By Doug Winter – RareGoldCoins.com

In the past few years, I’ve noticed an interesting trend in relation to the pricing of rare date gold coins. I refer to this as “value compression.” Let me explain what I mean.

When I mention this term I am referring to a small price premium between grades. The classic value-compressed issues have long been the Iowa and Roanoke commemorative half dollars. According to the most recent CDN Greysheet , the difference in value between an MS60 and MS65 Iowa half dollar is a whopping $12 (!) while a Roanoke shows a value increase of just $70 between MS60 and MS65.

This phenomenon has begun creeping into the United States gold market as well. Areas which appear susceptible to value compression include common date St. Gaudens double eagles, gold dollars, lower grade Carson City double eagles and early gold in the EF45 to AU55 grade range.

Why do values compress in certain series? The most basic explanation has to do with current grading standards and appearance; a secondary reason is based on the actual design and size of a coin.

As an example, an 1851-C gold dollar is a $1,250-1,350 in EF45 in today’s market. In AU53 it is worth in the area of $1,500-1,600. Why is there such a small difference for what should be a pretty hefty increase in grade? This is mainly due to the way that these coins are now graded. There is no longer much aesthetic difference between an EF45 and an AU53 gold dollar and the market recognizes this by compressing the price spread between these two grades. In the case of the 1851-C dollar, the value is even more compressed between an AU50 and an AU53 or an AU53 and AU55. Simply put, if a collector can see no discernible difference between two grades, then why pay a premium.

In no series is this compression more evident than with common date St. Gaudens double eagles. If you take a random sample of freshly graded MS62 coins and freshly graded MS64’s, there is probably going to be little difference. In fact, the 62’s might even be nicer than the 64’s. This inconsistency of grade is why an MS62 is currently worth $1,450 and an MS64 is worth just $1,600. Back in the days when there was an appreciable difference between the two grades, there was an appreciable price difference. (more…)

This week a “bullion related” news item crossed my desk which gave me pause.

A company called Gold Solutions Marketing Inc. (www.TheGoldBullionCard.com),  recently issued a press release announcing their new Gold Backed “credit card”, which will be available soon online. The card, which will be branded by either MasterCard or Visa, is supposed to function like a regular credit card, but will be backed by gold bullion coins you have to deposit into an account. If you don’t currently have any gold, the press release states that you will be able to purchase a quantity of gold. ” below market prices”, at the time of your account opening.

Jeff Silver, VP of Gold Solutions Marketing, Inc. was quoted to say, “Those who ‘believe in gold’ can see  the new (Credit Card reforms of Feb 2010) law reshaping attitudes and conventions about credit cards that will help make this breakthrough collateralized credit card concept a reality in the very near future.  They know that gold, which is a hard asset, can provide a higher level of liquidity and usefulness, while positively impacting the financial picture for millions of Americans” .

Now to be fair, I have to state up front that I am not a big fan of the credit card industry or the big mega banks in particular, and how Congress has allowed, and still allows them to engauge in what many consider to be predatory business practices is a whole different story. But something just didn’t make sense to me in this press release.

First, this is a collateralized credit card, where of the line of credit is backed by an asset you already own.  According to Jeff Silver, the ” credit card [will be] based on 75 percent of the value of gold coins on deposit……, which should give the issuing bank a much more secure feeling about extending credit.”  You Think ?

Now my mother drowned all of her stupid children, but it seems to me that if I have $20,000 in gold bullion coins, in my possession, why on earth would I ship them off to a depository in exchange for a “credit card” with a $15,000 credit limit? (more…)

By Doug Winter – RareGoldCoins.com

A few weeks ago, I wrote an article that analyzed the recent population figures for Type One Dahlonega gold dollars. As I’ve done more research on gold dollars for my upcoming third edition Dahlonega gold book, I thought I would share the findings for the Type Two and Type Three issues. Read on for some interesting findings.

1855-D:

I had originally estimated that 70-80 pieces were known to exist. I think this number may be just a touch on the low side but not by much. There are four Uncirculated examples known to me. Interestingly all of them have seen their grade change by at least one point (in some cases by two) since I wrote the second edition of my book in 2003. The Duke’s Creek/Reed Hawn coin has gone from PCGS MS63 to NGC MS63 to NGC MS64 to PCGS MS64. It remains the finest known. A second coin has also been graded MS64 by NGC (ex Duke’s Creek and Bass II: 102). Unfortunately, the dealer who owned this coin a few years ago has failed to turn in the extra tags and the NGC population currently shows three examples in this grade.

It is also interesting to note that both the aforementioned examples have shattered the magical six-figure mark at auction. The Hawn coin brought $143,750 in Stack’s January 2009 auction while the Duke’s Creek/Bass coin sold for $149,500 as Goldberg 2/07: 2094.

1856-D:

If anything, I may have overestimated the total number known when I suggested that 80-90 1856-D gold dollars are extant. The grade distribution has changed but this is due to gradeflation and not a result of new coins coming on the market. Many of the four dozen or so coins I estimated to exist in EF grades have no morphed into AU’s. I do know that at least one or two fresh Uncirculated coins have turned-up since 2003 including one nice PCGS MS62 that I was offered privately in around 2005.

My estimate of four to five Uncirculated 1856-D gold dollars is probably just a hair too low and today’s number is more like six. I have seen three different coins in PCGS MS62 holders but at least one of these (probably the Duke’s Creek: 1488 example) has magically become an NGC MS63. The best I’ve seen remains Green Pond: 1009 which still holds the all-time auction record for this date at $47,150. (more…)