Pre-1933 semi-numismatic U.S. gold coins – like this 1904 Liberty Head quarter eagle ($2.50) gold piece struck in Philadelphia – are compelling investments that combine intrinsic and collector’s value. Premiums on semi-numismatic U.S. gold have collapsed in recent years, granting hard asset investors a unique opportunity to acquire these premiere tangible assets cheaply.
Choice, the presence of good options in one’s life, is a great thing. It can give you a sense of freedom as well as control. Unfortunately, many of us today have fewer good options than we might prefer. This is particularly the case when investing. Among the traditional investment classes, many stocks seem egregiously overvalued while most bonds don’t seem much better. However, there is one overlooked investment that is still a great choice: old, semi-numismatic U.S. gold coins.
Numismatics derives from the ancient Greek word for “coin” and refers to the study or collecting of coins. Therefore, numismatic coins, unlike common circulating pocket change, are pieces with special value to collectors. Semi-numismatic coins, therefore, trade partially on their bullion value and partially on their collector’s value, including their condition, design and history.
All semi-numismatic U.S. gold coins were struck at least 85 years ago, before 1933, when the United States was still on a classical gold standard. These beautiful and historic tangible investments feature some of the most aesthetically pleasing coin designs the U.S. has ever issued. Perhaps most importantly, semi-numismatic U.S. gold coins are the material expression of frontier America’s industry, invention and optimism. In short, they are the physical embodiment of traditional Americana stamped into solid gold.
Struck in 900 fine gold, these high denomination coins not only circulated freely in the Old West and the Great Plains, but also in the big East Coast cities like Boston, Washington D.C. and New York. In addition, many dates and denominations were minted in substantial quantities, ensuring a significant number have survived to the present. This is a great boon to modern-day tangible asset investors as it ensures there is a ready supply of these remarkable old coins available.
It is vital to understand the concept of premium when discussing semi-numismatic gold coins. The term “premium” refers to the amount over its bullion value that a coin sells for.
$5.00 Liberty Head (Half Eagle) Gold Coins for Sale on eBay
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South African Krugerrands, Canadian Maple Leafs and other bullion coins generally sell for premiums of less than 10%. But a 2,300 year old ancient Greek gold stater coin bearing the image of Alexander the Great is a strictly numismatic piece, with a premium of several hundred percent or more. Pre-1933 semi-numismatic U.S. gold coins trade between these two extremes with premiums that range from about 10% to around 100% of their bullion value.
This exceptional positioning makes old U.S. gold coins especially attractive investments. When you buy a semi-numismatic gold coin, most of what you are buying is gold, the bedrock of any good tangible asset portfolio. But semi-numismatic gold coins also include a modest dose of collector’s value, which is reflected in the premium.
These two components – bullion value and numismatic value – do not always move in lockstep. This gives semi-numismatic gold coins two distinct, non-correlated return components. Non-correlated assets are the holy grail of modern investment theory, as they provide diversification.
Worried about gold declining in value? No problem, the numismatic value of your coin may rise to offset a drop in the gold price. Likewise, a falling numismatic premium may be balanced by a rise in precious metal prices. In the best case scenario, you “win” twice via a rising gold price and rising premiums. Of course, in a worst case scenario both the bullion value and numismatic premium of an old gold coin can decline. Thankfully, this is a very rare occurrence.
$10.00 Indian Head (Eagle) Gold Coins for Sale on eBay
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It is important to point out that semi-numismatic U.S. gold coins have underperformed gold bullion over the last 15 years or so. Why has this happened? Well, the price of bullion is generally driven by economic instability and fear of currency debasement. And the last 15 years has seen a lot of both of those things with the Great Financial Crisis of 2008-2009 and global central banks’ subsequent policy of Quantitative Easing (money printing). Hence, the price of gold has risen strongly over that period.
Numismatic premiums, in contrast, are driven largely by strong economic growth and a booming economy. In fact, there is a direct relationship between the size of a country’s GDP and its coin prices. When a country’s economy is healthy and incomes rise, some of that wealth naturally bids up the value of collector’s coin. Therefore, it shouldn’t come as a shock that the recently stagnate U.S. economy has been reflected in broadly lower premiums for semi-numismatic U.S. gold coins.
Investors shouldn’t buy numismatic coins in anticipation of the end of the financial world. Instead, numismatics is a play on financial recovery – the economic dawn after the recessionary night. And while I strongly advocate that people buy bullion to protect themselves against severe economic dislocation, I also think it is prudent to invest in numismatics in the expectation of happier and more prosperous times in the future. Old semi-numismatic U.S. gold coins conveniently allow the savvy investor to do both in a single investment vehicle.
Some people, primarily bullion and rare coin dealers, don’t like semi-numismatic gold coins. You can read many internet articles by bullion dealers decrying how well-intentioned, but ignorant investors got scammed into paying outrageously high prices for old, common-date U.S. gold coins when they could have done much better just buying plain, no-frills gold bullion.
