It’s been a minute since I last wrote to you about collectible gold coins. And with gold having recently hit an all-time high near $2,080 per ounce, now seems a good moment to rectify this.
To catch you up: I am a collector of gold and silver coins. I tend to grab them when I have spare cash floating around. I do so for a few reasons:
- Their history is fascinating.
- They’re miniature pieces of financial art.
- They’re easily transportable.
- And my kids can easily move them from my safe-deposit box to theirs one day.
But perhaps most important is the fact that gold coins are, in most instances, nearly pure gold. To me, they represent the absolute best way to own gold. And I say that because of America’s history…and, sadly, because of America’s future.
Nearly a century ago, in 1933, President Franklin D. Roosevelt confiscated most gold and banned its ownership. It was his way of saving a dollar in distress and on the verge of collapse.
The U.S. dollar up to that point was on the gold standard and Americans could turn dollars into gold at $20.67 per ounce. After seizing gold, the government eliminated conversion and repriced gold at $35 per ounce. Goods that previously cost $20.67 in gold terms, now cost $35.
So, by grabbing all the gold and repricing it higher, FDR shored up the dollar but instantly devalued what it could be buy. And he defaulted on some of America’s debt, which was repayable in gold.
Of course, the average American got screwed. But no one ever said government is for the people and by the people. Or did they?
Anyway, I say “most gold” because some gold escaped Roosevelt’s desperate cash-grab: numismatic gold, i.e., collectible coins. Those coins were spared, meaning people who owned a collection of gold coins saw their wealth immediately rise, protecting them from the dollar devaluation that made goods more expensive overnight.
Jump ahead to now…
America is in a similar position, though too many people don’t recognize it.
U.S. debt is now a teetering Jenga tower of financial distress soon to crumble upon itself. It’s so large—$30 trillion, or $168 trillion if you include unfunded liabilities like Medicare and Social Security—that there is 0% chance Uncle Sam can ever repay it.
At this point it will simply continue to grow ever larger, until…
As I regularly write, I foresee a U.S. dollar/debt crisis by the end of the decade.
Which means I have some concern that the late-2020s going into the 2030s ultimately rhymes with the late-1920s going into the 1930s.
And the question I ask myself is: How does America fix a dollar collapse before it happens?
My bet: An executive order of some sort, possibly late in the next presidential administration, aimed at repairing generations of dollar destruction orchestrated by the sideshow carnival freaks we elect to higher office.
Most likely, the executive order will focus on gold, possibly even bitcoin (though I think bitcoin is more of a global solution to a deeply troubled financial system). The U.S. could very well confiscate private gold bullion once again and reprice it at levels you cannot imagine in order to save the dollar.
But the precedent has already been set: Coins with historical value—collectible gold—would be off-limits. We’d still get to keep those, even as Uncle Sam snaps up regular bullion gold.
And it just so happens that there’s an interesting opportunity in gold coins right now: $20 Liberty Gold Double Eagles (minted in the U.S. in the late-1800s through 1907) and $20 Saint-Gaudens Gold Double Eagles (minted between 1907 and 1933).
As I write this, we can buy those for about 6% over the spot gold price, or about $2,105 when the spot price is $1,980. They usually trade at a premium substantially higher than that.
To be clear, that price is for un-graded, “cleaned” coins…a class of coins that collectors generally shun because, well, the coins have been cleaned and are no longer in their original condition. Graded coins in the MS-62 to MS-64 range, just outside the high-quality collectible range, are in the $2,220 ballpark—still cheap relative to historical premiums. (You can find these coins through any reputable coin dealer, such as Apmex.com.)
Still, if all you want is gold that preserves your wealth and your spending power, and gold that remains a numismatic coin that Uncle Sam isn’t likely to touch, then snapping up these $20 Liberty and $20 Saint-Gaudens right now is a good play.
These two are the most-traded gold coins in the world. When money returns to gold coins (and it always does) it will gravitate at some point to the $20 Liberty and the $20 Saint-Gaudens, and premiums will widen.
Gold has saved collapsing financial systems for thousands of years.
No reason to think that’s suddenly going to change.