By Mark Ferguson for CoinWeek – MFRareCoins.com
Last week I wrote about why some economists believe our economy is going into a high inflationary period and how rare coins went into a runaway market during the last inflationary spiral, which occurred during the 1970s. I gave across-the-board examples of how “type coins” performed as an investment during that time and where their prices are today in comparison.
This week I’m continuing that discussion, looking at how gold coins performed during that same inflationary spiral so that we may take away some ideas of what might happen this time around in a coming new round of runaway inflation. Prices listed are bid/ask prices taken from The Coin Dealer Newsletter (CDN), the primary dealer-to-dealer price guide used during the 1970s and still in use today. All coin dealers use this guide. Investors are able to subscribe as well.
Both rare issue gold coins and so-called “generic” gold coins, which are the most common date U.S. gold coins minted prior to 1934, are reported here. Earlier U.S. gold coins minted from 1795 and prior to the dates reported here were not covered by the Greysheet, as the CDN is known, during those early 1970s issues of the publication. The first prices listed are from the very first issue of the Greysheet’s Monthly Summary, published during August, 1976. It is now known as the Monthly Supplement, and this extra monthly issue was produced in response to “greatly increased market activity.” Prices are also listed as of August, 1980, as that is the time collectible gold coin prices peaked from the inflationary run-up of the 1970s, which was a few months after gold bullion peaked during January, 1980.
This time around there’s a great case as to why gold bullion will vault into the multi-thousand dollar price level per ounce. In addition to escalated inflationary pressures, probably the biggest reason is that huge investment funds around the globe, in addition to individual investors, will be shedding paper assets and stampeding to gold, making increasingly larger investments in this “yellow metal” which has traditionally been used money as money for thousands of years.
The following prices are for Mint State 65 gold coins, which were considered the “investment grade” during the 1970s. Today many investors prefer MS 66 and MS 67 graded coins as “investment quality,” if they can acquire them.
|August, 1976||August, 1980||October, 2011|
|1908 $2.50 MS 65||$200/220||$3,000/3,350||$3,150/3,450|
|1911-D $2.50 MS 65||$1,125/1,275||$25,000/NA||$54,000/58,500|
|1929 $2.50 MS 65||$165/185||$2,750/3,050||$5,200/5,650|
|1909-O $5 MS 65||$3,350/NA||$45,000/NA||$380,000/420,000|
|1910 $5 MS 65||$435/485||$6,150/6800||$12,000/12,750|
|1911-D $5 MS 65||$2,300/NA||$25,000/NA||$210,000/230,000|
|1929 $5 MS 65||$3,400/3,800||$25,000/NA||$65,000/68,500|
|1911-D $10 MS 65||$3,500/NA||$32,500/NA||$125,000/135,000|
|1913-S $10 MS 65||$2,000/NA||$100,000/NA||$80,000/90,000|
|1913-S $10 MS 65||$2,000/NA||$100,000/NA||$80,000/90,000|
|1932 $10 MS 65||$240/265||$4,500/5,000||$3,350/3,500|
|1907 $20 High Relief||$3,750/NA||$35,000/NA||$42,850/44,000|
|1911-D $20 MS 65||$205/220||$2,750/3,050||$2,350/2,500|
|1921 $20 MS 65||$15,000/NA||$115,000/NA||$800,000/880,000|
|1928 $20 MS 65||$200/215||$1,250/1,400||$2,210/2,270|
During the above trend line time frame, the gold price rose from less than $150 per ounce, during the mid-1970s, peaking at about $850 per ounce during January, 1980, then eventually sinking for many years, to rise again to more than $1,900 per ounce seen within the past few weeks. This is a reflection of the falling value of the U.S. dollar. While the public believes the gold price has been in a bubble that has burst, some economists believe this is only the start of a much larger trend that will occur because of the ballooning national debt that will cause the dollar to fall much further and the gold bullion price to rise to much greater heights than recently seen.
Should that happen, collectible gold coins will undoubtedly rise along with the gold bullion price because of the value of their gold content, and will likely rise even higher because of their added collector price premiums. Today those price premiums have fallen way off, over their bullion values, making these coins an excellent value in comparison to their gold bullion content. However, we can see from the above chart that the most common date gold coins, also referred to in the market as “generic” gold coins, have not performed nearly as well as the rare issues.
Those rarities listed above are only random examples pulled from many other issues in each series, like $2.50, $5 and $10 Indian design gold coins and $20 St. Gaudens gold coins. Keep in mind that there are several other series of gold coins that have been minted beginning in 1795, when the U.S. Mint began striking gold coins. Those listed above are what’s reported here because that is only what The Coin Dealer Newsletter reported during the 1970s. And there are many other rare collectible gold coin issues within the series reported above that are not as expensive as those listed.
Another good reference to learning about earlier issues of collectible gold coins is A Guidebook of United States Coins, published by Whitman Publishing, also popularly known as “The Redbook.” It lists retail prices of collectible rare coins, and can be purchased at popular online book stores and other stores nationwide. Experienced coin dealers can help guide you in selecting which gold coins and other coins would be appropriate rare coins to invest in if you believe we’re in for another round of high inflation. Not all collectible coins will perform well. Only carefully selected rare coins will serve you best as hedges against future inflation.
Mark Ferguson was a coin grader for PCGS , a market analyst for Coin Values and has been a coin dealer for more than 40 years. He has written for the ANA, Coin Dealer Newsletter, Coin World, Numismatic News, , Coin Values, The Numismatist and currently has a weekly column on CoinWeek. Mark can be reached at Mark Ferguson Rare Coins ( www.mfrarecoins.com)