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Three ways to collect gold coins

NEW YORK – Gold shows off its attractive properties well in jewelry and watches. It’s also a key metal in medicine, electronics, science and even used in space exploration as reflective shielding because gold is malleable, noncorrosive, reflects heat well and it won’t rust or decay.

But gold is relatively scarce. In fact, all the gold mined in recorded history would reach only a third of the way up the Washington Monument, about 186,700 tons. That makes it a precious metal, enough for governments to buy and trade large ingots as part of a stable national economic policy. You can own gold for your own security, too, but because it has one of the heavier atomic weight of all precious metals, it must be acquired in smaller, more portable ways such as coins.

A 1-ounce gold Krugerrand gold coin sold for near spot price for $1,275 on July 21, but a 25 percent buyer’s premium placed it just over the spot price of $1,425. Image courtesy Antique Finders Service and LiveAuctioneers

Gold coins are classified in three categories: bullion, numismatic and commemorative.

Bullion Gold Coins

There is a reason why all the gold heists you see in the movies requires heavy equipment. Gold has an atomic weight of 79, one of the heavier of precious metals. A standard gold ingot weighs about 27 pounds or 400 troy ounces with a value of about $500,000, give or take. That’s fine for Fort Knox; not so great for your safety deposit box.

But because government central banks own most of the gold (the United States owns the most of any country at about 8,000 tons), they are able to mint national gold coins in stable weights that are certifiable and secure.

You can own gold ingots in smaller troy ounce sizes for portability or you can opt for the artistic design elements of brilliant, uncirculated, government-issue gold coins from one-quarter troy ounce to as high as five troy ounces of between 90 and 99.99% pure gold. They can be bought directly from any national mint, but it is better to buy from authorized dealers designated by the U.S. Mint, for example, for a small percentage over the daily spot price or at auction.

Bullion coins don’t circulate and so are always considered to be at the highest condition and are common, so it is unnecessary to have them professionally graded, unlike numismatic gold coins. The value of bullion coins is set by market forces determined by the buying and selling of gold on the open market on a daily basis, usually by central banks, large institutions and individual investors.

This 1904-S Liberty Head $20 gold coin is valued based on its somewhat imperfect condition and rarity that sold for $1,200 or near the spot price of gold. Image courtesy: Seized Assets Auctioneers and LiveAuctioneers

Numismatic Gold Coins

Gold coins have been in circulation since at least 560 B.C. under King Croesus of Lydia in Bronze Age Asia Minor. Since that time, each historic age has had their national gold coins minted with their history, heroes, monuments, conquerors and kings. Holding a numismatic gold coin is to feel the weight of history.

These gold coins, known as numismatic, usually trade higher than the spot price of gold for several reasons usually defined as rarity, condition, age and historic significance. All these factors affect its final value.

Numismatic gold coins aren’t regulated by the ups and downs of the spot market based on intrinsic weight (although it’s a starting point). Collectors instead value numismatic gold coins based on history. Unlike bullion gold coins, numismatic gold coins have been circulated over time and are generally uncommon the longer ago they were minted. That’s why it is generally sound advice to have a numismatic gold coin professionally graded for rarity, age, condition and overall available quantity so as to provide a regulated basis for future value, especially for auction where values are usually set.

A gold coin representing Kanishka, an early emperor of the Kushan Dynasty from circa A.D. 400 that sold in February 2016 for $2,050 based more on its history than its intrinsic value of .28 of an ounce or about $400 of gold. Image courtesy Ancient Art & Antiques and LiveAuctioneers

Grading is usually from 0 to 70, the highest being without flaws. The lower grades, though, can still command higher auction values simply because of its rarity without regard to condition. That is the wonder of collecting numismatic gold coins. Bullion gold coins are considered only for investment while numismatic gold coins tell a great story.