Of course, if you’re scammed into overpaying for any investment, you can expect to do poorly. So this is hardly a convincing argument.
$20.00 Liberty Head (Double Eagle) Gold Coins for Sale on eBay
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But bullion dealers also have another objection which is partially valid. They correctly claim that you will always be able to buy more ounces of physical gold for a given amount of money when buying bullion coins compared to semi-numismatic gold coins. But this criticism misses the point.
The numismatic premium that you pay for old gold coins is a potential source of future return. The premium level has the possibility of moving independently from the underlying price of gold. This gives rise to a financial idea known as optionality. In brief, numismatic optionality is the potential for a collector’s coin to rapidly increase in value at some indeterminate point in the future. An ingot of gold bullion, in contrast, possesses no numismatic optionality and is always completely dependent on the whims of the gold price.
Rare coin dealers also often criticize semi-numismatic gold coins. These self-interested dealers claim that only really rare gold coins make good investments. Semi-numismatic U.S. gold coins are relatively common, having been struck by the tens of millions. And, although huge quantities have been melted since their demonetization in the 1930s, these coins are still readily available in the marketplace.
Rare coin dealers’ assertion that only extremely rare and expensive coins make good investments is mostly based on the fact that this same class of coins has experienced superb investment performance over the last 20 years. But these abnormally high returns have been largely driven by the rise of the super rich over the same time period – our modern day robber baron class. These nouveau riche U.S. gold coin collectors have collectively poured hundreds of millions, if not billions, of dollars into their collecting passion.
$5.00 Indian Head (Half Eagle) Gold Coins for Sale on eBay
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This insatiable market demand has driven up the prices of legitimately rare U.S. gold coins to tremendous heights. In fact, it is doubtful if much investment upside remains in this part of the U.S. coin market. However, old semi-numismatic U.S. gold coins have been largely left behind, ignored in the rush to cater to bullion buyers on the one side and ultra-wealthy collectors on the other.
The historical origins of pre-1933 semi-numismatic U.S. gold coins add to their investment allure. In the late 1830s, the designs of the U.S. $2.50, $5.00 and $10.00 gold coins were updated by Christian Gobrecht, the Chief Engraver of the U.S. Mint. These iconic American coins, known as the Liberty Head series, feature a bust of the personification of Liberty wearing a coronet on the obverse. An eagle clutching an olive branch and bundle of arrows with its wings spread graces the reverse.
The Liberty Head series of U.S. gold coins were minted with only minor variations for approximately 70 years, from 1838 to 1908. These coins were, in many ways, foundational to the identity of the young American nation. They were witness to every major episode of U.S. history during this time, from the devastation of the Civil War to the taming of the Old West to the establishment of the National Park System.
Until the late 1840s the gold eagle, or $10.00 gold coin, was the highest denomination piece struck by the United States Mint. However, the discovery of a major gold find in California in 1848 prompted the U.S. government to investigate the striking of an even larger denomination gold coin, the legendary double eagle, or $20.00 piece. A unique Liberty Head design was created by Chief Engraver James B. Longacre for the new double eagle denomination and introduced into circulation in 1850. It was issued with few changes until its discontinuation in 1907.
$10.00 Liberty Head (Eagle) Gold Coins for Sale on eBay
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In the first decade of the 20th century, President Theodore Roosevelt wanted the nation to have gold coins that would rival the magnificent coinage of the ancient Greeks. To achieve this, he contracted the famous American sculpture Augustus Saint-Gaudens to prepare new coin designs. While Saint-Gaudens died before he could finish his work, his breathtaking designs were still adopted for the $10.00 and $20.00 gold coins.
The $10.00 Indian Head gold piece features the bust of a noble American Indian with a feathered headdress on the obverse and a perched eagle on the reverse. The $20.00 St. Gaudens double eagle depicts a robed Liberty, holding an olive branch and a torch, boldly stepping forward on the coin’s obverse and a majestic, powerful eagle in flight on the reverse. Struck from 1907 to 1933, these two gold coins are generally considered the most beautiful U.S. coins ever produced.
In fact, the obverse of the modern-day U.S. mint’s popular American Gold Eagle bullion coin series is almost an exact copy of the iconic St. Gauden’s design.
Due to the premature death of Augustus Saint-Gaudens, the $2.50 and $5.00 gold coins were redesigned by his former student, the American sculptor Bela Lyon Pratt. These two series are similar in design, although not identical, to the $10.00 gold coin created by Augustus Saint-Gaudens. The $2.50 and $5.00 Indian Head gold coins feature a Native American in full headdress on the obverse and a perched eagle on the reverse.
