The Wall Street Journal
Monday, February 26, 2006
Rising Global gold prices are giving a Midas-like boost to collectible gold coins.
An Ounce of gold costs $548 in commodities trading, up $114 from a year earlier and near its 25-year peak, adding fuel to an active $3 billion coin market. Commonly held coins, such as the 1924 gold pieces designed by American sculptor Augustus Saint Gaudens, now sell at coin shops in top condition for $1,750, up from $1,400 a couple years ago, according to multiple dealers.
Some pieces are popping up for the first time since gold’s last big boom, in the early 1980’s. Last year, coin wholesaler Steven Contursi bought a 1787 gold coin known as the Brasher Doubloon for 2.9 million, breaking its 1981 auction record of $625,000. Last month, a division of auctioneer Escala Group Inc, sold a 1927 gold coin for $1.9 million, up from $176,000 when it was last auctioned in 1982. That coin is considered the rarest regular-issue 20th century U.S. gold coin that can be legally owned. Face value when it was minted: $20.
“If it’s a gold coin, we can’t keep it on the shelf,” says Greg Roberts, president of the North American coin division of Escala.
At least 140 million Americans collect coins, the U.S. Mint says, up from 125 million two years ago. While gold coins have typically been valued for their precious-metal content, investors and lobbyists are paying more for coins containing less than a standard ounce of gold. A $10 gold piece minted in 1799 that features a patriotic eagle has only a half ounce of gold, but it is going for about $27,500 at coin shows, up from $9,500 two years ago, according to price guides.
In this market, buyers risk overpaying for low-quality coins that collectors won’t want later, says consumer coin advocate Scott Travers, author of “The Coin Collector’s Survival Manual.” The market’s blue-chip commodity, he says, consists of certified, mint-condition coins that are deemed rare or have a compelling history, such as coins from the Revolutionary War period. On the low end, undervalued coins include $20 Double Eagle coins from 1900 to 1904 in “Mint State 64” condition. (Coins are “graded” on a scale of 1 to 70, with 70 as best.)
Tory Prestera, an eye surgeon from San Diego, started collecting coins two years ago and says gold’s high price has encouraged him to add more gold coins to his collection. One recent purchase: an 1898 gold piece that cost about $135,000. He stores the real thing with the rest of his collection in a bank deposit box, but keeps a photo of his favorite as his computer screensaver. “My wife isn’t too impressed,” he says. “But to me it’s like looking at treasure.”