Numismatic Gold Worth It?

Franklin Sanders offers one perspective on the whether to spend the premium to buy numismatic gold coins or not. He provides a great counterpoint to all of the industry hype around the subject.

His introduction sums up his view:

Our new customers usually ask,  “Will the government seize gold again like it did in 1933?  Shouldn’t I buy numismatic coins to protect myself from seizure?  Aren’t numismatic coins exempt from reporting to the government?”  The correct answers are (1) No,  (2) No, and (3) No.  But numismatic coins do cost a lot more per  ounce than bullion coins, and they carry a much higher commission.

His big points are:

  1. The current law provides no real protection of numismatics
  2. There is no legal definition of what constitutes a “numismatic”
  3. Very few other forms of gold are reportable by dealers (e.g., 100 oz. gold bars, anyone?)
  4. The government’s far more likely to seize pension and retirement funds than gold anyway

via What You Need To Know Before You Buy Numismatics.

February 13, 2009 · Filed under gold

1 Comment

  1. greg Said,

    February 15, 2009 @ 9:13 pm

    I disagee with Franklin Sanders. On April 5, 1933, President Franklin Delano Roosevelt issued an Executive Order banning the private ownership of gold coins and bullion. Not only did FDR ban private ownership of gold, his order threatened fines and imprisonment for any American who failed to surrender his or her gold for paper money.

    One of the critical exceptions to gold confiscation was “old coin having a recognized special value to collectors of rare and unusual coin…..”

    Rare Coins Offer These Proven Advantages:

    Not Subject to Confiscation – Most modern issue bullion coins like Krugerrands and Canadian Maple Leafs can be confiscated in a national emergency. Pre-1933 US Gold coins are specifically exempt from confiscation as “collector coins.” I suppose they could change the law, but I doubt that the US Congress will take on that law change while they have much more important things to do. Remember, laws are made in Congress not the Administrative branch. Obama can’t touch semi-numismatic gold coins.

    Rare Coins are Private and Non-Reportable – Sales of Pre-1933 US rare coins are non-reportable. We are not required to report your purchase or your sales to anyone. However, the sale of many modern bullion coins over 25 ounces requires dealers to file a 1099-B with the I.R.S. reporting your profits at the time of the sale.

    Pre-1933 Gold Gives You Leverage – A bull market in precious metals has shown to dramatically drive up demand on prices for older US Rare Coins. This gives you a “Double-Profit” Opportunity.

    Many US gold coins are very price sensitive and go up almost immediately with the gold market. In the past, rare coins have offered two to three times the leverage of holding ordinary gold bullion coins like American Eagles.

    While no one can guarantee the leverage of Pre-1933 gold over gold bullion, just knowing past performance will help you make a more informed decision

    Sanders talks about the premium. This is not true at all. I am paying about 25% over spot for pre-1933 coins, but the sales comission is only 6% of that 25%. The remaining 19% is numismatic value not premium. I am able to sell back to my supplier at 19% over spot and due to the possibility of leverage at times I sell up to 30% over spot. This coupled with the non-reportable & non-confiscatable gives pre-1933 semi-numismatic a clear advantage over bullion. Sanders needs to read the law!