I get calls from potential new gold coin collectors nearly every day. Some of them have spent a good deal of time researching the gold coin market and have a good idea what the coins that they may be buying will cost. Others have no clue and are almost charmingly naive about what they can buy given their budget. This leads me to the topic of today's blog: how much does a collector realistically have to commit per coin to put together a nice collection of rare gold coins?
I've stressed in numerous articles and blogs the importance of specializing when it comes to coin collecting. Collections that are all over the map tend to have "issues" (putting it nicely) and having a greater in-depth focus makes for a better, more productive collector. But a collector's chosen specialty needs to be in sync with his budget.
If a collector calls me and tells me he wants to put together a set of Indian Head eagles on a budget of $1,000-2,000 per coin, my first reaction is that he's not going to get far. Only a few coins in this series can be purchased in this price range and these tend to be either the generic issues like the 1926 and 1932 or relatively lower grade (Extremely Fine and About Uncirculated) versions of the slightly better dates.
This doesn't mean that a collector with a $1,000-2,000 budget can't play in the rare date gold coin market, there are some reasonably interesting coins available.
The collector with a $1,000-2,000 budget needs to make one immediate decision: does he care more about comparatively high grade than rarity?
If the collector with this budget is grade-oriented, there are a number of options that he can pursue.
One nice set that comes to mind are Philadelphia gold dollars struck from 1877 through 1889. This set consists of 13 coins and all of them can be found in MS63 for less than $1,500 per coin. And, if the collector in question wants to step up to MS64 examples, all the dates in this set can be found for less than $2,000.
Once this set is completed, the collector can focus on many other of the gold dollars from Philadelphia. All of the Type One issues from 1849 through 1854 can be had in MS63 for less than $1,500. And many of the Type Three issues from the mid-1850's, 1860's and early 1870's are very affordable in MS60 to MS63 grades.
If the collector on a fairly tight budget is more rarity oriented, the Liberty Head quarter eagle series offers a number of potentially interesting options. Most of the Philadelphia issues from the 1840's are scarce, and nearly all can be obtained in the lower to mid-AU grades for $1,000-1,500.
Many of the Civil War era quarter eagles--from both the Philadelphia and San Francisco mints--offer a great amount of bang for not a lot of buck. Let me pick a random example to illustrate my point. The 1867 quarter eagle has an original mintage of just 3,200 business strikes and it is likely that fewer than 125-150 are known. Yet, when available, a nice AU55 example of this date should cost $1,500-1,750.
The low mintage quarter eagles from 1880 to 1894 are intriguing. With the exception of the ultra low mintage 1881 and 1885, most of these dates can be obtained in the AU55 to MS62 for under $2,000.
There are a number of interesting half eagles that can be purchased for less than $2,000 per coin. This includes many of the No Motto Philadelphia coins in About Uncirculated and a number of the New Orleans issues as well. This includes some interesting dates, such as the 1843-O Small Letters and Large Letters, 1845-O, 1846-O and 1851-O in Extremely Fine.
Speaking of New Orleans coins, is it possible to have a budget of $1,000 to $2,000 per transaction and still purchase the popular Charlotte and Dahlonega issues? The answer is a qualified yes. I regularly handle common date C+D gold coins grading VF35 to EF45 that are priced from around $1,750 to $2,500. You aren't necessarily going to get a coin that is a candidate for beauty-prize winner at the price/grade level but you'd be surprised at the interesting lower grade issues that come available from time to time.
What about larger size coins?
At the $1,000-2,000 it is possible to buy as many as twenty to thirty different No Motto eagles in the EF40 to AU55 range. Most of these will be Philadelphia coins but there are many New Orleans eagles that can be found in EF grades for around $1,500 to $2,000.
Your dollars are going to go much further in the eagle denomination if you stick with the With Motto coins. The issues struck from 1878 to 1907 are readily available in the $1,000 to $2,000 range and you can find many of the more common dates in MS63 for $1,500-2,000. Given the fact that eagles have nearly half an ounce of gold and thus melt for around $700-800, that you can buy reasonably interesting coins for $1,000 seems like great value to me.
Since a Liberty Head double eagle has a basal value of nearly $1,500 worth of gold, your $1,000 bill isn't going to do much damage in this denomination. But if you can swing a $2,000 purchase, you'd be surprised at what you can find. Case in point: I recently sold a lovely PCGS EF45 1858-S double eagle with a CAC sticker for around $2,000. This coin isn't a great rarity but it isn't easy to find, its over 150 years old and it has a great association with the Old West.
I'm a big advocate of having a smaller collection of cool coins as opposed to a large collection of widgets. To me, the rare gold market's "sweet spot" is around $2,500 to $7,500 per coin. In this range you can start to purchase some really interesting pieces, both in terms of grade and rarity.
At this level you won't find much in the way of early gold. But you will be able to buy nice quality Classic Head quarter eagles and half eagles including some of the mintmarked coins.
There are some great values in the Charlotte and Dahlonega market in this price range. For $3,000 to $5,000 you can buy really nice half eagles in About Uncirculated from either mint and this includes some better dates from both the 1840's and the 1850's. You won't be able to buy the keys like the 1842-D Large Date or 1861-D half eagles but there are not many other dates you won't be able to afford in the price range.
Even if have around $7,500 per coin to spend, you'll probably find Proof gold to be well out of your range. But how about nice Uncirculated No Motto half eagles or eagles in the MS61 to MS62 range for around $5,000 per coin? These still exist and the quality of tends to be well superior to comparably graded C+D mint issues.
At the $5,000 price point, you can purchase some really interesting Liberty Head double eagles. Want some examples? Some of the coins that I've personally sold for five grand or so in the last 45 days include a trio of nice EF45 1851-O's, an 1855 in AU58, an 1856 in AU55, an 1864 in AU55, and an 1865 in AU58. All of these were approved by CAC, all had good eye appeal and all are "out of the ordinary" dates in above-average grades.
There is so much more to select from at the $5,000 to $7,500...the list could go on and on. Better date Three Dollar gold pieces or common dates in nice MS63 to MS64. Rare, seldom-seen San Francisco issues of all denominations. Nice common date Carson City double eagles in About Uncirculated.
New collectors are often intimidated by the better date United States gold coin market and they don't need to be. There are a tremendous amount of interesting coins out there at $7,500 or $5,000 or even $2,000.
Do you have questions about how much you have to pay to play in the rare gold market? Feel free to ask me via email at dwn@ont.com or leave your comments below.
