The DWN Guide to Buying Rare US Gold Coins
/I spend millions of dollars per year on rare US gold coins. Here are some of the questions I ask myself when contemplating the purchase of literally each and every coin.
Please note that I give considerably more time thinking through the purchase of a $25,000 coin than I do one priced at $2,500. However, I do ask many of the same questions for the lower priced coin as I do the more expensive one.
1839-O $2.50 PCGS MS62 CAC. From the DWN archives and described as, “100% natural in appearance.”
IS THE COIN NICE?
Seems like a pretty basic question, but it’s one that has to be asked—and answered—on every coin you buy.
As I view coins at shows, auctions, online, or in my office, I view them first with no magnification (except tiny coins like gold dollars which my old man eyes can’t see anymore). The thing I am looking for in the first few seconds is the level of eye appeal. I believe that 95% of the time your first impression about a particular coin is correct, so I’m making mental notes regarding the originality, the color, the luster, and how severe any marks are.
I spend about 90% of the time viewing the obverse. If I like the front of the coin, I’ll eventually flip it over to view the reverse, but unless there is something terribly wrong on this side, I’m going to make my decision to buy or pass based on the obverse.
Remember that the light you use is going to strongly impact the way you see a coin. Don’t view a coin in direct sunlight, and avoid overhead sources like at coin shows.
WHAT’S WRONG (OR ISN’T WRONG) WITH THE COIN?
Sizable percentages of certain issues or types have been doctored. If I am looking at an early gold coin, I’m going to assume that something is wrong with it. I tend to look very carefully for shiny spots in the fields (these are often the result of something having been removed from the coin), or swirls which are a sign of a sharp object having been used to remove a spot or a shallow mark.
Very few collectors—or dealers for that matter—tend to look at the edge of a coin. It is relatively common for early gold coins to have been rim filed, which is when a coin with an edge bump or a rim ding is carefully filed to hide this damage. It’s not easy to see the full edge of coins in third party holders (especially coins in old slabs), but I urge you to look at them; certainly when you have the coin in hand.
Certain dealers are known for either doctoring coins themselves or via proxies. If a dealer has coins that are all shiny or his inventory is filled with No Grades run don’t walk.
IS THE COLOR ON THE COIN REAL OR NOT?
It is important for you to learn what genuine color looks like.
One of the most important things to note about gold is that it isn’t as reactive a metal as silver or copper, and therefore it doesn’t tone as richly. If you see a vividly toned pre-1933 gold coin, chances are good it has been enhanced.
A good sign a coin is artificially toned is if it shows deep red, or what I call Cheeto™ orange toning. This is the product of a coin being chemically treated and then heated. After a period of time, the chemicals break down and become cartoonish in appearance.
You’ll learn what natural color looks like for coins from each mint by viewing auction lots or by looking at the coins I sell on my website. Every mint has different looks and, as an example, the rich yellow-gold hue exhibited by a natural Charlotte half eagle is far different than the reddish-gold seen on a No Motto San Francisco eagle.
DOES THE COIN HAVE POSITIVE OVERALL EYE APPEAL?
Eye appeal is defined as the conglomeration of such important individual criteria such as originality, coloration, strike, surface preservation and color. There is a certain amount of subjectivity in eye appeal. I personally like coins with deep (but not dark) coloration as well as coins that are “luster bombs.” And as long as they are not conspicuously situated, marks don’t bother me all that much. Your tastes might be totally different.
1880-S $20.00 PCGS MS64 CAC. From the DWN Archives and described as a “Luster bomb.”
It is important for a number of reasons to buy coins with positive overall eye appeal. The most obvious is that coins which are pretty are easily resold. If I have a pretty example of a popular coin (say a nice MS64 High Relief) this will likely be an easier coin to sell than an MS65 or even an MS66 which has been dipped.
As you become a better educated collector, you’ll learn that certain issues within your specialty are very elusive with good eye appeal. When you are offered a coin with the right “look” for you, it is important to give it strong consideration.
IS THE COIN RARE?
Thanks to 30+years of submissions at both PCGS and NGC, collectors are able to make determinations about a coin’s overall and high grade rarity. It should always be remembered that the populations of most higher grade scarce and rare US gold coins are significantly inflated by resubmissions. In some cases, this means that as many as 40-50% of the coins listed in the population figures represent duplications.
CAC’s information is a great source for determining the qualitative rarity of an issue (i.e., how many of the PCGS and NGC graded 1851-D half eagles in AU55 have been approved by CAC). I have had my eyes opened hundreds of times in the last decade+ by the numbers of coins that pass CAC’s strict standards; both in terms of being stunned by how few coins have been approved or amazed by how many have been approved.
1878-CC $5.00 PCGS AU50 CAC. From the dwn archives, and the third rarest half eagle from the Carson city mint.
There are a number of ways to determine if a specific date is truly rare. One is mintage figures; if a specific US gold issue has an original mintage of 1,500, it is likely rare today. (Yes, there are exceptions to this…)
If the Fairmont hoard contained less than three or four examples of a specific liberty Head half eagle, eagle, or double eagle, it is also likely rare.
If a major collection such as DL Hansen has a reasonably low grade example of a specific date, it is likely (but not always!) rare.
