Pre 1933 U.S. Gold – An Investment Opportunity Worth Considering
Prior to 1933 the United States Mint issued gold coins in denominations of $2.50, $5.00, $10.00, and $20.00 all intended for general circulation. On April 5th of 1933, President Franklin Roosevelt issued an executive order “forbidding the hoarding of gold coin, gold bullion and gold certificates”, requiring all said items to be turned in to any federal reserve bank by May 1st, 1933.
Many modern day gold investors and numismatists refer to this material as pre 1933 gold or semi-numismatic gold. The term semi-numismatic references the nominal collector value associated with many of the gold coins of the era. In other words this would be the value of the coin in addition to its gold value. For example, U.S. $20 gold piece contains just under an ounce of gold, .9675 troy oz. to be exact. This would mean with gold at $1,600 per ounce the “melt value” of the coin would be $1,600 X .9675 = $1,548. In reality the average $20 gold coin is worth closer to the $1,650 to $1,700 range with gold at $1,600. The difference between the gold value and the actual value is often referred to as the “premium”.
With the sharp escalation in the price of gold over the past several years, the “premiums” on the pre 1933 gold coins have not kept pace with their historical average and represent an excellent investment opportunity. For example, in January 2010 with gold at $1,135 per ounce, U.S. $20 Saint-Gaudens graded mint state 64 was selling for $1,880 representing a premium of 71% over its “melt value”. Currently that same coin can be purchased for exactly the same money, $1,880, the only difference is gold is currently at $1,550 an oz, not $1,135.
Examples like this are spread throughout the U.S. Indian and Liberty gold series and represent an excellent investment opportunity outside of the conventional “gold bullion purchase”. Let me put it another way, you can make money with your gold investment now two ways, either with the price of gold increasing or with an increase in the premium of the semi-numismatic item.
Additionally, the downside risk of losing “premium” is almost zero, the upside is enormous. Many experts believe, myself included, that we have seen the bottom with respect to the premiums associated with the pre 1933 gold as the pendulum has already begun to swing.
Buying pre 1933 gold offers a dynamic to gold investing that few investors consider as well as an additional level of diversification. If you are going to buy gold and the premium is almost on par with modern bullion it is well worth your consideration.
Peter Kevorkian
United Coin & Precious Metals
