Doug Winter on Lower Grade Gold...

[FishyOne]

...in case you haven't seen this yet, it's an interesting article.

 

CoinWeek article

[jom]

Good article but he doesn't really say why you shouldn't collected lower graded gold other than the very rare pieces.

 

jom

[coinman_23885]

Good article but he doesn't really say why you shouldn't collected lower graded gold other than the very rare pieces.

 

jom

 

The answer is because of liquidity. The number of interested collectors drops off sharply below EF-40 and the collector base is rare/almost non-existent below VF-20.

[brg5658]

Good article but he doesn't really say why you shouldn't collected lower graded gold other than the very rare pieces.

 

jom

 

The answer is because of liquidity. The number of interested collectors drops off sharply below EF-40 and the collector base is rare/almost non-existent below VF-20.

 

Yes, that's why you shouldn't INVEST in low grade gold. It's not a reason for why you shouldn't COLLECT lower graded gold.

[coinman_23885]

Good article but he doesn't really say why you shouldn't collected lower graded gold other than the very rare pieces.

 

jom

 

The answer is because of liquidity. The number of interested collectors drops off sharply below EF-40 and the collector base is rare/almost non-existent below VF-20.

 

Yes, that's why you shouldn't INVEST in low grade gold. It's not a reason for why you shouldn't COLLECT lower graded gold.

 

I think it is relevant to collecting too. Collectors do upgrade from time to time, and assuming finite resources, the collector must allocate them efficiently. This requires careful planning or else the collector may be stuck with a duplicate and a reduced pool of funds that could be used for other coins.

[RWB]

The entry cost of collecting gold has always been high for typical collectors. Also, the Mint routinely removed heavily worn god coins from commerce so that the intrinsic value of circulating pieces could be maintained.

 

As mentioned above, buying low grade gold might reduce the entry cost, but as a collection matures, there is the desire to up-grade. That is when low-grade gold becomes a problem to sell at even a modest profit. A further point is that most collectors like to have uniform sets or groups of coins. A low grade piece sticks out among an otherwise EF set of half eagles or eagles.

 

Overall, I feel it’s better to buy the best quality you can afford, and to save and consolidate your funds toward purchasing a really nice example of a scarce date, not a low-ball piece.

 

[brg5658]

Both of the replies Kenny and Roger give are ultimately related to investment and recouping your initial purchase price upon selling. Neither are arguments as to why someone should not collect gold coins at whatever level they want to.

 

I don't collect gold at all. I'm just playing devil's advocate here a bit.

 

Reading an article about how everyone should collect gold from a dealer in high grade gold comes across to me about the same as reading a book about why buying a new car is better then a used car written by a car salesman.

 

[DaveG]

I wouldn't deny that there may be a certain amount of self-interest in DW's (former) advice to stay away from lower-grade gold.

 

Speaking from personal experience, however, sometimes it's a bit difficult to sell lower-grade or problem gold without losing money - unless the price of gold has gone up a lot since purchase, of course.

 

 

edited to add: In DW's defense, he (and dealers like him) do provide a lot of liquidity to the rare gold marketplace, so it makes a lot of sense to buy the kind of coins he sells, so that, when one decides to sell, there are some ready buyers.

[coinman_23885]

I don't collect gold at all. I'm just playing devil's advocate here a bit.

 

Reading an article about how everyone should collect gold from a dealer in high grade gold comes across to me about the same as reading a book about why buying a new car is better then a used car written by a car salesman.

 

Doug Winter is intellectually honest, and I do not think potential sales/profit influenced his motivations or the piece itself. I do collect gold and his observations are spot on.

[wdrob]

Speaking from personal experience, however, sometimes it's a bit difficult to sell lower-grade or problem gold without losing money - unless the price of gold has gone up a lot since purchase, of course.

 

I agree completely and ran into that very same experience recently. I had a Type 1 $1 Gold Coin that had a few scratches on the obverse and reverse. They were not scratches from improperly cleaning though and the TPG had net graded that piece to AU58 when the details were, in my opinion, worthy of a 61 or 62. I thought .... no problem. At least it came back in a problem free slab.

 

The FMV for that coin was around $365.00 to $425.00. I played hell trying to sell that piece by accurately describing it and couldn't get a bite, just watchers at $300.00. Dropped to $275.00 .... same thing ... no bites just watchers. It wasn't until I dropped it to $250,00 that I finally got a bid or two.

 

I was hoping for a bidding war between the two at the end but that war only became a police action and I gained another $10.00 ... Sold for $260.00. $165.00 below FMV.

 

I am planning on being more selective in the future as to what Gold I buy.

 

[BillJones]

Sorry, but low grade gold has never done much for me. I know it sounds snobby, but for the most part I tend to avoid gold pieces that grade less than AU-55, and I don't have anything in my collection that is less than EF-45. The EF coins are a couple of issues of Charlotte mint gold dollars that were made ugly. After looking at some higher grade, MUCH higher priced examples of these dates, I bought the EF coins because from the eye appeal perspective it made economic sense. If they are almost all unattractive, why pay more for "ugly?"

 

I suppose if you need to fill a spot in your collection that you really want to fill, buying a low grade piece is okay, if you are happy with it. In fact the Carson City half eagle that Doug showed was attractive in its own way. BUT my attitude is if I can't afford to buy something that looks decent of a certain rare issue, I'd rather do without it. That's why it took me over 20 years to finally buy a 1796 half dollar, which was one coin I needed to fill my half cent to non silver dollar type set. I just wouldn't pay $8,000 for a thing in Fair-2 with a hole in it.

