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Old U.S. Gold Coins

$20 Libertys and $20 St. Gaudens

Old U.S. gold coins encompass U.S.-minted gold coins that served as money in this country until 1933, when they were called in by President Franklin Roosevelt. The best known old U.S. gold coins are the $20 Libertys and $20 St. Gaudens, also dubbed Double Eagles . Other popular old U.S. gold coins are the $10, $5, $2-1/2, and $1 coins, both the Liberty type and the Indian Head type. Whereas the $20 coins are commonly called Double Eagles, the $10 coins are called Eagles, the $5 coins Half Eagles, and the $2-1/2 coins Quarter Eagles.

Old U.S. gold coins are good investments only when they sell at spot or at small premiums over spot. Look at the graph that tracks VF-grade $20 Libertys against the spot price of gold. At times, VF $20 Libs have traded at spot and at other times they have carried big premiums. Specifically, in the early 1980s, the late 1980s, and early 1990s, VF $20 Libs traded at spot; however, in the mid-1980s and the mid- to late-1990s, they gained premiums. Graphs that plot higher-grade Double Eagles’ prices against spot show the same relationship. In 1992, MS-62 St. Gaudens sold at $20 over spot. CMI believes premiums on old U.S. gold coins could shrink further when gold rises above $300.

View Graph

Typically, old U.S. gold coins pick up premiums during periods of heavy promotions. The graph shows two such periods.

In the early 1980s, when gold prices were in decline after their run-up to $850 in 1980, little new money was entering the gold market. As a result, many dealers recommended that South African Krugerrands, which dominated the bullion coin market then, be traded for old U.S. gold coins because Krugerrands were going to be confiscated.

It was an easy story to sell because South Africa’s apartheid system was being condemned worldwide and the negative publicity surrounding the issue lent credence to the idea of confiscation. However, only a symbolic ban on the importation of Krugerrands was imposed, and there was never any proposal in Congress (or anywhere else for that matter) to confiscate Krugerrands. Nevertheless, many investors switched to old U.S. gold coins and their premiums rose substantially. In time, though, the fear of confiscation died, and premiums shrank.

In 1998, as apprehension grew about the approach of the year 2000, the gold coin market became ripe for another promotion of old U.S. gold coins. This time promoters hyped them as protection against the collapse of the world’s computers and the banking system. The fear was so widespread that bank regulators required Y2K compliance. Today, Y2K is a faint memory.

Nevertheless, Y2K was a real concern to many investors who accepted the notion of old U.S. gold coins being “non-confiscateable.” “Confiscation” is a theory that holds no validity, but again premiums on old U.S. gold coins climbed. However, when January 1, 2000, rolled around and no problems arose, investors began selling and premiums dropped precipitously. For a further discussion on the promotion of old U.S. gold coins, read Myths, Misunderstandings, and Outright Lies.

Another big danger to investing in old U.S. gold coins is the huge overhang in Europe. At the end of WWII, the United States held the world’s largest hoard of gold, and U.S. dollars were redeemable in gold by foreign governments. Following the war, the U.S. poured billions into rebuilding Europe via the Marshall Plan. Additionally, to stimulate European economic growth, the U.S. opened its markets to European goods. Consequently, massive quantities of dollars flowed to Europe.

As prosperity returned, Europeans converted those billions of dollars to gold. So great was the conversion that on August 15, 1971, President Nixon closed the “gold window” because the redemptions threatened to empty U.S. gold vaults. Much of the gold sent to Europe was old U.S. gold coin. Even before WWII, U.S. gold coins had been popular in Europe, and gold-loving Europeans hoarded them.

No reliable statistics are available on how many old U.S. gold coins European banks hold, but, undoubtedly, it is in the tens of millions. Between 1850 and 1933, U.S. mints turned out more than 165 million Double Eagles. The mints also produced millions of smaller gold coins. Today, several large numismatic wholesale firms have offices in Europe for finding hoards of old U.S. coins. One firm used to advertise “Shipments coming in from Europe daily.” Another firm boasts “Offices in Brussels, Paris, and Zurich.” In recent years, though, the repatriation of old U.S. gold coins has slowed to a trickle.

Although European central banks have been sellers of gold in recent years, holders of old U.S. gold coins have curtailed sales because of low prices. Yet, despite the reduced supply, premiums on old U.S. gold coins have shrunk. CMI believes premiums on old U.S. gold coins will fall further because of the overhang in Europe.

