Question for Gold bugs.... If or when you buy/sell Gold Eagles or

[Dover]

some other gold coin, how do you determine their buying/selling value? Is it based on spot gold or the listed coin price? Do you dicker with the coin dealer or is the price set? I suppose it depends on how much you buy/sell....

And do the dates matter?

It's a bit of a mystery to me how you trade in coins. Sorry if this is a stupid question, but everybody is a newbie sometime....

[leftyandproud]

1. being a gold/silverbug hasn't been such a bad thing lately

most of the common coins like 2003-04 gold eagles sell for a slight premium above spot, usually $15-25 over melt value.. Now if the coins are in above average condition, like an MS68 or MS69 ranking, you will pay a bigger premium for the extra quality. The most common types of coins (canadian maple leafs, American eagles, etc) are generally sold close to bullion value. Other "collectible" coins...like stuff from 50+ years ago typically trade based on RARITY, and less on actual gold content. Some coins with less than 1/2 oz of gold in them can sell for $1000+ due to age and rarity. Some coins are also in "proof" condition which means they go through a special process to make them look extra shiny & reflective. These sell for more than the basic uncirculated gold/silver coins due to their pretty appearance, but they still have the same amount of bullion as the regular coins. I recommend if you want to invest in gold, look for some cheap basic American eagles or South African Kruggerands (Krugs are usually only $10.00 above spot--they aren't as pretty as eagles but have the same full ounce of gold)

Personally, I think SILVER is a much better value right now. You can get a nice roll of 20 Silver eagles for $140, compared to $440 for a single gold eagle today. Silver eagles usually have a higher premium than gold eagles though, around 15%-20% above spot for some reason. The coins are beautiful though, and I think every collector should have a few. When you decide to sell them, you should still get the same extra premium you paid when purchasing them, so it ends up being a wash anyway. Ebay has hundreds of auctions for gold/silver eagles, and occasionally you can find a real bargain...and you won't even need to pay sales tax which makes it even better! ;) Ebay is good for buying coins from the US mint...stuff that you know is guaranteed for content and purity..but if you really want to buy a decent quantity of silver for retirement, I recommend you find a reputable dealer and buy some certified, serial #ed 100 ounce silver bars from a major bullion company like englehard or Johnson Matthey. Most dealers can test the bars before you buy them to guarantee 99%+ purity and they usually trade much closer to melt value price than the silver coins I mentioned, but again, the tradeoff is that the bars are ugly, and the eagles are beautiful! :)

Good luck and have fun collecting! ;)

[EstimatedProphet]

2. Well put Lefty

I would add what I think is a handy way of calculating whether you are making or losing money-an increase in gold price of 20-25% means gain in value, since a change of that magnitude will account for commission on both buying and selling to a dealer. You will always pay a little more than spot to a dealer when you buy, and get a little less than spot when you sell. This is the dealer's commission.
I would also say that bars, although not as attractive, are a better investment in some respects; they don't have the coin collector's value to inflate the price, and because of this, they sell at a lower commission sometimes.

[ArCynic]

24. .

[Dover]

3. Wow, now that's helpful information! Thank you!!! I do have a few

lingering questions regarding the newer coins (Gold Eagles,etc.) and need some clarification on terms you used.

You said, "Now if the coins are in above average condition, like an MS68 or MS69 ranking, you will pay a bigger premium for the extra quality."

Were you referring to older collector's coins here or the newer minted Gold Eagle type? I thought all of these newer coins were identical in gold content and basic condition, so don't know what MS68 or MS69 is a reference to. And if you have a choice of dates (I've seen some dealers that insist on choosing the dates), why does that matter to them? Are certain years more desirable for these newer coins or do they just need to be flexible because it is dictated by what they've got on hand? Is a 1998 more or less valuable than a 2001 for instance? Given a choice, how do you choose?

And you also said: The most common types of coins (canadian maple leafs, American eagles, etc) are generally sold close to bullion value.

By "bullion" do you mean spot price? Sorry, don't know the vocabulary yet.

