American gold coins are stamped with history, and their value won’t tarnish over time.
By John DorfmanAs our once-green bills begin to glow with all the colors of a lurid rainbow and our coins seem to get more and more plasticky with every passing year, it’s instructive to recall that at least some American coins were once made of solid gold. Some were of basic and utilitarian; others were works of art. All possessed that special, enduring beauty that glows from the yellow metal no matter what form it takes, and all are sought after by collectors today—albeit at a wide range of price points.
The minting of gold coins in the U.S. came to an official end in 1933, when newly-elected President Franklin D. Roosevelt took the nation off the gold standard as part of his battle against the Great Depression. The last gold coin was a version of the famous Double Eagle design originally created in 1907 by the Beaux-Arts sculptor Augustus Saint-Gaudens, bearing a walking Lady Liberty image on the front (obverse) and the twinned raptors on the reverse.
As soon as the ban went through, the newly-minted $20 coins were held back from circulation and ordered melted down, but a rogue Treasury employee pocketed about 20 of them and replaced them with earlier Double Eagles. Somehow they ended up in the hands of a Philadelphia jeweler, who sold nine of them to collectors. The Secret Service was bent on getting these back, but King Farouk, an inveterate coin collector, bought one and sent it home to Egypt, out of their jurisdiction.
When Farouk was deposed in 1952, his Double Eagle appeared on the market, but attempts to confiscate it were again thwarted, and it vanished into a private collection until the 1990s, when British coin dealer Stephen Fenton offered it in New York. This time it was seized and, after a lengthy legal battle, sold at auction in 2002 for $7.5 million, the profits split between Fenton and the U.S. Mint. The buyer was anonymous, so the famous gold piece has effectively disappeared again.
Of course not all gold coins sell for multimillions. Many ordinary (or “generic”) 19th-century $20 gold pieces sell for only a small premium over the intrinsic (or “melt”) value of the gold they contain.
According to Jim Halperin, co-chairman of Dallas-based Heritage Auctions and a numismatic expert, “for generic U.S. gold coins like $5, $10 and $20 Liberties, from 1838 through 1908, the common dates trade at very low premiums versus melt. They are very liquid with tiny buy-sell spreads.” So the main factor affecting the market for such coins is the international gold market.
Interestingly, says Halperin, “when gold goes up, the premiums tend to go down. Right now premiums on generic coins are almost as low as they’ve ever been. Ones that used to be at a 50 percent premium over melt, you can now buy for a 12 percent premium.” Even high-end, non-generic coins, with values many multiples over melt, have been buoyed by the gold boom.
Paul Song, director of rare coins and banknotes at Bonhams in Los Angeles, says, “The value of gold being historically high has had a macroeconomic effect on gold coins in general. As the market has risen, so has the value of the rare numismatic ones, with values over $20,000.”
But the basic drivers of value are, as with artworks, rarity, condition and historical and aesthetic significance. Halperin cites an $20 gold piece from 1849, the Gold Rush year, which is absolutely unique—only one was struck. “I would guess it would bring $25 million to $30 million if it came up for sale,” he says. It won’t, though, because it is in the Smithsonian.
A historically significant early date is also a good reason to pay a lot for a coin, even if it’s not a stratospheric price. Song cites a $10 “nine-leaf” piece from 1795 that sold at Bonhams for $115,000: “1795 is one of the classic dates, as this is the first year of issue for gold coins in the nascent United States of America.”
Rarity is also key, even if artificially caused, as in the case of a $20 gold coin from the Carson City, Nev., mint, struck in 1870. “Only 3,789 were struck in this year,” says Song, “and the majority were melted, making this one of the most sought-after coins in the entire series of U.S gold coins.”
And as for aesthetic value, consider the 1907 “Roman Numeral High-Relief,” of which an example in excellent condition sold at Bonhams for $35,100. “It is widely considered the most revolutionary and beautiful coin ever produced by the U.S. Mint,” says Song. “In fact, its design, by Saint-Gaudens, is still used for modern U.S. bullion coins.”
And then there is the undeniable mystique of gold. It doesn’t decay, and its luster doesn’t dim with time. It has a special, soft feel to the touch. The ancients invested it with the power of the sun, and today’s numismatists are no less awed.