2002 American Gold Eagle Proof Set with Original Box

2002 American Gold Eagle Proof Set with Original Box
Photo Credit: APMEX

2002 American Gold Eagle Proof Set with Original Box

Buy It Now Price: $2,882.46 (price as of 2017; item no longer available)

Pros:

-This magnificent, heirloom-quality 2002 American gold eagle proof set comes with its original, satin-lined, U.S. mint-issued packaging and certificate of authenticity.

-American gold eagle proof coins are a specially struck version of the bullion series and are intended exclusively for collectors.  Carefully prepared coin blanks  are hand-fed into a die-press where they are struck a minimum of two times at low speed.  As a result, these proof coins possess a mirror-like background juxtaposed against frosted devices – a highly desirable phenomenon called “cameo proof” by coin collectors.

-This 2002 American gold eagle proof set consists of four pieces totaling 1.85 troy ounces of pure gold – a 1 troy ounce coin with a $50 face value, a 1/2 troy ounce coin with a $25 face value, a 1/4 troy ounce coin with a $10 face value and 1/10 troy ounce coin with a $5 face value.  American gold eagle coins are all U.S. legal tender, although their bullion value far exceeds their face value.

-All American gold eagle coins are struck in solid 22 karat (91.67%) gold.  The other alloying constituents are 5.33% copper and 3.00% silver.  The small addition of silver to the alloy ensures a rich, deep golden color without any reddish overtones from the copper.

-Mintages for the individual coins in the 2002 American gold eagle proof set were very low, ranging from just under 27,000 to around 40,000 pieces.  Although the U.S. mint does not publish the number of proof sets released, we know that it is limited to the lowest mintage coin of the series.  In this case, it is the 2002 1/2 troy ounce American gold eagle proof coin with a population of only 26,464.

-This 2002 American gold eagle proof set comes in its original presentation case.  Unfortunately, many of these proof sets have been removed from their mint-issued boxes and broken up for third-party certification by NGC or PCGS.  Although it isn’t widely recognized yet in the coin collecting community, I feel that original mint packaging will be become increasing desirable in the future.

-All American gold eagle proof coins are eligible for purchase in your precious metal IRA!  The precious metal IRA is one of the only ways for U.S. citizens to legally own tangible assets in their retirement accounts.

-With spot gold currently trading at $1,330.70 a troy ounce, this 2002 American gold eagle proof set contains $2,461.80 worth of gold.  This translates into a premium over spot of about 17.1%, which is very reasonable considering the low mintage for this date in the series.  Therefore, I believe the buy-it-now price of $2,882.46 leaves ample room for future price appreciation.

 

Cons:

-American gold eagle proof coins are significantly more expensive than their bullion counterparts.  You can expect to pay a premium between 3% and 8% over spot for a 1 troy ounce bullion American gold eagle coin versus 17.1% for this 2002 American gold eagle proof set.  However, these proof coins possess substantial numismatic investment potential while their bullion counterparts do not.

The Truth about Offshore Gold Storage

The Truth about Offshore Gold Storage

Foreign investing seems to be all the rage these days.  I am continually bombarded by articles on finance websites emphasizing the necessity of international diversification.   And here’s the thing.  I don’t disagree with these assessments.

International diversification is an important element in any well-balanced investment portfolio.  This can easily be accomplished by purchasing ADRs (American Depositary Receipts) or foreign-focused ETFs (Exchange Traded Funds) and mutual funds.  These securities give exposure to well-established foreign corporations that are operated according to international best practices.

But this isn’t the kind of foreign investing that worries me.  Instead, I want to talk about offshore gold storage.  Precious metal pundits and skeptical financial commentators often advise people to buy and store gold overseas.  Their argument generally goes something like this:

The world’s financial system is incredibly over-levered and unstable.  This will inevitably lead to a currency crisis in the dollar, euro, pound or yen (or even all of them simultaneously).  The financial authorities will invariably respond to this financial panic by instituting capital controls, requiring the purchase of overvalued government bonds in retirement accounts or even seizing financial assets outright.