[Conder101]

The FMV for that coin was around $365.00 to $425.00. I played hell trying to sell that piece by accurately describing it and couldn't get a bite, just watchers at $300.00. Dropped to $275.00 .... same thing ... no bites just watchers. It wasn't until I dropped it to $250,00 that I finally got a bid or two.

 

I was hoping for a bidding war between the two at the end but that war only became a police action and I gained another $10.00 ... Sold for $260.00. $165.00 below FMV.

What this says to me is that the true FMV probably wasn't anywhere close to $365

[wdrob]

What this says to me is that the true FMV probably wasn't anywhere close to $365

 

Maybe so. I am with the understanding that the value listed either through NGC's price guide or PCGS's price guide are what is considered FMV. I may have that completely wrong.

 

Either way I pretty much just broke even on that sell. I have been much more selective in the Gold that I have bought since that coin.

 

 

[Nutmeg Coin]

A coin shop worker had a type I $20 a little while ago and asked my opinion on whether it, a decent VF, should be certified even though it was a relatively common s mint coin. I said probably not, he had paid a bit over spot, I showed him GS and then spoke with a dealer who offered around $1700 for the coin. So even though it was a well worn gold coin, and had decent surfaces, was worth a stiff premium.

 

Mr. Winter focused in on the well known and highly popular "cc" lower denom. gold 1870 coin; I would think it would be an anomaly in such an argument, but when he, EF Hutton and Mr. Albanese speak, eveyone listens.

 

Coins that are well circulated and are undamaged or uncleaned, are great coins to buy at the right price. Mr. Albanese has recommended Bust coins in grades XF and above, preferably CAC stickered, but definitely certified.

[slingshot-migration]

I am sure your coin expertise far exceeds mine. I am surprised Mr. Winters

 

just recently came to the conclusion that rare low grade coins sell! I suspect my

 

marketing expertise exceeds Mr. Winters in that any car dealer knows some

 

customers purchase chevette's and others buy corvette's. I am not a car

 

salesman. Several factors play into this most commonly how much one can

 

afford and what they are comfortable in. Good luck Mr. Winter's. I don't

 

mean to be condescending simply enlightening to some.

[johnny9434]

I like the part of buying what you can afford. I agree and like that article

[DirtyGoldMan]

I am a big fan of circulated gold coins, including lower grade issues. I was the buyer of the 1865-S $10 of which he makes reference in the article.

 

Musing specifically about that coin, it was struck near the end of the Civil War on the west coast, circulated heavily for some time, was pulled from circulation, did NOT get melted in 1933 unlike many circulated gold coins, presumably bounced from collector to collector, and ended up in my complete collection of 1865-S gold coins.

 

What stories could the coin tell of its life and times? What were the odds of it surviving? How did it get its unusual overdate?

 

It is exactly this intersection of history, romance, and scarcity that makes me a coin collector.

 

[FishyOne]

I am a big fan of circulated gold coins, including lower grade issues. I was the buyer of the 1865-S $10 of which he makes reference in the article.

 

Musing specifically about that coin, it was struck near the end of the Civil War on the west coast, circulated heavily for some time, was pulled from circulation, did NOT get melted in 1933 unlike many circulated gold coins, presumably bounced from collector to collector, and ended up in my complete collection of 1865-S gold coins.

 

What stories could the coin tell of its life and times? What were the odds of it surviving? How did it get its unusual overdate?

 

It is exactly this intersection of history, romance, and scarcity that makes me a coin collector.

 

 

Very nice piece of history. Thank you for sharing.

[coinman_23885]

 

This is one of the nicest VG8 gold coins I have seen. Usually they don't look this nice. The surfaces are decent, and I love the color.

[Hard Times]

Below is the kind of example DW and Dirty Gold is talking about, rare, desirable for many reasons, but lower grade than what Bill Jones and folks are talking about. Once has to pay a premium for something like this but will go for a premium when ready to sell.

 

Best, HT

 

[RWB]

Re: 1865-S eagle.

 

The "house cleaning" of worn gold on the west coast began before WW-I. The government wanted to get sub-standard coins out of circulation because banks were refusing to accept them. This caused trade disruption and complaints. There was considerable debate in Treasury about whether to pay face value or gold weight value. By paying face, and then melting the worn, light weight coins, the government lost about $750,000, but this was done to maintain the integrity of circulating gold.

 

[DaveG]

Actually, the re-deposit of of even fairly lightly worn coins was taken very seriously by bankers and bullion shippers in the latter half of the 19th century.

 

Because the dollar was defined as a specific weight of gold, creditors were very careful to be paid in full-weight coins - which is one of the reasons that gold bars were preferred for export; they suffered less abrasion in transit.

 

The post-Civil War Mint Annual Reports reported the amount of "mutilated or abraded" US gold coins that were deposited for re-coinage; some years its was a considerable amount.

[DirtyGoldMan]

Here's another...

 

[FishyOne]

@ DGM: Is your 1841-D the same as this one: HA.com

 

If so, did it cross at the same grade? It seemed a touch over-graded in the ANACS holder didn't it?

[RWB]

Dave is correct - recoinage of underweight gold was a continuing activity. I was referring to a special Treasury effort to remove badly worn coins from the west coast.

[DaveG]

Roger,

 

I hadn't considered all the implications of your post yesterday when I replied.

 

You raise an interesting point regarding the full value of gold coins (roughly analogous to the current practice of banks returning worn currency to the Fed for destruction and replacement).

 

By the time of WWI, the public had had about 30 years to get used to the idea of currency being fully convertible to gold at face value. I wonder if the public also got de-sensitized to gold coins needing to be of full weight?

 

It's interesting that there was no formal process for banks to send under-weight gold coins to be recoined. You'd think the Treasury would have been sensitive to that.