Pricing coins in gold

[jtryka]

Being an analyst, I am paid to think of valuation in many different ways, so I thought about valuing coins in terms of gold, under the old gold standard of $20.67 an ounce (just for fun, and I thought it might make some interesting comparisons to prices paid for coins before 1933). So here are a couple of examples:

 

1. A nice 1883-CC Morgan in MS-64 that I bought for about $100 would be 0.2874 oz of gold at $348, or about $5.94 under the gold standard.

 

2. My 1909-D Saint in AU-55 was $685, or 1.9684 oz. of gold, or $40.69 under the gold standard.

 

3. A nice 1835 Classic Head $5 in XF that I bought for $250 would be 0.7184 oz or $14.85 in gold dollars.

 

4. The 1818/17 Bust Half in VG that I bought for $38 would be 0.1092 oz or $2.26 in gold.

 

Of course this has some flawed assumptions as knowledge and relative scarcity of coins has changed over the past 70 years, but it sorta puts into perspective some of the crazy low prices we hear were paid for really rare coins back in the early 20th century.

[michael]

wow neat i never thought of it that way and it is an interesting and for me correct conclusion

 

now this is the type of post we need more of!

 

i love it!!

 

thinking great things about coins like this pure collector thread leads to other good things with coins ansd makes the hobby better for all and also leads to morecollectors and then demand and then everyone/everything is more positive in the

numismatic community

 

 

 

sincerely michael

[jeh46544]

Wow! I wish I could find coins at those prices!

[Hoot]

That's some very fun stuff Jeff! It's always good to make such comparisons for grounding one's own statements about "good ol' yesterday"!

 

Hoot

[jtryka]

That is certainly true Hoot, though pricing according to the gold standard isn't perfect (you could also use the CPI or other more esoteric methods). And Joe, you probably can buy coins for those prices today, you would just need to pay for them in gold! This is really an important lesson in the nature of money, specifically our currency in the current floating exchange rate environment. That 1883-CC Morgan cost only $5.94 in gold, or $100 in today's dollars, or 158,730,158.70 Turkish Lira! Certainly that last one sounds like a lot of money, but in reality they are all equal. The cost of things needs to be relative to other things. Back in the 1920s, that $5.94 was more than a day's pay to the average worker at the Ford plant working to build model Ts, and could also have bought a week's worth of groceries, or 119 bottles of Coke! Pricing is always relative, but our minds tend to equate everything to today's cost, without considering the other side of the equation. It's easy when I am paying $1.93 for a gallon of regular gas to be amazed when my Dad tells me he paid 15 cents a gallon for his first car, but I always overlook the other side where he only made $1.15 an hour at work!