- 06/26/2019
- Joe Presti
- Summer 2019
$20 Gold Coins or Gold Eagles, Which is Better?
Which is better is really relative and personal, but I will attempt to point out some pros and cons for each option.
The reality is the premium on lower-end uncirculated big US gold has not been lower in recent memory. There are several reasons for this anomaly. First, there have been large numbers of coins coming to the US from European hoards. There was also a very large hoard of $20 gold coins from Canada that has been entering the US market. We have dealt with both of these issues in past decades. The market gets temporarily flooded with material and it could take some time for the coins to get absorbed into the market, but eventually they do and premiums will rise again. Also, there is the issue of dealers not doing a good job educating buyers about these impressive gold coins, because it is easier to give people what they want versus educating them or losing a sale.
First, we will examine $20 gold coins in MS-62 condition. You get a coin that has .9675 oz. of pure gold. As we speak, gold is $1343/oz, so these coins would “melt” at $1300. They are also graded MS-62 and have a CAC sticker, so you can be assured they are solid for the grade compared to being commercially graded. They have been authenticated as genuine by a major grading service, either PCGS or NGC. There are also no shipping costs when purchased from RCNH.
Gold Eagles on the other hand are made of 90% gold just like the $20 coins, but they weigh slightly more than one ounce, so that you will net an ounce of pure gold. You can buy these coins from RCNH at 1% over our cost. There really isn’t much else to say about these coins.
When put side by side, both coins are United States Mint products. The $20 coin is close to 100 years old that was commonly used in daily transactions. Governments routinely used them to pay debts and the US sent thousands of coins to Europe to pay our debts and they have been sitting in vaults for years and the banks have been systematically selling these into the market for the last 30-40 years. These $20s cannot and will not ever be minted again, the dies have been destroyed. The Eagles on the other hand are minted for the sole purpose of being bought and sold for their bullion value. In theory, the government can mint as many as the market can absorb. While you can buy Eagles that are graded and authenticated by the grading services, it is not recommended since it is not worth the premium that would be charged.
We do not take a position in gold bullion, and do not stock these coins. Bullion is ordered from our wholesaler when you place an order. When we order these coins, our wholesaler charges us a flat $19 shipping fee on less than 10 oz. to ship the coins to us. That breaks down to anywhere from $2 per coin to $19 per coin. Since we only mark Eagles up by 1%, we must charge shipping to you, adding between $25 to $50 total.
The most compelling reason to buy certified $20 coins is insurance. What do I mean? Over that last 10 years, counterfeiting has gone from a non-issue to something you now have to think about. It has become such an issue that the government is now getting involved. The counterfeiters, mostly from China are getting better at their trade by the day. We currently have machines that can tell us if an Eagle is gold or not, but what happens when they perfect a way to fool the machines? Speaking as a numismatist, it is much harder to counterfeit a classic coin than it is to counterfeit a modern coin. If counterfeiting does become a major issue, then you could opt to have your gold Eagles certified by a major grading company, but that would add approximately $20 to $30 per coin to the cost of ownership. Examining it from a different perspective, if counterfeiting is a major problem, we could see premiums of these $20 coins skyrocket.
Bottom line, if you were to take a theoretical purchase of five one-ounce gold Eagles, the cost including all shipping would be about $1376 to $1400 per coin depending on whether you wanted the Eagles certified vs. $1400 for a CAC certified MS-62 $20 Liberty or St. Gaudens gold coin. Sounds like the $20 Saints and Libs are a no brainer to me.