST VALUE IN THE RARE COIN MARKET!

GOLD COMMEMORATIVES – THE CLASSICS!

There are 13 types of U.S. gold commemoratives of the classic 1903-1926 era. The two $50 Panama-Pacific gold slugs are six figure rarities. In fact, at current prices they may be the best coins in the entire rare coin market. Because of their extreme rarity and price, we won’t include them in this analysis, but we’ll focus on the more affordable 11 piece set of 1903 to 1926 gold commemorative dollars and $2.5 pieces. Here is a list of the 13 classic U.S. gold commemoratives, along with their approximate prices in MS65 to MS67 grades.

Nine gold dollars:
1903 Jefferson $1,600-$4,500
1903 McKinley $1,400-$4,250
1904 Lewis & Clark $5,500-$16,500 1905 Lewis & Clark $7,900-$49,000 1915 Panama-Pacific $1,400-$5,900 1916 McKinley $1,300-$3,500
1917 McKinley $1,600-$4,500
1922 Grant with star $2,500-$3,900 1922 Grant no star $2,500-$3,900

Two $2.5 gold:
1915 Panama-Pacific $6,750-$13,000 1926 Sesqui Centennial $2,300-$45,000

Two $50 gold:
1915 Panama-Pacific Octagonal $200,000-$275,000 (MS66) 1915 Panama-Pacific Round $220,000-$325,000 (MS66)

THE BEST VALUES IN THE RARE COIN MARKET!

First, let’s take a look at why we feel U.S. Gold Commemoratives are currently the rare coin market’s best values. Of course the number one concept is current price, more specifically, price to rarity ratio, price relative to other comparable coins, and price relative to past price highs. But before we talk about price, let’s talk about the other major reasons the 1903-1926 U.S. Gold Commemoratives may be the best coins you can buy.

• Historical Significance – The Gold Commemoratives of the early 20th century were struck during the heyday of the great Expositions. The first half of the century was marked by numerous major “Worlds Fairs” highlighting the rapid progress being made in a wide variety of fields including transportation, electricity, communication and industrial technology. Beginning with the Louisiana Purchase Exposition in St. Louis in 1904, and ending with the Sesquicentennial Exposition in Philadelphia in 1926, these gold coins celebrated a pinnacle of American ingenuity and inventive genius.

• Extremely low original mintages – While mintages for most rare U.S. coins are measured in the millions or tens of millions, gold commemorative mintages are measured in the thousands or tens of thousands. From a low of 5,000 (1917 McKinley) to a high of 46,019 (1926 Sesquicentennial), the average mintage of a gold commemorative coins is a mere 13,893!

• Low survival rates – Survival rates for gold commemoratives are lower than for their silver counterparts. Many gold commemorative coins wound up in jewelry, and their numismatic value was ruined due to polishing, mounting or wear. Today, finding choice, original pieces is possible, but not always easy.

• Completion and affordability – The 11-piece set contains no extremely expensive coins, and all can be located with a relatively modest effort. This adds to the desirability of the coins, as sets that cannot be completed tend to be avoided by most collectors. This is a set that most serious collectors or investors can complete!

• Incredible value for the money – After prices rose to tremendous heights in the late spring of 1989 due to what was really a price bubble caused by the introduction of PCGS third party grading in 1986, today’s prices seem ridiculously cheap. Below are a few examples of MS-65 values at their height in late May, 1989 along with their corresponding prices today:

As is readily apparent, average prices are close to one fifth of their all-time highs, and in some cases, only one tenth, and the upside potential in this market is enormous. The old adage of “Buy Low, Sell High” was tailor-made for this field right now. While the future is always uncertain, we can think of few areas of U.S. numismatics now that are more ripe for significant gains in the intermediate term than the classic commemorative gold coins of the United States.

Rarity by Original Mintage and Total Certified

At this point, all of the eleven classic gold commemoratives have great rarity to price ratios. We are convinced they are the best values in the coin market and we highly recommend all eleven issues. However, you can further differentiate the issues by looking at relative rarities.

Two of the best measures of relative rarity are original mintage and total number certified. For commemoratives, original mintages were based on the pre-sale estimate of demand. In many instances, not all coins minted were sold; so many were then melted by the Mint. In the coin market, for gold and silver commems, we used the number actually distributed as the original mintage. In terms of total number certified, PCGS has been grading for 30 years. In that time, PCGS has graded 33.6 million coins, of which 44,000 have been 1903-1926 gold commemoratives. Comparing the total number certified in every grade for each issue is a very useful relative rarity measure.

THE STRATEGY!

We’ve been personally very aggressively buying gold commemoratives for the past few years. But we’re in a different position than our clients. Though we have a long-term view for the rare coin market, we’re dealers who are in the market buying and selling every day. So we’ve been following a “BUY THEM ALL” strategy for gold commems. If we buy more than we sell we don’t mind having a little extra inventory of these great coins to hold long term.

There are several strategies you can use to take advantage of the tremendous values offered by gold commemoratives. This is actually a very personal decision based on your personal financial position and goals. Do you want a long-term approach? Are you hedging against the inevitable long-term loss of purchasing power of the U.S. dollar? Do you want to pass wealth to your heirs? And bottom line, how much money do you want to put into gold commemoratives? Here are some strategies to consider.

1. Buy the Best, Buy PCGS Graded – This isn’t really a strategy, this is actually an imperative. The real values are in the best quality coins. This means coins graded “Gem quality” MS65 or better. And as far as third party grading goes, PCGS is gold standard. So buy PCGS grade MS65 or better gold commemoratives.

2. Build a Set! – One of the most meaningful ways to participate in the rare coin market is to build a complete set of an important series. This is especially true for the 11 piece gold commemorative set. There are just 11 coins and they are relatively affordable, so this is a completable set. Indeed, we’ve seen gold commems trade as sets for the last 50 years. Interestingly, complete sets of the 11 gold commemoratives trade at a modest premium to the total price of the individual coins, usually 2% to 10% depending upon quality and eye appeal. So if you do the math, when you buy the last coin to complete your set, you add about 2% to 10% to the value of every coin in your set. There are two ways to approach set building. First, you can build one set of either one grade (say MS65 of MS66) or of the highest possible grade for each coin (a spectacular project). Complete sets are also a great way to transfer wealth to your heirs. Give each of your children (and/or grandchildren) a set of Gem quality gold commemoratives.

3. Build a Position in the Least Expensive Issues – This is a “price point” strategy. And if you understand the “Law of Big Numbers” you’ll know what we mean. We think Warren Buffett once said, “If I only had a million dollars to invest I could make 50% a year”. For rare coins, it’s easier for a $1,000 coin to go up 10% than a $3,000 coin. And for gold

commemoratives, the least expensive issues are the most ridiculously underpriced of all coins in the U.S. rare coin market. So with this strategy you’d decide the financial size of the gold commem position you want, then buy as many MS65 and MS66 1903 Jeffersons, 1903 McKinleys, 1915 Panama-Pacifics, 1916 & 1917 McKinleys, and 1922 Grants as you can.

4. Pick a Favorite! – With this strategy you’d pick out one favorite coin and load up.

Give me a call today to inquire!

Best wishes,

Van Simmons

David Hall Rare Coins

949-567-1325

800-759-7575

www.davidhall.com