In addition to being attractive in their own right, the $2.50 quarter eagle and $5.00 half eagle Indian Head series are notable for being the only U.S. coins that were struck in incuse, with the design features sunk into the flat field of the coin. They were struck from 1908 until production ceased in 1929.
$2.50 Indian Head (Quarter Eagle) Gold Coins for Sale on eBay
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When considering pre-1933 semi-numismatic U.S. gold coins for investment purposes, eye appeal is paramount. Anything that helps make a coin look better is desirable, including attractive toning, a full strike and a minimum of ugly contact marks. However, condition is perhaps the most important characteristic.
Serious investors should only acquire specimens that grade Extra Fine (XF-40) or better in condition. This will help guarantee maximum eye appeal by ensuring that most of the coin’s details are intact. But this rule can be relaxed under certain circumstances, such as when dealing with less common, pre-Civil War dates and mints.
You can quickly enter full numismatic territory here though, so be careful.
Some collectors will not consider semi-numismatic U.S. gold coins unless they are in uncirculated (MS-60) condition or better. I don’t personally believe semi-numismatic gold must be in uncirculated condition to be investable. However, if you do choose to purchase uncirculated coins, you may want to consider pieces certified by a third party grading service.
The two most popular grading services for coins are PCGS (Professional Coin Grading Service) and NGC (Numismatic Guaranty Corporation). These companies authenticate, grade and then encapsulate coins in tough, clear plastic holders called slabs. This allows coin collecting and investing novices to buy and sell these slabbed coins with confidence.
$20.00 St. Gaudens (Double Eagle) Gold Coins for Sale on eBay
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Anything that detracts from the beauty of a coin should be avoided. This advice is especially important for common-date semi-numismatic U.S. gold coins, as they can’t rely on rarity to enhance their appeal. Unattractively toned, weakly struck or harshly cleaned specimens should all be eschewed. Any sort of significant damage, such as major rim bumps, scuffs or scratches, is also unacceptable. You want to buy clean, problem free gold coins.
You should also beware of unscrupulous coin dealers or telemarketers that may try to sell semi-numismatic gold coins at extravagant mark-ups. They usually target those with little collecting knowledge. Do not fall prey to these scam artists. Nothing cripples the long-term performance of an investment more than overpaying.
As of mid 2018, with spot gold trading at around $1,270, prices range from just under $250 for $2.50 quarter eagles to around $1,400 or $1,500 for $20.00 double eagles. However, it is important to note that the prices of semi-numismatic U.S. gold coins fluctuate with any sizable movement in the price of gold.
If you are looking for maximum exposure to gold and minimum numismatic exposure, larger gold coins like the $10.00 Liberty Head, $20.00 Liberty Head or $20.00 St. Gaudens series are your best options. These coins currently have premiums that range from a modest 10% to 20% in the marketplace.
The $5.00 Liberty Head, $5.00 Indian Head and $10.00 Indian Head coins will give you a slightly higher exposure to numismatic value. These semi-numismatic coins have premiums between 15% and 35% right now.
$2.50 Liberty Head (Quarter Eagle) Gold Coins for Sale on eBay
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The Liberty Head and Indian Head $2.50 gold coins have the highest premiums among U.S. semi-numismatic gold coins, hovering around 80% at the moment. This gives quarter eagles an almost even split between bullion and numismatic value. These smaller gold pieces tend to have rather low mintages compared to the larger denominations and, in my opinion, represent exceptional value at this time.
I’ve compiled a table that shows the premiums on pre-1933 semi-numismatic U.S. gold coins as of the summer of 2018 below. This data was compiled using realized eBay sold prices for lightly circulated specimens; uncirculated examples would cost more. The gold price used in the calculations is $1,310 per troy ounce.
| Gold | Average | ||||
| Content | Bullion | eBay | Premium | Premium | |
| Denomination | (in troy oz.) | Value | Price | (in %) | (in $) |
| $2.5 Liberty | 0.12094 | $158 | $297 | 87% | $139 |
| $2.5 Indian | 0.12094 | $158 | $280 | 77% | $122 |
| $5 Liberty | 0.24187 | $317 | $375 | 18% | $58 |
| $5 Indian | 0.24187 | $317 | $415 | 31% | $98 |
| $10 Liberty | 0.48375 | $634 | $719 | 13% | $85 |
| $10 Indian | 0.48375 | $634 | $772 | 22% | $138 |
| $20 Liberty | 0.96750 | $1,267 | $1,422 | 12% | $155 |
| $20 St. Gaudens | 0.96750 | $1,267 | $1,450 | 14% | $183 |
The world may not be giving us as many good options as we would like, but there is at least one good investment option left to us – pre-1933 semi-numismatic U.S. gold coins. These overlooked pieces of historic Americana represent great value in an otherwise lackluster investment landscape.
Read more in-depth Antique Sage rare coin investment guides here.
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