Notice that the foreign ADRs, ETFs and mutual funds I mentioned above, while claims on foreign cash flows, don’t provide any protection against this scenario.  These paper assets in your brokerage account are easily accessible to desperate governments, should the need arise.  That is why many tangible asset proponents recommend that people protect themselves via offshore gold storage.

However, while I am sympathetic to many of these arguments, the devil is in the details.  The timing, magnitude and propagation of any global financial crisis will have a dramatic impact on its outcome.  Believing yourself to be completely inoculated against financial adversity because of your overseas gold holdings is an investing conceit that most people can ill afford.  Offshore gold storage is not the panacea it purports to be.

Overseas gold storage is usually couched in terms of “escaping” from your home country’s financial system.  Pundits will often recommend that individuals acquire foreign citizenship and passports at the same time, in order to “internationalize” themselves.  Sometimes they will go so far as to advise people make direct investments in foreign real estate or private businesses.

In any case, I am not a fan of being an “international” man.  For one, you must have an incredibly large net worth to make it remotely viable, probably on the order of $10 million or more.  It also presupposes that you can easily blend in with the population of whatever country you’ve chosen as your safe haven.  But the locals will always be able to spot the outsider among themselves.  And, if this immigration occurs in the context of a global financial crisis, those outsiders will not be well received.

But it is the idea of offshore gold storage that I dislike the most.  First, the storage fees for offshore gold storage in a secure vault are often exorbitant, generally ranging from 0.25% to over 1% per annum.  That might not seem like a lot, but it is a recurring annual fee that insidiously eats into your principal.  100 ounces of gold subject to a 1% storage fee will be whittled down to a mere 78 ounces after 25 years.  That is not the kind of return most people are looking for on their tangible investments.

Next, chances are good that you will never actually physically see your gold if it is stored overseas.  In other words, you will pay your money, but your gold may or may not be there.  Obviously, choosing a reputable (and by extension more expensive) custodian for your offshore gold storage will give you a greater assurance that your gold actually resides in the vault you think it does.  But remember this – fancy corporate letterhead and official-looking audits are relatively easy to forge with today’s technology.  Many, many people have been defrauded by bullion storage schemes in the past and I suspect that many more will be over the coming years.

It is also relatively common for precious metal dealers and banks to warehouse gold in what is called “unallocated” or “unsegregated” storage.  This is when a financial institution promises to give you your gold on demand.  But there might not actually be much, or any, gold in their vaults most of the time.  Holders of unallocated gold deposits are, in effect, unsecured creditors of a financial institution in the event of default or insolvency.

“Allocated” or “segregated” offshore gold storage, where specific gold bars with individually recorded serial numbers are stored in a vault, while safer, is still not without its risks.  Fraud and inside jobs are omnipresent dangers in such situations.  Even staid central banks have been accused of surreptitiously loaning out their nations’ gold reserves to achieve shady policy goals!  The bottom line is that if you can’t physically hold your gold, you don’t own it.

Finally, if there is ever a global financial crisis of epic proportions, the ostensibly politically stable countries with large amounts of offshore gold storage – Switzerland, Singapore, Hong Kong, Australia and the U.K. – will be sorely tempted to nationalize all that treasure.  This temptation will be even more acute if the country in question is suffering from a severe currency crisis.  All those precious gold bars neatly stacked in secure vaults would go a long way to quelling a country’s financial panic and restoring prosperity.  Yes, there would presumably be international diplomatic repercussions, but it just may be worth it, depending on the severity of the financial crisis.  This may not be a likely scenario, but I think it is one that can’t be discounted entirely, either.

Now, I don’t believe offshore gold storage is completely useless.  If you have a net worth of tens or hundreds of millions of dollars, there might be some value in keeping a million or two of gold bars in a Swiss vault deep underground.  But for the average investor, or even most well-heeled investors, offshore gold storage is just too expensive and carries too many risks.

This is why I advocate keeping your tangible investments local.  As the old adage goes, possession is 9/10ths of the law.  And while precious metals are great investments, other tangible assets, like art and antiques are also great diversifiers.  There is nothing quite like holding a sparkling old mine cut diamond or an ultra-rare French piedfort coin in your hand to remind you what true wealth is.

