What is gold worth? The answer to that question when buying gold and silver is a bit complicated. If you look in the daily newspaper or watch a business report on television, you will read about (or hear about) the daily “spot” price of gold.
This price refers to the current value of one troy ounce of .999 fine gold bullion. This bullion is in the form of bars of gold, and it has no numismatic value whatsoever. Instead, the value is tied solely to its melt value. If gold goes up $10 in one day, the value of the bar goes up the same $10. If gold goes down $3 the next day, the value of the bar falls exactly the same amount. These bars are usually traded in 100-bar lots, called “contracts.” In most cases, these contracts are bought and sold without physical delivery ever taking place.
Some people call this “trading paper gold.” Futures prices on gold contracts will be higher and higher the farther out the expiration date of the contract is. The difference in the daily “spot” price and the future delivery price is based on the interest on the money that is put up by the person guaranteeing the contract.
- The advantage of owning bullion gold is that it is the most liquid tangible asset in the world. Whether you’re in Tangiers, Tanganyika, or Tulsa, everyone knows the value of an ounce of gold.
- The disadvantage of owning bullion gold is that you can’t make a profit unless the price of gold goes up. Unlike numismatic gold, and to a lesser extent semi-numismatic gold, the value of your holdings is tied solely to the daily “spot” price.
Buying Krugerrands, and other rarities
Such items as Krugerrands, Canadian Maple Leafs, and American Gold Eagles, are also considered to be bullion gold. These are frequently called bullion “coins,” although they aren’t coins at all, as they were never intended to circulate.
What is Semi-Numismatic Gold?
Unlike bullion gold, semi-numismatic gold involves actual coins of the realm, both from the United States and foreign countries. The prices, at times, will rise and fall with the price of “spot” gold, but at other times semi-numismatic gold will rise on its own, as demand outstrips the supply. This happens because the supply of semi-numismatic gold is a fixed quantity, and a large gold strike in South Africa (or anywhere else, for that matter) won’t affect the supply. Why? Because unlike gold bullion bars and gold bullion “coins,” they simply aren’t making them anymore. The mintage figure for a circulated $20 Liberty gold piece of 1898 will be the same 500 years from now as it is today and was over 100 years ago. Yes, the supply will be much less due to attrition, but the mintage figure is a constant.
The term “semi-numismatic gold” usually refers to circulated United States gold coins struck prior to 1934 that carry a relatively small premium over their melt value. These coins fall more into the “common” category than the “rare” category, with the understanding that “common” is used in a relative sense. Since there are no common $3 gold pieces, there are no semi-numismatic $3 gold pieces. In contrast, some $20 gold pieces are common, some are rare, and some are ultra-rare, so $20 gold pieces fall into each category, depending on the individual coin.
Another popular semi-numismatic coin is the Swiss 20 Franc gold piece.
This coin is about the size of a United States $5 gold piece, and contains a little less than one-fourth of a troy ounce of gold. It is a real coin; i.e., it was struck for the purpose of circulating as legal tender. It is highly practical in a “Survivalist” portfolio, as it would be much easier to use in making smaller purchases than cutting up a one-ounce coin, should such a scenario ever come to pass. It is an attractive coin of high quality, making it a pleasure to own. It sells for a relatively small premium over the “spot” price of gold, so it offers a great (and far superior) alternative to the “bullion” coins.
Semi-numismatic coins do not offer the best of both worlds, but they offer a significant segment of both worlds, and make a viable investment alternative for certain portfolios.
What is Quality Numismatic Gold?
This is the IRC specialty! This category covers the very finest United States gold coins minted before 1934. These are the third-party certified coins of the highest quality that are hand-picked by the veteran senior numismatists at IRC. These are the coins that are the nucleus (if not the entirety!) of the finest IRC portfolios.
Quality numismatic gold is restricted to Mint State 63 and better US gold coins. This includes high quality $20 St. Gaudens gold coins that were issued from 1907 through 1933, choice hand-picked $20 Liberty gold coins that were minted from 1850 through 1907, attractive $10 Liberty gold pieces that were struck from 1838 through 1907, dazzling $10 Indian gold pieces that were issued from 1907 through 1933, and other beautiful and desirable United States gold rarities. These coins are the performers, the ones with the best track records, the issues with the greatest demand and the smallest supply. These are the coins with potential to burn.
Gold is a soft metal that is highly susceptible to scratches, bumps, digs, and many other impairments. United States gold coins struck prior to 1934 were literally dumped into bags after being struck. They were shipped, stored, and handled numerous times without a single thought about their quality. After all, this was money at the time, and not a valuable collectible. Only a small quantity of these coins survived in top condition. Today, these coins are the prizes of the numismatic world, eagerly s ought by collectors and others who seek only the finest.
Quality numismatic gold encompasses rarity, beauty, and desirability. It is highly collectible, eagerly sought, attractively priced, historically significant, and universally appealing. It is liquid, tangible, and portable. It provides both excitement and peace of mind. It is fun and financially sound.