Finally, the number of auction appearances per year is typically a good indication of a coin’s rarity, if figured over a 20+ year period. Coins that appear for sale at least quarterly are not rare. Coins that appear for sale once every three to five years? Those are rare…
WHAT IS THE BEST VALUE GRADE FOR THIS COIN?
The DWN Theory of BVG (Best Value Grade) states that for every issue, there is a grade which makes the most economic sense.
Let’s look at two real world examples.
The first is an 1894-P $20 in higher Mint State grades; the current numbers are as follows:
Total Graded at PCGS (# in +) / PCGS Price Guide (# in +)
MS63: 2534 (92) / $4,000 ($5,250)
MS64: 237 (28) / $7,250 ($11,500)
MS64: 9 / $37,500
from the DWN archives. As an MS64+, this would be a DWN BVG.
In my opinion, an MS63 example of this date is simply a generic, while an MS65 seems nuts to be paying $30k+ for. I would tend towards buying this issue in MS64+, especially since APRs for such coins are only around $1,000 more than for an MS64. Thus, a nice PCGS/CAC MS64+ at around $5,000-5,500 is the BVG for this issue.
The second is an 1855-O in nice circulated grades; the current numbers are as follows:
Total Graded at PCGS / PCGS Price Guide
EF45: 14 / $7,000
AU53: 10 / $8,500
AU58: 3 / $17,500
Given the very small price spread between EF45 and AU53, I would be inclined to look for the AU53 coin. The AU58 version is very rare with three graded as such and only four finer (all in MS61). With none sold at auction in AU58 since 2010 (and the last PCGS MS61 selling at auction in 1999), holding out for an MS61 is likely a fool’s errand. Thus, if I am offered a nice PCGS AU53, I’m going to buy it unless the price is insanely aggressive
WILL I BE ABLE TO LOCATE A FINER COIN?
As a collector, you need to decide if the coin you are contemplating buying is likely to be found finer and if so, how long will it take—and how much will it cost. There is a significant opportunity cost each time you pass on a good coin. If the last APR for a coin was, say, $8,500 in 2022 and you are underbidder on the next comparable coin at $13,000, you’ll likely have to pay this or more the next time one is available. That’s an opportunity cost approaching 50%.
Invariably a key coin in you specialized set will appear at a point in time when your cash situation is not great. I suggest you work with a well-capitalized dealer who will give you extended payment terms. I will be glad to sell a coin with 90 day interest-free terms, and I’ve allowed certain very good clients of mine as much as a year to pay for a six-figure coin.
If you own gold bullion, now (early 2025) is a great time to leverage it as partial or full payment towards rare US gold coinage
WHAT’S MY UPSIDE AND DOWNSIDE?
This question is more often asked by dealers than by collectors but the latter should be asking it every time they our making a purchasing decision. As a dealer, I ask this question in two ways. The first is if I am thinking of buying a new purchase and then trying to upgrade it. Let’s say I am offered an AU55 example of a scarce Charlotte half eagle for $8,000 with values as follows:
AU55 value: $7,000
AU58 value: $13,000
On this coin, we have $1,000 downside and $5,000 upside which makes it a no-brainer to purchase.
Here is another scenario. I’m offered a New Orleans eagle in EF45 for $15,000 with recent APRs of $13,000 and $12,650. The coin is very nice (although it won’t upgrade) and you like the overall appearance. What’s the coin worth if you have to dump it in six months due to your stock portfolio taking a big hit? If you purchased the coin from DWN, I will likely offer you around $13,500. If the coin was purchased from another dealer and I’m not crazy about it, my offer is likely to be around $12,000.
On this coin, your downside is $1,500 to $3,000. In my opinion, this seems reasonable.
IS THE COIN PHOTOGENIC?
Most collectors buy most—if not all—of their coins online. If a coin has good eye appeal, it is likely to sell on my website with ease. If the eye appeal is not good, it likely won’t sell quickly—maybe not all--unless it is so rare that people will overlook its lack of eye appeal.
I find myself constantly trying to determine if a coin will look good imaged on my site. A few of my findings after years of experimentation are as follows:
If a coin is too dark it will not image well. Deeply toned coins can look great in images; they just can’t be overly dark.
Coins that are very reflective are difficult to image. This is especially true if we are considering prooflike and deep prooflike gold. If a coin has heavy abrasions (as do most PL gold coins) the marks are going to look like craters on a lunar surface. This is the primary reason why I tend to not buy MS60 to MS62 PL Liberty head eagles and double eagles.
Clean holders help to sell coins, while dirty holders or scratched holders make selling more difficult. If you have a coin in inventory and it has a crappy holder, it is smart to send it back to PCGS or NGC and get a fresh new holder.
IS MY COLLECTION TOO RANDOM OR TOO SPECIALIZED?
What you decide to collect is ultimately your decision. But give some serious thought to the ease in which you’ll be able to sell your coins when time arrives.
A set of wholesome Dahlonega quarter eagles in VF-AU grades will be amazingly easy for you to liquidate for top dollar. A set with the die progression of 1804 half cents might seem interesting to you, but you might have been the entire market for these when you were active.
What suggestions can you add to this article? Please email me your thoughts at dwn@ont.com