Commemorative Gold Coins

Remembering an historic event, whether ancient or modern, is easily commemorated in the form of a gold coin. The U.S. Mint, for example, routinely mints many commemorative gold coins such as the 50th anniversary of the Apollo 11 moon landing this year. Still, these gold coins are legal tender, usually uncirculated and, with some exceptions, are considered bullion despite its commemorative mint.

On the other hand, private mints produce commemorative gold coins in large volumes for special events such as a presidential inauguration. They are unregulated, are not legal tender and grading them is usually unnecessary as they are not considered numismatic. It is sometimes difficult to know whether the gold used is gold filled, gold plated or just an alloy with silver, perhaps. Yet, their cost is usually much higher than the cost of acquiring bullion gold coins and even higher than gold coins bought at auction.

When a privately minted commemorative gold coin is eventually sold out of a personal collection, the value would be in the intrinsic value of the gold it contains, not the commemorative event itself regardless of its original “limited edition” price paid for it. And that’s usually disappointing to the collector.

A proof set of three U.S. Bicentennial gold coins by the Franklin Mint that sold for $80, no doubt a fraction of its selling price in 1976. Notice that there is only 6 grams of 500/1000 gold. 
Image courtesy Midwest Auction Galleries Inc. and LiveAuctioneers

Still, commemorating a special event in a gold coin that has special personal meaning makes a great memory, too. Just understand that their value over time is limited relative to bullion or numismatic gold coins.

Fakes, scams and forgeries

As long as gold coins have circulated, counterfeiters have had a field day trying to pass off lower levels of gold in a coin as the real thing. One way to accomplish this is by using tungsten as a base metal (the closest in density to gold), minting it into a recognizable coin, and adding a small layer of pure gold overall. The weight is similar to an authentic gold coin if not subjected to a higher level of professional scrutiny. Coins from the Middle East, China and North Korea, for example, account for some of the highest gold counterfeits circulating today.

One way to quickly detect a counterfeit gold coin is through its manufacture. If the details are somewhat uneven, incorrect in its original design or missing altogether, chances are the coin is a counterfeit. National mints pride themselves on the extremely high quality of their design and manufacture.

Collecting gold coins is great for investment, for history and even for personal memories. Just be sure to understand the complexities of each as your collection grows.

The Origin of Money: From Cowrie Shells to Bitcoin

Before there were organized monetary systems, there was barter and trade. Some sources report evidence of compensation exchange in cultures dating back as far as 10,000 years ago. People with the ability to fish would connect with those who cultivated and harvested crops to exchange commodities. While this form of trade was useful for many societies, it wasn’t without challenges. One of those challenges was finding a consistent party with whom to barter and trade the materials a person was capable of bringing to the table. Another challenge was the amount of time it could take to complete an exchange of goods – especially if one side of the exchange was dependent on crops that required many months to reach the point of harvest. Also, there was the question of how to value the commodities on both sides so there could be a fair exchange.

Long strand of chain link probably used as a form of currency, Roman Empire, circa 2nd-4th century AD. Measures 36 inches long x 1 inch wide. Sold by Artemis Gallery for $450 in September 2017. LiveAuctioneers.com Archive and Artemis Gallery image

People living near the sea – the Pacific and Indian Oceans, primarily – took a different approach, implementing cowrie shells from sea snails as an accepted form of currency. It’s believed that the brightly patterned cowrie shell is one of the longest-tenured forms of currency anywhere. The first indication of its use dates to 1,200 BC. Even after the introduction of gold coins as a form of currency, some civilizations opted to continue using cowrie shells.

Restrung Viking necklace of assorted green glass beads with two cowrie-shell pendants and three silver coins on loops, circa 9th-12th century AD, sold for $237 at TimeLine Auctions’ September 2016 sale. TimeLine Auctions, Ltd. image

The leap from cowrie shells to metal monies first took place in China. Archeological discoveries have uncovered various specimens of primitive coins. This evolution within early Chinese culture is said to have been inspired by people initially exchanging tools and weapons. This led to the inventive idea of creating small replicas of these items for a safer and easier method of exchange. Ultimately, the small replicas, some with sharp edges, were cast aside in favor of circular discs, often made of copper and bronze. Sometimes a hole was bored into the coins, to allow them to be placed together on a chain. This was the earliest identifiable example of what is considered early coinage. However, it was in Lydia (modern-day Turkey) that the gold-and-silver allow electrum, along with a process of stamping, turned out the first batch of precious metal coins.

