How to Invest in Gold and Silver Coins

1907

Investing in gold or silver coins can be an exciting and profitable adventure. However, this type of speculation is not for the faint of heart! We will start with the basics in this article. Gold and silver are international commodities which trade on a daily basis. The value of the U.S. dollar, as well as some volatile world events can affect prices. Daily quotes on metals are readily available on the Internet (MONEX is a good source of information). Although bullion is one choice, I recommend exploring the option of common date U.S. gold or silver coins, especially St. Gaudens $20 gold pieces. This is a good alternative to ordinary bullion purchase and can provide some numismatic value.

Difficulty:

Moderately Challenging

Instructions

Things You'll Need

• Internet Access
• A copy of the "Red Book" (Yeoman) of U.S. Coins
• A safety deposit box

1. $20 Liberty Gold Reverse Side

   GOLD

   Gold is a precious metal which has been the basis of world economy since ancient times. The Greeks and the Romans minted gold coins. When the New World was explored (and plundered) by Spain, special mints were established to produce Spanish gold and silver coins. And the United States has minted coins of many denominations/metals since 1787. During the 1800s gold traded at $20/oz. In the early 1930s the price was pegged at $35/oz. Then, the FDR administration made it illegal for citizens to own gold coins. Many of them were melted. When it became legal (again) to acquire gold in the mid 1970s the price was approximately $200/oz. In 1980 it exploded to $800/oz. for a short time. More recently it has crossed over the $1,000 barrier and then retreated slightly (as of this writing).

2. Classic Morgan Dollar!

   SILVER

   Silver is an abundant commodity metal which has many industrial uses. It is also very popular as a jewelry item. As in the case of gold, silver has a long and fabled history. For many years it traded at approximately $1 per oz. In the early 60s the price began to rise and the U.S. government was forced to change the composition of dimes, quarters and half dollars. In 1980 silver reached $50/oz. due to wild specualtion by the Hunt brothers and then fell sharply to $5 per ounce! Since 2000 it has been in demand and the price recently peaked at $20/oz. Growth in the Asian marketplace, pressure on the U.S dollar and the demand for silver will undoubtedly fuel interest in this metal again.

3. 1907 High Relief

   THE ST. GAUDENS $20 GOLD COIN

   Designed by Augustus St. Gaudens in 1906 and minted from 1907 to 1933, this is generally considered the most beautiful coin the U.S. Mint ever produced! It contains 1 oz. (97 percent) pure gold alloyed with 10 percent copper. The first year of issue (1907) featured a gorgeous "High Relief" coin which is extremely rare and valuable. Many other dates were also produced in small quantites. However, there are some "common" dates (1924 P, 1927 P, and 1928 P) which can be purchased for slightly above the cost of bullion! Note: An alternative to "Saints" is the Liberty Gold Coin. However, there are fewer common dates in this series other than the 1904.

4. Peace Silver Dollar

   SILVER DOLLARS

   Almost everyone has seen a silver dollar! They were very popular in the Old West and were referred to as "Cartwheels." The mixture of .900 silver was alloyed with copper, resulting in a coin containing almost 1 oz. of 78 percent pure silver. There are two basic types: the "Morgan" Dollar which was minted from 1878 to 1904 and then resumed for one year (1921) and the "Peace" Dollar which was minted from 1921 to 1935 with a pause from 1929 to 1933. Morgan and Peace Dollars circulated for many years and could be purchased at local banks until 1963. Then the cost of silver rose to $1.29/oz. and supplies of silver dollars diminished. Many were melted during the early 1980s silver stampede! The Casinos of Nevada still used these beloved coins until the late 1960s and then converted to tokens or Eisenhower dollars in the 1970s.

5. A (Graded) $20 Gold Coin

   GRADING SERVICES

   This topic is covered in another of my articles. There are several services out there, however, I recommend PCGS or NGC. Anyone interested in more information can Google "coin grading," PCGS or NGC. It is best to buy common date gold or silver coins which are graded MS 63/MS 64 (the top grade is MS 70, which is virtually impossible in a Morgan or Peace Dollar, as well as in a St. Gauden's piece). Purchase PCGS or NGC "slabbed" coins, as these will command a higher premium when the time comes to sell them. Acquiring "raw" or "loose" ungraded coins is not a good idea, as it will be more difficult to recover your investment.

Tips & Warnings

• Always shop around for the best prices.

• Common date "slabbed" gold coins (MS 63, MS 64) will trade at approximately 15 to 20 percent above the bullion or "spot" price (MS 64 is a better investment).

• Common date silver dollars are best purchased in MS 64 or MS 65 grades.

• Inventory your acquisitions noting the years, mints, types and grades.

• If you can afford MS 65 or MS 66 grades, go for it!

• Never buy coins from a TV Show dealer or a flea market!

• Do not buy coins which are "slabbed" by other (mongrel) grading services.

• "Raw" coins are generally a "raw" deal, and you will lose on most exchanges!

• Never keep any precious metals or coins in your home. A safety deposit box is relatively cheap and will provide peace of mind.