AuthorTopic: Reconsidering Numismatic Coins  (Read 747 times)

Offline Eddie

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Reconsidering Numismatic Coins
« on: December 22, 2016, 08:28:43 AM »
Almost every book on gold investing I've ever read suggests that non-experts should avoid numismatic coins as an investment, and stick to bullion coins, like Gold Eagles. Various reasons are given for this advice:

(a)Premiums over gold and silver bullion spot price can be high

(b)Coin values vary by grade, and it takes an expert to appraise numismatic coins. It's easy to get scammed by unscrupulous dealers.

(c)In a SHTF situation, such coins might not be as fungible as bullion coins, and certainly would likely be treated as bullion, at best.

Collectors like numismatics, because they know when gold spot price does spike, the premiums for high grade numismatics widen, giving additional leverage. They also like them for their scarcity, their esthetic value, and their historical significance.

But most of all, real gold bugs like numismatics because they know that, in the past, numismatic coins (and especially ones that are US legal tender) fall under different rules for confiscation than bullion, including bullion coins. When Roosevelt ordered Americans to turn in their gold, numismatic coins were exempt from seizure.

The banksters are obviously pushing us toward cashless money as fast as they possibly can, and in the current milieu we see that being played out in India with a concurrent strategy by government to separate ordinary citizens from their gold by confiscating it (under the guise of collecting supposedly unpaid income tax).

If (or more like when) America does go cashless, then gold will be under much greater scrutiny than it is now, and I can easily imagine a scenario where anyone selling gold bullion (legally) will be required to show provenance for the metal, give a cost basis, and have to pay tax on capital gains.

Capital gains on gold bullion are taxed now, and not at the regular capital gains rate. Long term capital gains on gold coins are taxed at 28%. Short term capital gains are taxed at the sellers marginal tax rate. That means instead of paying 20% on the gain, you'd pay the rate you paid on your most highly taxed income dollars, which right now is as high as 39.6% for high income individuals.

In the US it doesn't make much sense to go after stackers, because they are a really small crowd, compared to India, where almost everyone has some physical gold. But if people started rushing back into gold, as I expect they will at some point, then that might change very quickly.

So...if one agrees that numismatic coins, previously stated issues aside, are worth some kind of premium for their potential safety against confiscation, just how much of a premium is reasonable? And how likely are you to recoup that premium if and when you sell it?

The answer to the second part, imho, is that if you got what you paid for in the first place, you'll get it back when you sell, unless you bought when gold price was rising rapidly. The ideal situation is to buy numismatics when gold price really sucks, because the premiums are lower.

The chart below shows that clearly (using a common example, which is the $20 St. Gaudens MS64) and it also answers the first part, which is that, even in the worst gold bear markets, the premiums for this particular coin never drop much below about 25%.



What I'm getting around to is that right now, the premium for the $20 St. Gaudens MS64 is around 23-24%, which is at the low end of the range for the past 10 years. The price of gold might go down from here, but the premium over spot shouldn't go down much at all.

So, I see this particular coin (about $1350 apiece today) as an attractive buy, at the moment.






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Offline JRM

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Re: Reconsidering Numismatic Coins
« Reply #1 on: December 22, 2016, 08:47:30 AM »
As they say, don't store all of your eggs in one carton. 

For as long as fine art by recognized greats generally holds value, numismatic coins will.  Either are probably good ways to store up exchange value, provided you have a safe place to keep them.  If and when these lose value precipitously, believe me, the only "wealth" remaining will be fortress-like compounds, ammunition, weapons and a food/water supply.
My "avatar" graphic is Japanese calligraphy (shodō) forming the word shoshin, meaning "beginner's mind". --  http://en.wikipedia.org/wiki/Shoshin -- It is with shoshin that I am now and always "meeting my breath" for the first time. Try it!

Offline RE

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Re: Reconsidering Numismatic Coins
« Reply #2 on: December 22, 2016, 08:52:51 AM »
But most of all, real gold bugs like numismatics because they know that, in the past, numismatic coins (and especially ones that are US legal tender) fall under different rules for confiscation than bullion, including bullion coins. When Roosevelt ordered Americans to turn in their gold, numismatic coins were exempt from seizure.
OK, FUCK my queue and order of posting.  This is OBVIOUSLY HOT TOPIC on the Diner!

Since it is basically READY FOR PRIME TIME except for some links, I will publish it RIGHT NOW.  Blah.

RE
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Offline luciddreams

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Re: Reconsidering Numismatic Coins
« Reply #3 on: December 22, 2016, 09:25:34 AM »
But most of all, real gold bugs like numismatics because they know that, in the past, numismatic coins (and especially ones that are US legal tender) fall under different rules for confiscation than bullion, including bullion coins. When Roosevelt ordered Americans to turn in their gold, numismatic coins were exempt from seizure.
OK, FUCK my queue and order of posting.  This is OBVIOUSLY HOT TOPIC on the Diner!

Since it is basically READY FOR PRIME TIME except for some links, I will publish it RIGHT NOW.  Blah.

RE

You should just learn to take my advice as soon as I give it.  Maybe I should be the Diner Cult Leader.  I'm not wearing any stupid fuckin' hats or robes though. 

Offline RE

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Re: Reconsidering Numismatic Coins
« Reply #4 on: December 22, 2016, 09:39:12 AM »
But most of all, real gold bugs like numismatics because they know that, in the past, numismatic coins (and especially ones that are US legal tender) fall under different rules for confiscation than bullion, including bullion coins. When Roosevelt ordered Americans to turn in their gold, numismatic coins were exempt from seizure.
OK, FUCK my queue and order of posting.  This is OBVIOUSLY HOT TOPIC on the Diner!

Since it is basically READY FOR PRIME TIME except for some links, I will publish it RIGHT NOW.  Blah.

RE

You should just learn to take my advice as soon as I give it.  Maybe I should be the Diner Cult Leader.  I'm not wearing any stupid fuckin' hats or robes though.

You have the stupid beard all the time. :P  You're perfect for the part.  ::)

RE
Save As Many As You Can

Offline luciddreams

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Re: Reconsidering Numismatic Coins
« Reply #5 on: December 22, 2016, 10:03:48 AM »
But most of all, real gold bugs like numismatics because they know that, in the past, numismatic coins (and especially ones that are US legal tender) fall under different rules for confiscation than bullion, including bullion coins. When Roosevelt ordered Americans to turn in their gold, numismatic coins were exempt from seizure.
OK, FUCK my queue and order of posting.  This is OBVIOUSLY HOT TOPIC on the Diner!

Since it is basically READY FOR PRIME TIME except for some links, I will publish it RIGHT NOW.  Blah.

RE

You should just learn to take my advice as soon as I give it.  Maybe I should be the Diner Cult Leader.  I'm not wearing any stupid fuckin' hats or robes though.

You have the stupid beard all the time. :P  You're perfect for the part.  ::)

RE

No I don't, I've been clean shaven for the past month.  I have no plans of going back to the beard, or the long hair.  It was a phase.  I got tired of being a cliche. 

 

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