Double Play as a Strategy for Buying Gold Coin

Gold has been raging in a bull market ever since its price started to escalate in 2000. From near $250 an ounce in 2000, it has appreciated to $1,193 in July 2010. This has led many investors to lose faith in the potential of paper money as a secure mode of investment. Instead, they now prefer buying gold coins, as gold is the only hard asset that has a history of possessing value even in an economic crisis.

Double play, as a strategy for marketing and buying gold coins has been around for ages. However, in the 21st century, it has lost much of its sheen. Back in the 1980’s and 1990’s, gold coins were manufactured based on this concept. This form of selling involved advertising the gold coins based on their intrinsic gold value, plus their numismatic value. This meant that a coin could be priced higher than another coin of similar gold content if it had been a part of an interesting piece of history.

Over the years, the manufacturers stopped using double play as their selling strategy, as the market became highly impatient and buyers started investing in bullion gold coins. Here we shall see why bringing back this time-tested strategy is a must for the value conscious modern market.

Buying Gold Coins: The Third Camp

Gold coin buyers can be easily divided into three camps: investors, collectors and hybrids.

Investors prefer buying gold coins as a shield that ensures future economic stability. A majority of their investments are made in the bullion gold coin market. On the other hand, collectors prefer to buy numismatic gold coins because of their symbolic value and heritage. Such collectors often go to great trouble to complete their coin sets and are ready to pay thousands for an interesting coin.

The double play strategy is meant to target the third camp of gold coin buyers. This camp is filled with investors who acquire coins that have high numismatic value and are either very high in quality or are extremely rare. The sale of the 1804 Proof Gold Eagle is the best example of this. It was sold for a staggering $1 million in 2003 and $2.47 million in 2005.

Buying Gold Coins: Liberty Head Gold Coins

Here we shall concentrate our study of double play as a marketing strategy on the two varieties of liberty head gold coins:

• Liberty Head $10 Gold Coin with Motto: This coin was produced from 1866-1907. It weighs 16.718 and contains 90% gold. The professional coin grading service (PCGS) has graded this coin into three separate categories: MS60, MS62 and MS63. As of April 2010, the intrinsic value of its MS62 grade copy is $740. This is the grade we shall study as it provides the best investment opportunity. The 1883 mintage of this coin produced around 208,700 copies, of which around 261 were graded as MS62 by the PCGS. The current market value of such coins stands at $865. Another example is the 1900-S version of this coin. The MS62 grade of this coin is very rare, with only 31 copies graded by PCGS. They have a market price of $1,100.
• Type Two Double Eagle ($20 Liberties): This coin has been graded in three categories by PCGS: AU55, AU58 and MS60.. The double play value of these coins is high because coins made in certain years are extremely rare but still maintain exceptional quality. Like the 1867 editions sell for $2,000 (AU55), $2,500 (AU58) and $4,000 (MS60). Another example is the 1873 Open 3 version of this coin. The US Mint records show a mintage of 1,000,000 and around 10,000 of each grade still exist. The price values are $1,500 (AU55), $1,600 (AU58) and $1,800 (MS60).