Ancient copper sestertius (Roman coin) of Emperor Antoninus Pius, scarce and occasionally issued during the Roman Empire. Offered with $200-$350 estimate in Jasper52 Sept. 30 Ancient Roman Coins Auction. LiveAuctioneers.com and Jasper52 image

Although it was at King Alyattes of Lydia’s direction that such coins were produced in the late 7th century, it was Greece that capitalized on the innovation. As Wayne G. Sayles states in the book Ancient Coin Collecting, “… the rise of Greek culture and the development of coinage as a form of artistic and political expression go hand in hand. The study of numismatics, from the 7th to the 3rd centuries BC, is really an exploration of Greek civilization.”

Two plaques containing examples of shell wampum and trade beads; part of a 5-piece lot of Native American beadwork objects that was sold by Cordier Auctions for $100 in February 2016. Cordier Auctions & Appraisals image

While the Greeks, followed by the Romans, were focusing their attention on producing coins made of silver, bronze, and gold, 7th-century China was changing things by developing paper money. Early on, these notes would be exchanged for coins. A trusted source would issue the person transferring the coins a note indication the amount of coins that were deposited, and at a later date, the holder of the note could redeem their currency. While paper banknotes were used within the Chinese culture for more than 500 years, the excess production of notes prompted a decline in value and a rise in inflation. This led to the beginning of the end of paper-money use in China, in 1455. It would be another three centuries before paper currency would return to the Chinese market. As is often the case, everything old becomes new again if you wait long enough. Such was the case with shell currency. Wampum – strings of beads made from clamshells and used as both a form of adornment and a form of currency – was used by Native American peoples. There is evidence of wampum’s use in the mid-16th century, and perhaps earlier.

Another unique example of currency could be found in late 17th-century French colonies in Canada. French soldiers were presented with playing cards bearing various denominations and the signature of a governor to be used as currency in lieu of coins.

1815 $20 TN-12 Remainder note, PCGS New 62PPQ, rarer than similar $5 and $10 notes, sold for $18,800 in a Heritage auction held in April 2015. Heritage Auctions image

Money continues its evolution today, with governments around the world minting and printing coins and currency daily. In addition, the 21st century has also seen increasing use of electronic transactions and digital currency. And at the same time, the cycle seems to have come full circle, as there are examples of a new generation utilizing the ancient principles of barter and trade.

A Coin Glossary for Aspiring Numismatists

Numismatics, or coin collecting, has its own lexicon, which can be bewildering to anyone new to the hobby. Popular nicknames of U.S. coins, such as wheat penny, buffalo nickel (it’s actually a bison) or Mercury dime (which neither depicts the Roman god nor has any mercury content), are also confusing. Use the following glossary to learn the basic lingo used by collectors of U.S. coins and soon you, too, will sound like an expert.

Bag marks: Surface abrasions found on coins as a result of coins striking the surfaces of other coins during bagging and shipping.

Buffalo nickel: Nickname given to the Indian head 5-cent coin issued from 1913 to 1938. The nickname is incorrectly used, however, because U.S. coins are usually named after their obverse (front-side) design. The animal depicted on the reverse side of the coin is a bison, not a buffalo.

Coin: A piece of metal, marked with a device and issued by a government for use as money.

The Winged Liberty Head dime is nicknamed the Mercury dime because of its resemblance to the Roman god. It was designed by Adolph Weinman and engraved by Charles Barber. Image courtesy of LiveAuctioneers archive and The Chivalrous Collector Ltd.