How Precious Metal Stacking Saved Coin Collecting

How Precious Metal Stacking Saved Coin Collecting

The last time before the present that coin collecting was popular in the U.S. was in the mid to late 1960s.  This mid-century renaissance in numismatics was primarily driven by the impending abandonment of silver in circulating coinage.  For over 125 years, the U.S. mint had used a traditional alloy of 90% silver and 10% copper for nearly all of America’s circulating silver coinage.

However, due to the Kennedy administration’s involvement in the Vietnam conflict and the subsequent inflationary “guns and butter” policy of president Linden B. Johnson, the government began over-issuing currency.  This inflation naturally led the price of silver to rise in the global market.  By the mid 1960s, it had become apparent that the U.S. government would need to replace the silver used in circulating coins before the intrinsic (bullion) value of the pieces exceeded their face value.

This development in U.S. coinage policy cultivated intense interest among the public.  One side effect was the increased popularity of coin collecting, particularly among younger people.  Although it was the twilight of circulating silver coinage in the U.S., it was a golden age for casual coin collectors.

During this period it was still possible to find desirable and rare coins in pocket change.  In addition, iconic older coin designs such as Mercury dimes, Standing Liberty quarters and Walking Liberty half dollars still circulated side by side with more contemporary Roosevelt dimes, Washington quarters and Franklin/Kennedy half dollars.  Children and adolescents everywhere happily sifted through rolls of coins, looking for better date examples to save.

Gresham’s Law states that “bad money drives out good money”.  Consistent with this ironclad economic rule, valuable silver coinage began to be pulled from circulation and hoarded by the mid 1960s.  Coin collectors were blamed as the scapegoat for the resulting shortage of circulating coins, even though it was the government’s short-sighted inflationary policies that had driven up the price of silver in the first place.

Finally, in 1964, Montana senator Lee Metcalf sponsored legislation that temporarily froze the date on U.S. coins and eliminated mint marks in a misguided attempt to make them unpalatable to collectors.  As a result, even though they were dated 1964, the last circulating 90% silver coins were actually struck by the U.S. mint in 1966.  During this same period, the U.S. government also introduced our current, execrable copper-nickel clad coinage.

Although it took a few years, silver coinage inexorably disappeared from circulation.  Once it became impossible to find good collector’s pieces in circulation anymore, interest in coin collecting gradually faded among younger generations.  Although coin collecting was still popular in the 1970s and 1980s, the hobby was a shadow of its 1960s golden age.

By the 1990s, coin collecting had fallen on hard times.  A bubble in third-party certified, or “slabbed” coins in the late 1980s had burst, devastating average collectors who had been sucked into it.  At the same time, high quality, rare date coins from the 19th and early 20th century relentlessly rose in value, pricing collectors of modest means out of the high end of the market.

This unfortunate state of affairs only worsened in the early 2000s.  By this time, the traditional hobby of coin collecting was clearly dying.  The existing collector base was rapidly aging, most having started collecting during their childhood in the golden age of the 1960s.  But there were almost no young coin collectors coming into the hobby to replace their graying ranks.  This was at least partially due to the fact that, since the late 1960s, it was impossible to find desirable coins in circulation.

I got my start in coin collecting in the late 1980s and early 1990s.  And I did so primarily by searching through rolls of half dollars and nickels for the odd, overlooked silver coin.  Even back then, it was no easy task.  Gresham’s law had done its wicked work all too well over the decades.  I did find a few silver pieces though – just enough to keep me coming back for more.

My entrance into the hobby of coin collecting was only possible because of the low prices of gold and silver during that time.  However, in my opinion, the days of sifting through rolls of circulating coinage from your local bank in order to pick out a handful of worn silver specimens ended about 15 years ago.  By the mid 2000s precious metals began to skyrocket in value, thus depriving aspiring young collectors of even this meager avenue of participation.  It looked like the hobby of coin collecting was destined for extinction.

But then a funny thing happened.  Precious metal stacking, the name given to systematically buying physical gold or silver bullion for investment purposes, came to the rescue.  In fact, I don’t think it would be an exaggeration to say that precious metal stacking literally saved the hobby of coin collecting.