And a question about buying/selling strategy - is it like stock where you buy low and sell high? If I bought gold five years ago, would I be thinking of selling now? In other words, should you skim profits when you can and wait for a new low to buy more, or just hang onto it?

If you do sell, do you have to report it and pay taxes on it?

[leftyandproud]

4. ..

"You said, "Now if the coins are in above average condition, like an MS68 or MS69 ranking, you will pay a bigger premium for the extra quality."

MS68, 69, and 70 are rankings for the coins. An independant group called "PCGS" I believe accepts coins from dealers and individual owners who want them graded...They inspect the coins thoroughly and assign rankings for quality (smoothness, lack of any miniature nicks or flaws anywhere on the coin, etc. Most of the basic coins you buy straight from the roll will be very nice coins and rank around "MS67" in quality. Very very few coins will rank a perfect MS70. These are the ones with a perfect stamp...the design is raised off the coin...Everything is very clear and smooth on the high grade coins. It is a very subtle difference overall, but the high ranked coins to end up being worth quite a bit more than unranked coins. Normal coins will be described as BU ("brilliant uncirculated") and tend to have some very very minor imperfections...nothing that stands out at a glance. I like regular BU coins. They are cheap, easy to store, and easy to exchange for reasonable prices. You may need to haggle over the price of a graded coin, since there really isn't an acceptable "standard" price for them, as there is for regular eagles.

All of the PCGS certified coins are sealed in a hard plastic container and given a serial number to verify their grade. If you do a search on Ebay for "MS70 gold/silver eagle", you should find several results...The coins are beautiful and virtually flawless...and sell for a pretty big premium over melt value. I don't recommend graded coins for investment purposes, but they certainly could make a nice (and rare) addition to your permanent coin collection, and an awesome gift for the coin collector in your family.

Oh, and "bullion" is just another word used to refer to precious metals. Bullion content = gold/silver content

As for the dates...older coins tend to be worth more than the newer coins, simply because they are harder to come by. This is not always the case however...It really depends on the number of coins minted and how easily they can be found on the market today. I believe that 1986 was the first year the gold coins were minted in the US and coins from that year are getting hard to come by today. I believe 1998-99 on the other hand had very large mintages of gold eagles, so you have a good chance of finding a 98 coin at or below what a 2003/04 coin would sell for today. It all comes down to their circulation. I believe you can find the mintage stats for every year somewhere on the US mint website to see which coins have the most/least mintage. I also recommend you check out "tulving.com" when browsing for deals. They tend to have good deals (low premiums) on older gold eagles when they get them in stock.

"And a question about buying/selling strategy - is it like stock where you buy low and sell high? If I bought gold five years ago, would I be thinking of selling now? In other words, should you skim profits when you can and wait for a new low to buy more, or just hang onto it?

If you do sell, do you have to report it and pay taxes on it?"

You can "trade" them if you choose I suppose. In today's environment however, I'm not selling anything. I think the dollar will keep sliding and the value of gold will increase as a result. Gold and silver do one thing well...HOLD THEIR VALUE. A one ounce gold coin will always be worth something...The little green rectangles printed by our government can be made worthless by running the printing presses all night, and by drowning the nation in debt. In fact, most of the gain in gold and silver prices has not been because demand increased...It has been because the value of the dollar has fallen off a cliff. The value of gold hasn't changed. The value of the dollars you use to BUY gold are what has fallen, causing the price rise. Gold and silver tend to hold their value regardless of what the morons in Washington or any other country do. The amount of gold/silver in the world is limited and finite...It rare by its very nature. This is what makes it such a unique investment. It will always be worth something. Every company on the New York stock exchange can issue a million more shares of stock tomorrow, dilluting the value per share of the company...Every government can print 10 billion more dollars of currency tomorrow...but the country will NOT be ten billion dollars richer...Everyone who holds the stock in those companies or paper money from those governments will end up a little bit POORER as a result. Governments can not "print" an unlimited number of gold and silver coins. They are rare by their very nature and will always be sought after items.