As gold rallies back to the level where Europeans again become sellers, old U.S. gold coins will flood the market. VF $20 Libs will again sell at spot; MS-62 St. Gaudens will sell at bullion coin prices. So, while old U.S. gold coins have significant premiums, bullion coins are the better buys. CMI recommends the Perth Mint’s Gold Dragons because they sell at bullion coin prices but have numismatic potential.

Although bullion coins are the better investment right now, when Double Eagles again sell at or near spot, they will be the better buys. (CMI anticipates that to occur when gold rallies to the $330 area; however, it could happen before then.) Double Eagles will be the better investment because someday they will again achieve premiums and provide investors the opportunity to increase the number of ounces of gold they own without laying out any more cash. A real-life example illustrates the principle.

In the late 1980s, a CMI client purchased 192 VF $20 Libs. By looking at the graph, you can see the client bought the coins near the spot price of gold. In 1998, when the premiums were high, the client traded the 192 $20 Libs for 1-oz Gold Eagles. The client received 236 Gold Eagles for a 50-ounce increase. It was a 50-ounce increase because a Double Eagle contains .9675 ounce of gold. So, the client traded 186 ounces (192 X .9675 = 185.76) of gold for 236. Gold coin buyers should keep this trading strategy in mind. It can be quite profitable.

Coin Grades

Anyone investing in old U.S. gold coins soon hears about “coin grades.” A coin’s “grade” is a visual evaluation of how much wear a coin has suffered. Coins with little wear are graded higher and bring higher prices than those with significant wear. However, a low-grade key coin could easily be more valuable than a high-grade common-date coin. A key coin is a difficult to find, rare coin. By contrast, common-date coins are in abundance.

Below is the spectrum of coin grades as developed by the American Numismatic Association (ANA). The discussion that follows is to inform new investors as to the complexities of coin grading; it is not a guide to coin grading. Investors wanting to become more knowledgeable about old U.S. gold coins and grading them should get a copy of R.S. Yeoman’s A Guide Book of United States Coins, commonly called The Red Book. Send $12 to Certified Mint, and we will mail you a copy.

Coin grades (from low to high):

Low-grade coins show considerable wear. Coins graded MS-60 are considered Mint State (Mint State [MS] is used interchangeably with uncirculated). Mint State coins have no signs of wear but may show contact marks, and the surface may be spotted or lack some luster. Coins graded MS-61 and higher should have increasing luster or be lightly toned with very few contact marks. The greater the luster or toning and fewer the contact marks, the higher the grading. An MS-70 coin would be in perfect condition. Very few regular issue coins are graded MS-70.

Anyone can easily see the wear on low-end coins, but accurately determining whether a coin is an F-12 or VF-20 requires experience in coin grading. Differentiating between an AU-55 and an MS-60 coin calls for even more skill. Finally, grading a coin either MS-62 or MS-63 becomes subjective, and “experts” often disagree. Consequently, the grading services have become invaluable to investors.

PCGS, NGC, and “Slabbed” Coin

NGC graded MS63
1904 $20 Liberty
PCGS graded MS63
1924 $20 St. Gaudens

In the mid-1980s, over-grading had become wide spread. It was common for circulated coins (below MS-60) to be put in plastic holders (“slabbed”), labeled MS-62 or MS-63, and sold to unsuspecting investors.

Since the buyers usually could not detect the over-grading, they did not know they had been taken advantage of until they sold. One investor in the late 1980s put $150,000 into old U.S. gold coins, many of which had been graded MS-62 or MS-63 by the firm from which he bought them. Three years later – at the suggestion of CMI – he submitted them to PCGS and learned that most of the coins had been over-graded by as much as five grades. His $150,000 investment was worth less than $35,000. Unfortunately, this investor’s situation was not unique. Thousands of investors have suffered similar losses.

Ethical numismatists decried the over-grading and screamed that it was damaging coin collecting – and it was. Then Professional Coin Grading Service (PCGS) launched a unique concept in 1986. PCGS would only grade coins. The company would not sell coins. Its income would be derived only from grading fees, and it would survive only if it did a credible job.

There are thousands of skilled numismatists across the country, and while most of them do not always agree with PCGS grading, PCGS thrives because its grading is fair and competent. PCGS now grades 100,000 to 150,000 coins a month.

In 1986, Numismatic Guaranty Corporation (NGC) sprung up to provide still another grading service. And, NGC has prospered, also grading thousands of coins monthly. PCGS and NGC have been so successful that no major retail firms now “slab” their own coins. (Putting a coin in a plastic holder with its grade marked on the holder is called “slabbing.”) Other grading services have attempted to emulate PCGS and NGC, but none have become as accepted as have the two major grading services.