Precious metal stacking is the purchase of gold and silver purely for bullion purposes.  But, a significant number of stackers inevitably became interested in the numismatic aspects of bullion coins issued by governments.  This might sound like a contradiction, but some modern, government-issued bullion coins, with their beautiful designs and near-perfect strikes, really do possess great numismatic potential.

It is a short step from precious metal stacking to searching for semi-numismatic, certified MS-70 examples of American Silver Eagles or Australian Gold Kangaroos.  From there, new collectors can branch out in many different directions.  Some gravitate toward older proof coins with their deep mirror finishes and historical importance.  Others look back to the classic early 20th century circulating U.S. coinage that inspired many of today’s most popular bullion coin designs.  Some branch into foreign coin collecting, drawn there by the plethora of attractive modern bullion coins struck by foreign governments.  A few even look further back in time to the origins of coinage in medieval and ancient coins.

Precious metal stacking has completely revived the coin collecting industry.  Not long ago, numismatics was a slowly dying hobby dominated by older collectors who were chasing the coins they fondly remembered from their youth.  Now it bustles with the activity of thousands of new precious metal stackers using gorgeous modern bullion issues as their gateway to further numismatic adventures.  No, coin collecting today is not the same as it was in the 1960s, but it is still here and vibrant, thanks to precious metal stacking.

Contemporary Drypoint Print Titled “Five Snails” by Mariko Kuzumi

Contemporary Drypoint Print Titled "Five Snails" by Mariko Kuzumi
Photo Credit: PrintsbyMariko

Contemporary Drypoint Print Titled “Five Snails” by Mariko Kuzumi

Asking Price: $200 (price as of 2017; item no longer available)

Pros:

-This is a simple, yet alluring contemporary drypoint print titled “Five Snails” by the New York artist Mariko Kuzumi.  It was made in 2011 using BFK Rives paper – a premium, acid-free, 100% cotton print-making paper imported from France.

-Drypoint is an etching technique where copper, zinc, Plexiglas or acetate plates are engraved using a sharp, needle-like implement.  The resulting etched plates are then inked and used to make prints.

-Mariko Kuzumi used two different zinc plates to make this contemporary drypoint print – one for primary subject matter of the snails and a second for the foreground grass.

–Mariko Kuzumi was originally born in Japan, but immigrated to the United States with her family at age 14.  She later attended the prestigious Rhode Island School of Design, where she earned a BFA and BARCH degrees.  Her work has been exhibited extensively in the New York City area.

-Drypoint etched plates are very fragile.  Because of this they are only able to produce a very limited run of prints, often no more than a few dozen.  With this particular contemporary drypoint print, only a single copy has been made.  The “Five Snails” print is a unique work, a factor that will positively impact its future investment performance.

-I love the use of color and line in this contemporary drypoint print.  The snails form an arcing splash of color that naturally beckons the viewer’s gaze to sweep across the piece.  The loose, almost jittery art style lends the work a welcome sense of natural energy and vitality.  And the brightly colored snail shells add a refreshing vibrance to the otherwise monochromatic print.

-A lot of contemporary art has a reputation for being intellectually inaccessible or just plain ugly.  However, this contemporary drypoint print by Mariko Kuzumi bucks the trend.  It packages the best elements of contemporary art into a work that, while slightly abstracted, is still visually appealing and completely approachable.

-Considering this print’s appealing artistic style, premium materials and the fact that it is one-of-a-kind, I believe the asking price of $200 is easily justified.  It is also important to keep in mind that good art is invariably more expensive to produce than the layman would suspect.

 

Cons:

-Mariko Kuzumi’s “Five Snails” print only measures 10.5 inches (26.7 cm) wide by 4.5 inches (11.4 cm) tall, making it a rather small work.  Given its modest size, this contemporary drypoint print will never be appropriate for hanging over a sofa or fireplace.  However, it would still look stunning in a more intimate space like a bathroom, foyer or perhaps a bedroom.

-This work comes unframed.  If you actually want to display it, you will need to spend an additional $75 to $150 to have it properly framed with an acid-free mat and UV-filter glass.  This will drive up the total cost of the print to a range of perhaps $275 to $350.