If you want to "trade" in the precious metals, you might want to consider some mining stocks that trade on the market...You can buy and sell them every day, and they typically have a move 2-3X what the price of the metal does. This has obviously been great lately...While gold has gone up 50%, gold stocks have ran up 150%. Of course, it works the same way on the downside so you have more risk in doing this. I don't like the risk so I have stayed away from this option. Personally, I recommend getting a small stash of gold and silver, finding a safe place for it, and locking it away for a rainy day. Don't spend all of your money on precious metals. First, I recommend you pay off any high interest debt you have, especially credit cards and car loans. Remember, killing your VISA balance is like getting an INSTANT and GUARANTEED 17% return with absolutely zero risk. Paying off debt should be the first step for anyone...Once you have major debts erased and save up a few extra bucks, it certainly couldn't hurt to add a little shiny stuff to your collection, accumulating a few silver eagles each month and saving them for a rainy day. I'm not a financial advisor, but this would is my personal advice.

Do your own homework.
Good luck.

And have fun collecting. :)

[junker]

5. lefty knows the real stuff. good advice.

the days of trading the pm's will come when the markets are no longer suppressed (price suppression documented by www.gata.org). So now is a real buy and stash time that is just before the largest transfer of wealth in history....i.e. from those who have not the gold to those who do...


and bear in mind both warren buffet and bill gates are buying and HOLDING their precious metals.

[kalian]

6. Quick question if I may....

you suggested to purchase silver bars from a reputed dealer. Do these
transactions get reported to the Feds? I read in several other forums
that the Feds had requested to track ALL silver and gold transactions.
Is there any way to remain...let's say..."anonymous"?

Thanks for your other tips...will come in VERY handy during the next
few weeks.

[leftyandproud]

9. I don't believe..

I think the dealer needs to report that he sold anything worth above $10,000. I'm not positive on this, but I'm pretty confident that he doesn't report YOU personally as owning that amount...just that he sold this much. I could be wrong...and I know the Bush/Aschroft clan is trying to change laws now so they can track gold owners. I believe it was a tiny provision in the "patriot" act 2...

ugh

[kalian]

15. Thanks for the reply

Fortunately, I didn't have the intention of investing anything
above 10K but I was concerned that there were some rumors that
Ashcroft wanted to keep tabs on folks that were going into gold...

[Dover]

7. You are a real gem for explaining all this to me, and a good teacher.

It's fascinating stuff. Another world to explore, and I hope this is helpful to others here at DU who are also tentative about all this. I have a few more followup questions, but don't want to take advantage of your generosity, so if you would rather not answer anymore I certainly understand. And again, thanks SO much. I will get some literature on this, but personal experience is at least as valuable.

So what you're saying about the graded coins (which really has more to do with their condition than their dates..although some dates are more valuable than others) is that you really don't need to worry about this all that much unless you are a collector, and you are almost as well off buying ungraded coins in generally good condition with mixed dates.

So if I decided I wanted to spend about $5000 on gold (assuming all debts are paid first) I would call up different dealers and see what the coins were selling for, relative to the spot price. What questions should be asked of the dealer in order to make up your mind? For instance, would you ask if they are "BU"? Should you expect a discount for buying a larger vs. smaller quantity? If you are buying a quantity of coins, should you request certain dates or accept the sellers choice of dates? In other words, how would this conversation go?

[Art_from_Ark]

10. If you are buying bullion coins, usually the dealer picks the dates

If you are buying generic "old gold" (US gold coins minted in 1933 or before), you will probably not be given a choice of dates if ordering through the mail, unless you want to pay extra.

Regarding "BU" vs other conditions, modern bullion coins are assumed to be in BU (brilliant uncirculated) condition. If not, they will be worth less. Older "bullion" coins that actually circulated at one time (like English sovereigns and French 20 francs) will probably have some wear. Coins that were restruck at a date later than that shown on the coin (like French 20 franc "roosters" of 1908-1914, any Austrian gold coin dated 1915, Mexican 2 and 2 1/2 pesos dated 1945, etc.) should be in BU condition (because they never actually circulated).

