Jeff Garrett: A Golden Opportunity
Posted on 11/2/2023
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In the last few weeks, gold has finally started to move in a positive direction, as it briefly topped $2,000 for the first time in months. Tensions over global conflicts and concerns about the massive federal debt have once again made gold look attractive as a safety play. Almost daily we have clients calling and asking about how to buy gold to protect their assets. It will only take one headline crisis for gold to move to the next level.
The most immediate effect of the recent gold rise has been an upsurge in coin shipments. I would also guess that companies with a strong web presence that are devoted to bullion have also seen an increase in business. Many dealers whom I have contacted have bought much more than they have been selling. That is one of the reasons that the premiums for bullion-related objects are near recent lows.
This oversupply is also playing out in the rare, or nearly rare, coin market. Generic date, common issues of United States gold coins are selling for very low premiums once again. Much of this surplus is fueled by an avalanche of pre-1933 gold coins flowing back to the United States from Europe. During the Depression and before, large quantities of US gold coins were shipped to Europe as a standard course of international trade. No one really knew how much US gold remained lurking in the vaults of European banks and other financial institutions.
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| LEFT: 1895 Double Eagle graded NGC MS 61 RIGHT: 1925 Double Eagle graded NGC MS 62 Click images to enlarge. |
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Starting in the 1950s, some US coin dealers began to repatriate these coins at a steady, but slow pace. In the 1960s and 1970s, some previously rare-dated Double Eagles appeared in these European shipments. Mega-rarities such as the 1924-D, 1925-D and 1926-S were found in quantity. A great narrative of this time period can be found in the seminal books on US gold coins by David Akers that were first published in the 1970s. Akers knew much of this information firsthand, as he had handled many of these mini-hoards.
Many of the largest dealers of the day participated in this slow but steady release of US gold coins back into the domestic market. For years, the market has been orderly with premiums swinging based on supply-and-demand issues of the day. In 1999, the premium for US gold coins surged as citizens around the world prepared for the Y2K crisis that never materialized. There have been other ups and downs over the years, but US gold coins have been a steady favorite of investors and those serving that clientele.
Today the rare coin market is being faced with an unprecedented quantity of gold coins entering the market. These coins have been quietly entering the market for some time, but in the last few years some retailers have been loudly touting this newfound supply of US gold coinage. At least one cable TV show has invested in a high-quality presentation featuring the story of US gold coins, and how they found their way to Europe for the last 100 years or more. Other retail operations have been running newspaper ads and selling by direct mail.
By now you are probably thinking that this part of the market should be avoided due to oversupply. I urge you to consider otherwise. There has never been a better time to start a collection of US gold coins. Premiums for most Double Eagles, other than scarce or rare issues, have been crushed in the last year or so.
There is also a lot of market uncertainty due to the fact that no one really knows what is in the recent flows coming from Europe. A few of the major players have an idea, but I doubt any one person or group knows the full extent of what exists in these foreign holdings. Markets hate uncertainty, and that is one of the reasons prices have fallen so much. In time, this will be resolved as the coins are absorbed and more information becomes clear to researchers and collectors.
The knee-jerk reaction of most collectors and dealers is to fear large quantities of coins when they enter the market. Several years ago, when I handled the 16,000 coins in the New York Bank Hoard of Treasury-released Silver Dollars, I was asked by several dealers if this would kill the market for Morgan Dollars. These individuals far underestimate the size of the market for rare coins. Those coins were sold to a single company that sold every coin for retail, and the market was unaffected by the hoard.
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| An 1885 Morgan Dollar, graded NGC MS 67, and pedigreed to the New York Bank Hoard, with the special NGC label for this hoard. Click images to enlarge. |
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Going back decades, the same fears were felt when the Redfield Hoard of Silver Dollars entered the market. That hoard contained over 400,000 Silver Dollars, many of which were quite rare dates. The coins were expertly marketed, and prices actually rose based on the number of new collectors that were attracted to the hobby by the fascinating story of LaVere Redfield and his Silver Dollars. It should also be remembered that the GSA hoard of Carson City Silver Dollars contained over 2.5 million coins, and these have now been fully dispersed and are widely collected.
The same opportunity awaits those interested in US gold coins, particularly Double Eagles. Savvy collectors and investors should take advantage of this market uncertainty and amazingly low prices. Many collectors are probably unaware of how many date and mintmark combinations of Double Eagles can be purchased for very little over the melt value.
The following is a list of 125 Double Eagles that can be purchased for less than $2,500 in About Uncirculated or Mint State:
1851, 1852, 1853, 1855, 1855-S, 1856, 1856-S, 1857, 1857-S, 1858-S, 1859-S, 1860, 1860-S, 1861, 1861-S, 1864-S, 1865-S, 1866 With Motto, 1866-S With Motto, 1867, 1867-S, 1868-S, 1869, 1869-S, 1870, 1870-S, 1871, 1871-S, 1872, 1872-S, 1873 Close 3, 1873 Open 3, 1873-S Close 3, 1873-S Open 3, 1874, 1874-S, 1875, 1875-S, 1876, 1876-S, 1877, 1877-S, 1878, 1878-S, 1879, 1879-S, 1880, 1880-S, 1881-S, 1882-S, 1883-S, 1884-S, 1885-S, 1887-S, 1888, 1888-S, 1889, 1889-S, 1890, 1890-S, 1891-S, 1892-S, 1893, 1893-S, 1894, 1894-S, 1895, 1895-S, 1896, 1896-S, 1897, 1897-S, 1898, 1898-S, 1899, 1899-S, 1900, 1900-S, 1901, 1901-S, 1902, 1902-S, 1903, 1903-S, 1904, 1904-S, 1905, 1905-S, 1906, 1906-D, 1906-S, 1907, 1907 Arabic Numerals, 1907-D, 1907-S, 1908 No Motto, 1908 With Motto, 1908-D No Motto, 1908-D With Motto, 1909, 1909-S, 1910, 1910-D, 1910-S, 1911, 1911-D, 1911-S, 1912, 1913, 1913-D, 1914, 1914-D, 1914-S, 1915, 1915-S, 1916-S, 1920, 1922, 1923, 1923-D, 1924, 1925, 1926, 1927, 1928
For those who find the starting price a bit high for Double Eagles, you might consider Five Dollar and Ten Dollar gold coins. Most groups of European gold have never contained the smaller denominations (Gold Dollars and Quarter Eagles). The above mentioned, however, are often seen in quantity. There are dozens of dates for beginner collectors to choose from, and starting a set of these has never been more affordable in relation to gold.
The most recent groups of gold have also contained some interesting coins starting in the 1840s. Nearly every US Mint (with the exception of Dahlonega and Charlotte) that produced gold coins is represented as well, including Carson City and New Orleans. The majority of the coins I have seen have also been fresh and original. The collector-driven market for originality makes these particularly appealing.
Someday soon the dispersal of European gold will be over, and this golden opportunity will have passed. As Warren Buffett has been quoted saying, "Attempt to be fearful when others are greedy, and to be greedy only when others are fearful." In my opinion, his sage wisdom holds just as true in numismatics as it does in the stock market.
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