PCGS’s and NGC’s coin grading services provide a greatly needed benefit to investors who purchase old U.S. gold coins. Now, investors can buy coins that probably are graded accurately. Although coin grading has definite guidelines, coin grading remains as subjective as a beauty contest. A coin can be slabbed MS-62, and two knowledgeable numismatists – both with more experience than the PCGS or NGC graders–can disagree. One may say it’s a MS-61, while the other says it’s a MS-63!

Just because a coin is slabbed doesn’t mean its grade is final. Many coin dealers resubmit coins, asking for a higher grading. Often, they get it. Other coin dealers frequently bust the coins out of their holders and resubmit. Coin grading is that subjective.

In fact, slabbed coins trade “sight-seen” and “sight-unseen.” Sight-seen means buyers have to see the coins and agree with the grading before paying. Sight-unseen means buyers will take the coins without seeing them.

One longtime numismatist claims that “a coin’s unique appearance, luster, toning, depth of strike or peculiarities can affect offers as much as 100% in rare cases.” Unique coins usually trade “sight-seen,” while common-date MS-61s, -62s, and -63s trade “sight- unseen.” It takes great knowledge to profitably trade in old U.S. gold coins.

Gold investors should avoid old U.S. gold coins and the numismatic market. Numismatics (coin collecting) is a world of its own. Many pitfalls await novice investors, the worst being overpriced coins from unprincipled dealers. Although over-graded coins ceased to be a problem after PCGS and NGC started slabbing coins, overpriced coins remains a major hazard for gold coin buyers. Furthermore, liquidity can be a major problem.

The longtime numismatist mentioned above recommends “allowing at least 30 days for a dealer to sell your rare coins.” He says “sudden emergency liquidation can reduce your realized price by 5% to 20%.” That’s a generous evaluation of the numismatic market. If you’re sold overpriced coins, you can watch 50% of your investment disappear regardless how much time you give a dealer. Besides, do you really want to put a part of your life’s savings in something that may take 30 days to liquidate? What if it takes 60 days, or 120?

Consider also another tip offered by the above numismatist on “How to Sell Your Coins at Maximum Prices.”

Find a dealer you can trust

Okay, but how do you find that honest dealer? How many corrupt dealers do you go through finding him? How much do you lose in bad buys before you connect with an honest dealer?

Why not invest in gold you can trust, gold that moves dollar for dollar with the world price of gold? Why not buy gold bullion coins that can be liquidated at prices which can be determined by anyone? Why not put your money in gold coins that make you the “expert” on how much they are worth?

Here’s another tip from the numismatist:

Always have your current expert get offers from the dealer who sold you the coins originally. Different dealers support different markets.

This advice exposes two more flaws of investing in numismatic coins. First, your “current expert” has to go back to your former “expert.” Why aren’t you still dealing with the original expert? Again, how many “experts” do you have to go through before you find that honest dealer?

Second, you should never invest in a coin whose value is determined by the support of a certain dealer or marketing organization. Those firms move from coin to coin, always wanting to have “something new” to offer their customers. When they move on, previous promoted coins suffer. Avoid this problem by investing in bullion coins.

This Web page is long, and you are to be congratulated for reading this far. Your time has been well spent. What you have learned could save you thousands of dollars and great heartache.

The unfortunate story told above about the man who invested $150,000 but received coins worth $35,000 is not unique. A husband and wife not long ago had CMI evaluate a group of common-date “slabbed” MS-62 Double Eagles. They had paid $72,000 for the coins. Sadly, they should have paid no more than $48,000. They suffered an immediate loss of $24,000, one-third of their investment.

In early 1998, another investor who wanted only to invest in gold called a firm that advertises Gold Eagles extensively. However, after being told that numismatic coins were “not confiscateable,” he put $27,000 into a variety of old U.S. gold coins graded MS-62 through MS-65. He subsequently learned that the coins could be sold for only about $21,000. The man suffered an immediate $6,000 or 22% loss.

Such losses can be avoided by investing in bullion coins. Don’t take unnecessary risks with your money.


If you are considering precious metals for survival purposes and would like to discuss the matter, call us at 800-528-1380. Our normal hours are 7:00 a.m. to 5:00 p.m. MST, Mondays through Friday. However, we often take calls before 7:00 a.m. and more often after 5:00 p.m. Sometimes we can be found in the office on Saturdays.