And if you buy bullion gold, you can often get a discount if you buy 10 or more of the same kind at one time.

[Art_from_Ark]

8. You are right that Gold eagles were first minted in 1986

But that date is by no means rare. The only Gold Eagles for which there seems to be a real premium are some of the half ounce coins. I myself have some 1991 1/4 ounce coins (the last year for Roman numerals) that have a miniscule mintage compared to the 1986 issue (36,000 vs. 726,000 for the 1986), yet there is almost no premium for my coins.

Regarding the question about paying tax on profits, yes you have to report profits and pay tax, if you are in a tax-paying bracket.

Regarding the MS-68, 69 and 70 eagles, my advice is to stay away from those, especially since the grading services seem to be getting sloppy with their appraisals and there really is no market for high grade recently minted coins that will never see the wear and tear of honest circulation.

[54anickel]

11. Thought on grading services -

Wasn't this a bit of a marketing ploy by dealers to play on the fears of confiscation?

I thought that the rules of confiscation was that true collectibles, older nuemistic, or graded that carry a surcharge of 15% or higher above the spot price would be exempt from confiscation.

I am not a collector so I have no idea if that is true or not. Something I read somewhere......Not sure how much of a threat confiscation is. I've read articles that go both ways.

[Art_from_Ark]

17. The grading services

were set up to try to bring uniformity to the very subjective world of coin grading. The American Numismatic Association (ANA) originally had an authentication service, but no grading service, so PCGS (Professional Coin Grading Service) was formed in 1986 by a coin dealer in California to help collectors distinguish between coins with slight wear ("sliders") and those never circulated ("uncirculated"), to distinguish "original surface" coins from "cleaned" coins, and to distinguish among the many slight but economically important nuances of the uncirculated grades (MS60-70). There have since emerged several other grading services, which I will discuss later.

At any rate, the only way "confiscation" would come into play here would be if someone submitted a counterfeit coin for grading, since the grading services are required by law to turn over all counterfeits they receive to the Secret Service. Thus, if your coin were encapsulated in a grading service holder, it could be taken as a sign of authenticity, and thus (theoretically) as assurance against confiscation by the SS.

[54anickel]

18. Thanks, so there isn't a real threat of confiscation by the gov't?

[Art_from_Ark]

19. Confiscation

Basically the only coins that are subject to confiscation today are counterfeits, and any 1933 $20 gold pieces that are not the one that was recently sold at auction with the US government's approval (that is a story all in itself).

The fears of confiscation date from 1933, when Roosevelt "called in" the gold coins then in circulation and essentially demonetized gold. Agents were sent around to people's homes to "redeem" their gold coins for paper money. Unbeknownst to most people was a provision, implemented by Treasury Secretary Morganthau, that was included in the gold order that allowed people to keep "rare and unusual" gold coins, so long as it did not exceed a certain number for the same date and denomination. Therefore, most people theoretically could have hung on to their gold coins, but since this was the middle of the Depression and every cent counted for most people, and most people were under the impression that it was illegal to hold on to any gold coin, they traded them in (much to their detriment, because the price of gold soon rose to $35/ounce, making the $20 gold piece worth $33.94 for its gold alone).

From 1933 to 1974, the US government tried to discourage the private ownership of gold, either through laws prohibiting citizens from owning gold bullion (both in the US and overseas), by making certain dates of foreign gold "illegal" to hold, and by making it difficult to import legal gold into the US from overseas. Thus, for example, the 1967 Canadian $20 gold piece issued to commemorate the 100th anniversary of Canadian confederation was technically illegal for Americans to own when it was issued, because it carried a date that was later than 1959!

Then there was the problem with the Krugerrands in the 1980s. Importation of Krugerrands was prohibited sometime in the 1980s (1986, I believe), but the Krugerrands that were already in the country could still be legally traded. Nevertheless, a lot of collectors and investors believed it was illegal to own any Krugerrands at all, and the Krugerrand market all but died for fear of government confiscation of these coins. To compound matters, US Customs did not seem to have a firm grasp of the law, with some customs agents thinking that no Krugerrands could be brought into the US, others thinking that no gold coins at all from South Africa could be brought into the US, and still others thinking that only certain dates were affected. And even after the law was repealed, some agents, at least, thought they could confiscate the coins.