Clad: Coin that has a core of base metal, such as copper, and surface layers of a more valuable metal, like copper-nickel. U.S. dimes, quarters and half dollars minted since 1965 are a clad coinage.

Denomination: The face value of a coin; the amount of money it is worth as legal tender.

Die: A metal punch, the face of which carries an intaglio or incuse mirror image to be impressed on one side of a planchet.

Double Eagle: A $20 gold coin of the United States.

Eagle: A U.S. $10 gold coin.

Grading: Since the mid-20th century, the American Numismatic Association has used a 1-70 numbering scale, where 70 represents a perfect specimen and 1 represents a barely identifiable coin. Descriptions and numeric grades for coins (from highest to lowest) are as follows:

  • Mint State (MS) 60-70
  • Uncirculated (UNC)
  • About/Almost Uncirculated (AU) 50, 53, 55, 58
  • Extremely Fine (XF or EF) 40, 45
  • Very Fine (VF) 20, 25, 30, 35
  • Fine (F) 12, 15
  • Very Good (VG) 8, 10
  • Good (G) 4, 6
  • About Good (AG) 3
  • Fair (F) 2
  • Poor (P) 1

Half Eagle: A U.S. $5 gold coin.

The Indian Head 5-cent coin is nicknamed the buffalo nickel. It was designed by James Earle Fraser and engraved by Charles Barber. Image courtesy of LiveAuctioneers archive and Rago Arts and Auction Center

Indian Head cent: U.S. cent designed and engraved by James A. Longacre and issued 1859 to 1909. Also called Wreath, or Wreath and Shield, for the designs on the reverse.

Large cent: Refers to the U.S. cents of 1793-1857, with diameters between 26-29 millimeters, depending on the year it was struck.

Legal tender: Currency (coins or paper money) explicitly determined by a government to be acceptable in the discharge of debts.

Mint mark: A letter or other symbol indicating the mint of origin. U.S. coinage began at the Philadelphia Mint in 1793.

Obverse of the Morgan silver dollar, which depicts a profile portrait of Liberty. Image courtesy of LiveAuctioneers archive and Capo Auction

Morgan dollar: A U.S. silver dollar minted from 1878 to 1904, and again in 1921. The coin was named after its designer, George T. Morgan, U.S. Mint Assistant Engraver. The obverse depicts a profile portrait representing Liberty, while the reverse depicts an eagle with wings outstretched.

NickelThe common – but factually incorrect – name for the U.S. 5-cent piece. In the 19th century copper-nickel cents and 3-cent coins were also nicknamed “nickel.”

Obverse: The side of a coin that bears the principal design, often as described by the issuing authority. In a coin toss, the obverse is known as “heads.”

1935 was the last year the U.S. Mint issued the Peace dollar, which was composed of 90 percent silver. The coin was the result of a competition to find designs emblematic of peace. The reverse depicts an American bald eagle at rest clutching an olive branch, with the legend ‘Peace.’ Image courtesy of LiveAuctioneers archive and Lyn Knight Auctions

Peace dollar: A U.S. dollar coin minted from 1921 to 1928, and again in 1934 and 1935. Designed by Anthony de Francisci, the coin was the result of a competition to find designs emblematic of peace. Its obverse represents the head and neck of the Goddess of Liberty in profile, and the reverse depicts a bald eagle at rest clutching an olive branch, with the legend “Peace.” It was the last United States dollar coin to be struck for circulation in silver.

Planchet: A plain, round metal disk which, when placed between the dies and struck, becomes a coin; also called a flan or blank.

Proof coinage: Special early samples of a coin issue, historically made for checking the dies and for archival purposes, but nowadays often struck in greater numbers specially for coin collectors. Preparation of a proof striking usually involved polishing of the dies. They can usually be distinguished from normal circulation coins by their sharper rims and design, as well as much smoother “fields” – the blank areas are not part of the coin’s design.

