What is causing the current high premium on pre-33 gold?

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In 2017 and 2018, I recall hearing that you could purchase pre-33 gold coins in decent condition either below the spot price or slightly above it. Does anyone have insight into why the prices have experienced such a dramatic increase, resulting in premiums of 20% to 40%? Additionally, what could be considered a reasonable premium for pre-33 gold coins at the present moment? Thank you for reading.

I’m uncertain about acquiring them below the spot price, but I used to regularly buy ungraded pre-33 common date gold coins at or near the spot price when paying in cash. I’m not sure what has caused the recent price surge, but it does seem excessive. I also remember my dealer offering me a great deal on an Indian half eagle, mentioning that no one was paying above spot for them at the time. This was in 2016. He even said that I could take the coin out of its bag and hammer on it, and it would still hold its value for us. This is an important consideration if you plan to sell in the short term, as you might only receive the spot price for pre-33 gold unless you find a private buyer.

Do you believe a 20% premium is high for circulated pre-33 gold coins?

What would you consider a reasonable premium for these coins? It seems that larger denominations, such as $20 Liberty and Saint-Gaudens, are currently available with relatively low premiums, almost at a decade low. Smaller coins, on the other hand, tend to cost less but come with higher premiums. In my experience with pre-33 gold, the premiums for smaller denominations like $1 and $2.50 are exceptionally high, while $5 coins also command a significant premium. However, when selling them back, they tend to fetch close to their melt value. Additionally, there are concerns about the grades and condition of pre-33 US gold coins, particularly regarding cleaning and handling over the years. In contrast, foreign gold coins like French or Swiss 20 Francs and British Sovereigns typically have lower premiums (around 3-4% or less) and are widely recognized for their purity and weight.

Consider old foreign gold coins to help manage and maintain reasonable premiums.

If you’re limited in terms of purchase size, you might want to consider these foreign gold coins to keep premiums reasonable. Netherlands 10 guilders are another option with a relatively low premium, slightly more gold content than Swiss 20 Francs. However, if you prefer the $5 Liberty Head pre-33 gold coins, you may still find reasonable premiums, especially for cleaned examples.

Indian Liberty coins in $5 and $10 denominations, as well as the $20 Saint-Gaudens, can also be appealing choices. Unslabbed pre-33 gold coins are primarily suitable for stacking, and you can often find them at local shows with relatively low premiums (3-4% or less). However, slabbed coins by NGC or PCGS provide authenticity guarantees, which can be important for gold coins. To potentially enjoy some numismatic upside potential, focus on finding MS64 or higher graded coins with exceptional luster and the characteristic orange color. These coins may offer better long-term prospects, unless your primary goal is to invest in the metal itself.

Are you interested in collecting for numismatic value or for the bullion value?

For collectors, getting a Napoleon franc, whether graded or not, from a reputable online seller like APMEX, JM Bullion, or Provident can be a cool addition to your collection. And for bullion purposes, Europeans gold coins offer several great options, including the 20 Mark coins from the Kaiser Reich era, as well as Roosters, Helvetias, and Sovereigns. There are numerous varieties available, often with only a small premium, if you’re looking for variety in your collection.

Some of the major players occasionally have pre-1933 coins for sale on eBay. However, be cautious, as some of these deals may involve “cleaned” coins. If you prefer to buy graded coins, aim for PCGS-64 or higher to ensure you receive a well-preserved coin with authentication. If you’re looking strictly for gold content, buying raw coins on eBay can be risky, as some buyers have received coins in poor condition. PCGS-64 coins are a safer bet for obtaining a quality coin that hasn’t been significantly damaged and is authenticated.

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