[54anickel]

21. Thanks much.

[Dover]

12. Thanks

I also thought I'd read somewhere that you had to pay taxes on profits of gold and other precious metals (except vintage coins which are put in a different category). I think there is some confusion about this which is generally winked at by sellers because supposedly, as a gold owner, your purchase is supposed to be anonymous and unrecorded. So I think the understanding is that one doesn't have to report it until it's sold, or something like that.

Would you have any advice for how to go about a purchase based on my question in the post above?

[junker]

13. buy local, no reciept, under 10k dollars in any one purchase

no receipt means no paper work for irs means no paper trail to you. You get the metal so you do not need the paper reciept. Under 10k dollars means that no federal paper work is required. Places less onus on the coin dealer. Buy bullion so you don't care about grades (opinions of extra worth) because when TSHTF the 'extra value' will evaporate to the melt price anyway.

Buy local coin shops. get to know the owner. Use a 'nom d'convenience' and proceed with known coin types. Can't go too wrong.

AND note this
A pure one ounce of gold in a coin form, say like an eagle or a maple can be used as a template for other coins claiming to be the same weight/purity. In the sense that a cut out in cardboard of the circumferance, and an edge-on view cut out will act as a purity indicator in that any other coin of that type must pass through these size slots to be the same purity of gold. Make sense?

Buy quick. Gold going to rocket really damn soon. Along with silver. Most I can afford is a bit of silver occassionally.

[kalian]

16. Thanks for the tip!

I'll be heading into Manitou Springs this weekend and start shopping
around.

[Art_from_Ark]

20. American eagles are not pure gold

They are 91.666% pure, meaning they have their remaining weight in alloy metal (in this case, a combination of copper and silver). The total weight of a one-ounce gold eagle is 33.931 grams, meaning that they weigh one ounce plus 2.831 grams (the weight of the alloy metals). This is one reason why they are not so popular here in the Orient.

You really can't prove a lot by comparing diameters. An American Eagle one ounce coin, at 32.7mm, is larger than a one-ounce Canadian Maple Leaf, even though the net gold content is the same. At the same time, a one-ounce gold eagle is slightly smaller than a US $20 gold piece (34mm), yet the $20 gold piece will have slightly less gold (.9697 ounce) and more weight in alloy metal.

As for coins of the exact same fineness, I am holding in my hand a 22K English sovereign, and a 22K 1/4 ounce American gold eagle. One has more gold than the other, even though their finenesses *and diameters* are the same.

[CaptainClark23]

14. Likewise

Junker beat me to it, but his advice in this matter is sound. I buy from a local dealer with whom I've struck up a relationship. Don't have much in the way of liquid assets, so I take a bit each payday and put it into PM coins. I always pay in cash. No record except my anonymous receipt.

The dealer knows my first "name", and that's it. He also knows I'm good for a few hundred cash every couple of weeks, so he makes sure he has me covered.

Because of my limited resources, I cannot afford 1 oz. gold regularly, so I buy it in 1/10 and 1/4 oz. coins. I mix heavily with silver. Every once in awhile my dealer has coins he's gotten good price on, and passes along to me. I just picked up a 1 oz. Austrian Philharmonic, and a couple of 1/4 oz. Krugs today. For the most part, however, I'm sticking with Eagles and Maples for the recognition factor should things go way south.

[ArCynic]

26. ..

[ArCynic]

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[ArCynic]

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[ArCynic]

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[Infinite Velocity]

27. Information about gold coins

Here's an excellent site about gold bullion...

http://certifiedmint.com/introduction.htm

They have a section about the Myths, Misunderstandings and Outright Lies!

http://certifiedmint.com/myths_lies.htm

[54anickel]

28. Thanks for the informative links. n/t