Don StottI received a complimentary copy of The Rosen Numismatic Advisory the other day. Along with the advisory, was a nice letter from its owner and founder, Maurice Rosen. I thank you Mr. Rosen. For those of you who own numismatics, his letter is dynamite, and I suggest the subscription price of $48 per year, might be a good investment. You can subscribe by sending that amount to him at Box 38, Plainview, NY 11803. One interesting suggestion he offers, might be worth your while, even if you are not into numismatics, which I, of course, am not. His observation is that the Sacagewa dollar is a miserable failure. Naturally, as a government idiot thought of it, designed, it, and probably spent several hundred million taxpayer dollars making it. What else can you expect from government? But you can buy new rolls of 25, for $35 from the US Mint, and if stored away, it might be a good way to invest a few bucks.
The title of this piece deals with the utter simplicity of bullion coins and bars, and in fact, the entire thing is the utmost in simplicity. When buying a bullion coin or bar, you are buying gold and silver, not age and condition. No grading necessary, no placing them in handle proof plastic containers, no expert grading, and deciding the price, and spreads that are minimal compared to numismatics. The "high end" coins, which seem to have done well, are damned expensive, and when push comes to shove, it is the absolute least metal for the most dollars. Push and shove will undoubtedly ask you, "how much gold you got Bub?" (Are you old enough to remember "Bub" bubble gum?) Not, "well, gee, that must be a MS 63, or is it a MS 61? I just want an once of gold for this set of tires, and I don't care what the date or condition is." Krugerrands are a mere $2.50 over the spot price of gold. Hundred ounce silver bars are only 47 cents over spot.
Wonderful clients of mine in South Carolina, were recently hounded by a numismatic dealer, who continually called, offering "great looking double eagles," for a mere $695. They have .9675 of an ounce of gold in them, and an ungraded double eagle, wholesale, is worth about $325. She didn't bite. When someone calls, and offers you a bargain in anything…hang up. I despise those jerks, sitting in their little cubicles, making endless phone calls, harassing everyone with their merchandise. If I want something, I'll do the calling to a dealer, and I don't need phone solicitation. I wouldn't be caught dead calling a client of mine, unless instructed to do so.
I assume you understand about "spreads," don't you? Well, just like the stock market, the spread is the difference between the price you pay when you buy ("ask"), and the price you get when you sell ("bid"). The less desirable the stock or coin is, the wider the "spread." Joe Blow's cotton gin stock, may have a huge spread, while GE or John Deere may have a small spread. A Krugerrand or American Gold Eagle will have a spread of $7, while a numismatic coin may have a legitimate spread of a hundred or more dollars, and many hundreds, if an inexperienced buyer or seller gets involved with a shady dealer. A $1,000 "bag" of US silver coins, which as I write this, is $3625, has a spread of but $250, or 35 cents an ounce.
No one should ever buy a numismatic coin on the phone, unless it is graded by PCGS, and even then, not unless one has a "Grey Sheet" or "Blue Sheet," to know what they are actually bringing. In other words, buying and owning numismatic coins, has many pitfalls; and a knowledge of all the ins and outs of the hobby, is necessary in order to come out ahead. There are numerous coin shows around the states every month, for the hobby numismatic collector to bargain, wheel, deal, and view these coins. Numismatic coins, are in a way, like guns. Plain Jane guns that shoot, are minimal in cost (be sure they are unregistered) and sophisticated, rare, old, or unusual guns command very high prices. I just want mine to kill the fool who might want to rob me, and I could care less about what year it was made, or what condition it is in, other than being operable. I am a life member of NRA and GOA, and I actually throw away the "National Rifleman" after a cursory glance, because I simply don't care about rare guns, any more than I care about rare coins. My guns will kill, and my bullion coins and bars will do just fine as hedges against inflation.
I assume that most readers of Gold Eagle are interested in protecting themselves, and there can be no better way than with bullion coins and bars, which serve the same purpose as common, ordinary guns. The American Gold and Silver Eagles may serve an additional purpose, as I mentioned in the two previous pieces, and may be worth the extra amount per ounce, but its your decision. The Gold Eagle, is undoubtedly the most beautiful coin in the world.
If you own numismatics, do not sell them, as you would probably take an economic bath if you did. Just think twice about buying more, as opposed to the simplicity and convenience of gold and silver bullion coins and bars. One can buy many things on the phone, but some things one simply must not buy, sight unseen. Cars and antiques come to mind. A body would be a fool to buy either, sight unseen, unless the sale is backed up with many, many color photographs, as are mostly seen on E-Bay. Two friends of mine bought vehicles on E-Bay, flew to where they were, and are very happy with them, but the photographic portrayals of them were excellent, and the sellers had excellent reputations. Antiques and cars command different prices in different parts of the US, but bullion coins and bars are the same price everywhere, and no photos are necessary.
It's just so simple to buy and sell bullion coins and bars. No arguing about price, no worry about condition, rarity, or age. No inspections necessary when selling, with a couple of exceptions. Coins, such as the Canadian Maple Leaf, and Austrian Philharmonic, have no hardeners in them, and scratch and dent easily, they are so soft. Being easily damaged, I consider it wise to stick to the American Gold Eagle or Krugerrand, due to the fact that they are difficult to scratch or dent. Even though it is the gold and silver you are buying and selling, obviously, a mistreated, or abused coin must have something taken off if it is defaced. It is almost impossible to deface a Krug or Gold Eagle.
May 25, 2002
Don Stott has been a precious metals broker since 1977, has written five books, hundreds of columns, and his web site is www.coloradogold.com
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