Mercury dime: Nickname for the Winged Liberty Head dime issued from 1916 to 1945. Composed of 90 percent silver, 10 percent copper.

Mint mark: On U.S. coinage, a letter or letters indicating the mint where the coin was produced. Mint marks in the United States coinage include P for the Philadelphia Mint, D for the Denver Mint, S for the San Francisco Mint, and W for the West Point Mint. In the past, CC for the Carson City Mint, C for the Charlotte Mint, D for the Dahlonega Mint, and O for the New Orleans Mint were used.

Reverse: The side opposite the obverse, usually the side with the denomination. In a coin toss, the reverse is known as “tails.”

Standing Liberty quarter: A U.S. 25-cent coin issued from 1916 to 1930. It features the goddess Liberty on one side and an eagle in flight on the reverse. The coin was designed by sculptor Hermon Atkins MacNeil.

Steel war penny: 1943 U.S. cents were struck in steel due to wartime shortages of copper. The Philadelphia, Denver and San Francisco mints each produced these 1943 Lincoln cents. The unique composition of the coin (low-grade steel coated with zinc, instead of the usual bronze composition) has led to various nicknames, such as wartime cent and steelie. The 1943 steel cent features the same Victor David Brenner design for the Lincoln cent, which had been in use since 1909.

U.S. Mint: Produces circulating coinage for the United States to conduct its trade and commerce; also controls the movement of bullion. There are four active coin-producing mints: Philadelphia, Denver, San Francisco, and West Point.

Walking Liberty: A U.S. half dollar that was introduced in 1916, which depicts a Walking Liberty figure, while the reverse depicts an eagle.

Wheat penny: U.S. Lincoln cent issued from 1909 (the centennial of Abraham Lincoln’s birth) to 1958. Designed by Victor D. Brenner and engraved by Charles Barber, the coin takes its nickname for the “wheat ears” design on its reverse.

6 Rare Coins You Won’t Find In the Sofa Cushions

“We’re in the money!… We’ve got a lot of what it takes to get along!” 

The lyrics of The Gold Diggers’ Song from the Warner Bros. film Gold Diggers of 1933 are appropriate in describing this week’s auction of 250 vintage rare coins. Collector-quality gold and silver – U.S. and foreign – will be rolling out to the highest bidders. Take a look at 6 highlights from this catalog.

Several factors make the 1859 U.S. $3 Princess gold coin a rare find. The coins were not widely used in the Eastern U.S. and were largely unpopular. Collectors have since changed the status of this attractive design. The coin is sometimes referred to as a “Copper Spot” gold coin because it is composed of 90% gold and 10% copper and silver.

1859 $3 Princess ‘Copper Spot’ gold coin, original, mint AU. $4,125-$8,250. Jasper52 image

 

The auction opens with a rare 1955 Double Die Lincoln cent, a rare error that is estimated to sell for up to $7,000. Separately, this second 1955 double die Lincoln cent could sell for upward of $7,770.

1955 Lincoln cent, PCGS graded. Estimate: $3,885-$7,770. Jasper52 image

 

Two rare Morgan silver dollars from the San Francisco mint, named for designer and engraver George T. Morgan, stand out in the collection. This 1903-S Morgan has a PCGS AU50 rating and could top $10,000.

Rare 1903-S Morgan silver dollar, PCGS AU50. Estimate: $5,445-$10,890. Jasper52 image

 

This 1904-S Morgan silver dollar, PCGS AU53, is estimated at $3,135-$6,270. Both of these Morgan dollars are considered rare.

Rare 1904-S Morgan silver dollar, PCGS AU53. Estimate: $3,135-$6,270. Jasper52 image

 

Foreign coins in this collection are led by a rare 1906-S Australia sovereign, PCGS MS63, which could achieve $5,700.

1906-S Australia Sovereign PCGS MS63, extremely rare. Estimate: $2,850-$5,700 Jasper52 image

 

This diverse sale of coins spans centuries and origin. Peruse the full collection and get in the money.