The Investment U e-Letter: Issue # 427
Tuesday, April 12, 2005 How To Buy Gold Coins: Own fantastic 100-year-old "Brilliant Uncirculated" Gold Coins… at 5% or Less Over Melt Value
By Dr. Steve Sjuggerud, Advisory Panelist, Investment U In the U.S., gold coins from 100 years ago in "Brilliant Uncirculated" condition are worth a lot of money. Here, whenever a collector uncovers a nice "Brilliant Uncirculated" old U.S. gold coin, the first thing he thinks to do is send it off to a grading agency like PCGS, to get it independently graded, and sealed in a tamper-proof container. This unlocks its value… this simple step could increase its value by as much as 100%, as non-professionals are willing to buy these gold coins in this form. (Brilliant Uncirculated means what it sounds like… the coin was uncirculated… it's spent its life in a bag at a bank somewhere, and Brilliant basically means mint state in coin lingo, with maybe a few marks from being knocked around in a bag, but that's it.) Sending a Brilliant Uncirculated coin to a grading service here really is worth the trouble. While a "raw" old U.S. gold coin might be worth close to its melt value (like $430 for a coin like a Saint Gaudens, which I recommend in my newsletter), if it gets graded MS-63, it's worth more like $650. And in MS-65, it's worth twice that! So Here's Where the "How To Buy Gold Coins" Part Gets Interesting… The European Agencies Haven't Caught On Yet! In Europe, grading agencies and tamper-proof holders haven't taken off yet. That means you can actually buy fantastic 100-year-old European gold coins that are in "Brilliant Uncirculated" condition (and that might grade at the MS-63 level in the States) right now - in raw form - at 5% above their melt value! One coin dealer who has served hundreds of readers well, Burt Blumert, makes an outstanding offer… He will sell you century-old European gold coins in Brilliant Uncirculated condition for 5% above melt! Why would anyone buy a gold coin minted yesterday, in the same condition, for the same price? I have no idea. Why Buy Gold Coins Anyway? My reasoning for my interest in gold coins is a little unique. I've tried to avoid the cliché stories about gold and gold coins. They're the "easy" stories to tell you. I'm avoiding them because, quite frankly, the easy stories gold bugs sell you are not the reason I'm buying. I buy gold coins because, first of all, I believe that gold is cheap. Gold is financial catastrophe insurance. And we haven't had a financial catastrophe in the U.S. in 25 years. I'm not predicting financial catastrophe, here. I'm simply buying catastrophe insurance, when it's at its cheapest. You've probably seen the chart below from me before. But it's really important: It shows the price of gold, adjusted for inflation, since it became legal for Americans to own gold on January 1, 1975. The remarkable thing here is that gold is now as cheap as it's been since it's been legal to own. Yes, gold has risen in dollar terms in the last two and a half years. But I added the euro to this chart, to show you that the rise in the price of gold in the last two and a half years was really a crash in the dollar. 
It is a true gold bull market when gold is rising in terms of most major currencies. And we are definitely not seeing that yet. In addition to being a cheap asset, gold is also a hated asset - just what I like. As you know, I still don't believe that stocks are a good deal right now. They are still relatively expensive, and the masses are still interested in them. Chances are, stocks will do very little, at best, in the next few years. Meanwhile, gold is cheap. And it is a hated asset that nobody believes in. There is still plenty of upside. The Skinny on How to Buy Gold Coins… Again, what we're doing is buying gold when it's cheap. For investors who have lived through the multiple disasters of the 1970s, you know the value of financial catastrophe insurance. The way we're doing it is to buy an asset that trades extremely close to the price of gold, even in "Brilliant Uncirculated" condition. The collector's premium could rise in the next few years. There is a small chance the collector's premium could go nuts, if grading takes off in these coins. It's a possibility that we can put in the back of our minds. But we're not banking on it. What we're doing is owning raw gold in one of the most attractively priced forms possible: 100-year-old European gold coins in "Brilliant Uncirculated" condition. There are tons of options here. I've created a partial list (see chart below) of some of the coins available out there, and their gold content, so you can know exactly what you're getting, and what kind of premium you're paying over melt value. 
What I'm doing here is recommending a way for you to buy gold coins, particularly if you don't own any already. Your downside risk in the asset is practically nonexistent. You're paying 5% over melt value for Brilliant Uncirculated 100-year-old European gold coins. And the melt value is there: it's raw gold. How wrong can you really go? Good Investing, Steve Today's Investment U Cribsheet - I've contacted a few dealers, and Burt Blumert seems to be the one who is consistently able to deliver at the 5% above melt price. Contact Burt at Camino Coin at: 800.348.8001 or burtblumert@comcast.net.
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