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Recently, it seems that many Precious Metal firms have been
praising the virtues of older (usually European & fractional ounce) Gold Coins.
There are some differences of opinion on the matter and many of our repeat clients have contacted us for advice regarding the
pros and cons of the issue. We've decided that there is a need to address this issue on our website for the benefit of all.
 CONFISCATION ISSUES
The most frequently used technique to promote these coins is to raise the issue
of confiscation. Many sellers tell investors that old gold coins are not "subject to
confiscation," leaving the impression that modern gold bullion coins are subject to
confiscation!
As a result of
this misinformation, many investors buy old gold coins at prices
significantly higher
than the value of their gold content.
ARE OLD GOLD
COINS COLLECTABLES?
Many precious metals firms maintain that
because old gold coins are
"collectables," they would not be subject to another gold recall. Some firms
say that premiums of at least 10 - 15% automatically make coins
"collectibles." No current Federal law or
Treasury Department regulation or directive supports these statements.
The statements that specific types of gold coins are not subject to confiscation
are based on an Executive Order that President Roosevelt issued in 1933 prohibiting
private ownership of Gold Bullion & Gold Bullion coins. The executive
order exempted "gold coins having a recognized special value
to collectors [of rare and unusual coins]," but it did not define "special
value" or "collector". The
evidence suggests that sellers promoting old gold coins propagate
this myth because it makes it easier to sell high-priced "old gold" coins.
Although Roosevelt's Executive Order required U.S. citizens to turn in their gold
coins and gold bullion, foreigners continued to redeem paper dollars for gold until 1971.
From the end of World War II to 1971, the United States gold reserves were reduced by more
than 50%.
 It is widely believed that all the gold coins
surrendered under Roosevelt's
prohibition were refined into .999 fine bullion bars. This is not true. It was to the
government's advantage to pay foreign debt holders with (22 karat) gold coins versus
(24 karat)
bullion bars. With the official price of gold at $35 an ounce, a foreign bank redeeming $70
million paper dollars received 2,000,000 ounces of gold (if the Treasury delivered gold
bullion bars of 24 karat).
However, when the Treasury delivered gold coins
of 22 karat (with a face value of 70 million) it delivered only 1,935,000 ounces of gold, thus
retaining 65,000 ounces of Gold in the U.S. reserves. Therefore, it was to the U.S. Treasury Department's
advantage to pay out U.S. gold coins instead of bullion bars.
The entire
prohibition & recall issue revolves around the fact that it was most beneficial (if not very
shrewd), to pay U.S. foreign debt with 22 karat Bullion Coins versus 24 karat
Bullion Bars. If this
required that the Government confiscate [any & all] Bullion coins which
are privately owned versus releasing pure Gold for payment of national debt, then confiscation it would
be!
A widely overlooked fact about the Fixing price of Gold
Bullion (1933): Before the "fix"
was placed (at $35 per oz.), Gold was
trading in the mid $20 range. Any persons holding Gold [bought before the
Fix] reaped substantial profits at the time of surrender. And during the middle of the
Depression (1933), the next best thing to hold [other than precious metals] was
cash! RECALL
OF OLD
EUROPEAN COINS
For several years,
sellers have been importing European gold bullion
coins dated before 1933 and claiming that these coins would be beyond the reach of the U.S.
government in the advent of another recall or prohibition.
The imported coins most widely promoted are:
Austrian Ducats
French Francs / Roosters / Napoleons / Angels
British Sovereigns
Swiss Twenty Francs & Helvetias
Regardless of the date minted, there is no precedence excluding them
from confiscation. In addition, these coins hold very little, if any, numismatic
potential. European "old gold" coins are simply not worth the
high prices asked.
| European old gold coins are often compared with old U.S. gold coins, which have
been known to reach substantial premiums at times. But European old gold coins are simply
bullion coins, and historically, they are unlikely to gain any substantial numismatic premiums. |
Most of these coins have been in general circulation for decades, and they have
always sold for just a few dollars above the value of their gold content (i.e.:
melt
value). This is why sellers promote them. They buy the European coins near (or at) bullion
prices and mark up the pricing, ensuring big profits for themselves.
European gold coins also contain unusual
and varying amounts of gold, such as
.1867 oz., .2354 oz., or .1110 oz. Most buyers/investors prefer full-ounce coins,
or fractions of ounces that are easily understood and accepted, such as 1/2
oz., 1/4 oz. or
1/10-oz.
There are unique circumstances that may require purchasing
"Old Gold" Bullion coins, and depending on your needs, sometimes these types of purchases do
make great sense. Buy the "Old Gold" coins for their intrinsic beauty or the
appeal and sheer pleasure of owning them-- but not as an
investment.
For the typical
investor in Precious Metals, the wisest
purchases are almost always modern Gold Bullion coins such as:
Modern Bullion coins have their gold content
stamped in English and come in sizes in which the majority of buyers & sellers are used to
dealing. Even when you find European coins at bullion prices, fractional-ounce Gold
Eagles, Maple Leafs, or Krugerrands are comparably priced. Most Modern Bullion coins are available in
1 oz., .50 oz., .25 oz., and .10 oz. weights. Some of these coins are of normal 22
karat purity while others are 24 karat pure gold. The 24
karat Gold coins require extra attention in care and storage
as pure gold is soft by nature & is easily scratched,
dinged or dented.
Modern Bullion Coins are accepted in trade
worldwide. The majority of these coins are issued with a Face Value (such as the $50
1 oz. U.S. Gold Eagle, or $100 1 oz. U.S. Platinum Eagle).
Because these coins are globally recognized and accepted, Modern Gold Bulllion coins are much easier to liquidate
versus European "Old Gold."
To
review details and images of Modern bullion coins, navigate to our website page Coins & Bullion.
For some interesting histories of older U.S Numismatic collector Bullion
Coins see Precious Metals History.
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