How To Determine The Value of Your Gold Coins
Gold has been mankind’s most desirable asset for more than 5,000 years. It freely circulated as everyday money – except during times of great economic turmoil – from the time of the Ancient Greeks and Romans right up to 1933. Until that year, the value of the great majority of gold coins was the same as their face value. That meant a $20 gold coin could be freely exchanged for 20 one-dollar bills. And 20 one-dollar bills could be exchanged for one $20 gold coin. It was a two-way system that promoted a stable value for our money.
That era ended in 1933. As part of his effort to re-inflate our economy from the depths of the depression, President Roosevelt recalled all circulating gold coins in the well known gold confiscation under executive order 6102. He had his Treasury Department melt them and send the newly formed ingots to Fort Knox for storage. Then Roosevelt revalued gold, in a series of steps, from its pre-1933 value of $20 to $35 per ounce.
Literally overnight, a $20 gold coin contained more than $20 worth of gold. Owners of the limited number of coins that survived the federal recall order, primarily collectors and overseas banks, wondered how to determine the value of their gold coins. Were they only worth their gold value, or would the government’s efforts turn once-common issues into scarce and rare dates?
Today we know the answer to that question. The government’s massive melting of our circulating $1, $2.50, $5, $10, and $20 gold coins created hundreds of rarities out of coins with original mintages that suggest easy availability. Here’s one example: the Philadelphia Mint struck 2.9 million $20 gold coins in 1931, one of the higher mintages of the 1907-1933 series. Based strictly on its original mintage, the 1931-P should be easily available and not too expensive. Thanks to the government’s melting, all 1931-P $20 gold coins are rare and extremely valuable.
Speed forward to 2009. All U.S. gold coins minted before 1933 are worth FAR more than their face value, and many are worth FAR more than their bullion (metallic) value. That’s true because the number of collectors of U.S. gold coins of the pre-1933 era has expanded tremendously. At the same time, the available supply of these coins has remained relatively unchanged. Because rare coin market values are set by the interaction of supply and demand, the long-term value of pre-1933 U.S. gold coins has shown a distinctly rising trend.
So how can you determine the value of your pre-1933 U.S. gold coins?
We live in an age of tremendous availability of information. Early in the last century, collectors and investors were content to determine their gold coins’ value by following (and interpreting) auction results. In the late 1940s, publishers began offering a once per year guide book that listed values for every U.S. coin. Then monthly publications were introduced, providing ads and estimated market values. Then weekly coin newspapers, filled with articles, auction results, and market commentaries, were established. Today we have all of these sources, plus the information on the Internet.
All of these sources, when you know how to use and interpret them, are extremely valuable. All of these sources can help you determine the value of each gold coin you own. But none is perfect. Each has its own quirks and its own idiosyncrasies.
When buying your coins you are paying retail and when you sell you are receiving whole sale. Therefore, the single best way to determine the retail or wholesale value of your pre-1933 U.S. rare gold coins is to have your trusted advisor perform a portfolio review. Retail values can vary significantly and your broker/dealer should have a buyback policy that will help you determine the value of your gold portfolio.
