Gold Coin Grading & Certification

On my first visit to the local coin shop (that opened up this spring), I noticed a coin in a plain cellophane and cardboard coin holder marked MS66. I asked the owner who graded that coin an MS66 and he said "I did. I grade coins too". I was more than a little surprised.

When you start considering the purchase of coins in the higher MS (or Mint State) grades, you must be very careful . One grader of coins may rate a coin MS66 while another may grade the same coin at MS64 and money, sometimes lots of money, can be lost. Let me give you an extreme example...

A 1907 St. Gaudens High Relief Gold Double Eagle graded MS64 is currently worth approximately $26,000. That same coin graded MS65 is worth approximately $46,000. So let's say you bought that coin as an MS65 from a dealer who a few years later went out of business. When you go to sell the coin to another dealer, he says "Nope, in my opinion this should only be MS64 and I will pay you what an MS 64 is worth". That is how investors can lose lots of money.

The solution? When purchasing coins from dealers in the higher MS grades, make sure they are graded and "slabbed" (encased in plastic) by either PCGS (Professional Coin Grading Service) or NGC (Numismatic Guarantee Corporation). This is insurance that the quality of coins you think you invested in are of that quality.

I will talk more about these two organizations in another post.

Happy investing!

Selling Scrap Gold-10K Gold Ring

In my article, Selling Scrap Gold-A Case Study, I detailed my experience with one of the big scrap gold buyers. You've probably seen their ads on TV "Send us your gold, get a big check back". I did not accept their low-ball bid and got my scrap gold back, a small 10 karat gold ring.

I sold that ring a few days ago to the local coin dealer I mentioned in my previous post for $48 and change. The ring had no special meaning to me (not a family heirloom or keepsake) and I wanted to start a business relationship with this local dealer. So when he offered me 50 percent of the ring's gold value (based on the current spot price of gold), I decided the offer was fair.

Here is how the ring's value was calculated...

At the time of the sale, spot gold was at $890.60 per Troy ounce. The 10k ring weighed in at 5.3 pennyweights which is approximately 26 percent of a Troy ounce (there are 20 pennyweights in a T. ounce). So $890.60 x .26 = $231.55. If the ring had been pure 24K gold, that would have been the gold value of the ring. Since it was only a 10K ring, it's gold content is 41.66 of the total weight (more information on this can be found in my article titled Gold weights & Measures). So $231.55 x .4166 = $96.46. The dealer offered 50 percent of that value which is how I received a little over $48.00.

If you are considering selling your scrap gold in the future, I hope you find this information helpful. Feel free to add a comment if you have a question on any of this. By the way, the dealer will probably receive at least 90 percent (probably more) from a major refiner or about $88.00.

Local Coin Shops-A Useful Resource

A coin shop just opened up in my town. If you are asking yourself, "So what's the big deal?" let me explain. The town I am talking about has one gas station, one grocery store, a small bank branch, a post office, a couple of gift shops, a few churches, a couple of bars and a smattering of houses. And now a coin shop.

Even though I probably won't be doing big-time business with them, they are another investing resource for me. If you have one or more coin shops in easy driving distance of you, I hope you take advantage of them. Even if you do most of your gold and silver investing with a major out-of-town dealer, or call in to TV coin shows, or use eBay stores/auctions, a local dealer may fill in some investing "gaps".

Although small, this coin shop has a nice selection of coins, especially Morgan silver dollars. It's nice to be able to see these coins up close, examine them, discuss price, etc. By making a few small purchases and developing a relationship with a local dealer, you can use them as a sanity check before investing in particular coins, grades of coins or discussing your basic investing strategy.

There is one thing I noticed about this coin shop that raised a red flag regarding the grading of coins, especially the higher Mint State grades. I will cover that in a future post as this one is longer than I intended.

Prosperity (Scrap Gold) Parties

Over the weekend, I watched a short news story on one of the Minneapolis/St. Paul TV stations about Scrap Gold parties. Sometimes referred to as Prosperity Parties, this is where people bring their scrap gold and other jewelry to a place (usually someone's home), have it examined and converted to cold, hard cash.

People proudly display a few hundred dollars they received and everybody is happy. But they leave out an important detail which is what percentage you can expect to receive of the gold's value based on the spot price of gold. If the customer receives 30 percent of the gold's value and the appraiser turns around and receives 95 or 98 percent from a refiner, how fair is that?

I am not saying some of these appraisers don't present a fair offer but there is certainly room for some serious low-balling to the customer. If you happen to attend one of these parties, here are a few useful facts...

Spot gold is stated in Troy ounces. A Troy ounce equals 20 pennyweights which equals 31.1034 grams. If spot gold is $900 a Troy ounce on the day you attend one of these parties, then each penny weight has a gold melt value of $45 for a pure 24k gold piece of jewelry or $22.50 for a 12k piece of jewelry.

If you are quoted a price in grams (as opposed to pennyweights), each gram is worth $28.94 for a pure gold piece and $14.47 for a 12k piece (which has only 50 percent gold content). When you are offered a price on your scrap gold, do a little figuring in your head to see if you are being offered a fair price and one you are willing to accept. More information on this subject is contained in my Gold Weights & Measures article elsewhere on this site.

Gold American Eagles Still Soaring

In an update to my article on Gold American Eagles, I mentioned that 710,000 Gold Eagles were sold in 2008 versus 140,000 the year before. Further numbers show interest is still strong in this popular gold bullion coin.

In March 2009 136,500 Gold Eagles were sold compared to 113,500 in February 2009 (Silver American Eagle sales totaled 3,132,000 in March!). But there is something missing from these totals - Fractional Gold Coins. All Gold Eagles sold were one-ounce coins.

If you are at all familiar with Gold American Eagles (from my article or elsewhere) you know that they are normally produced in half-ounce, quarter-ounce and tenth-ounce sizes also. But the U.S. Mint has suspended their production and will not say when production will resume.

If you have been investing in Fractional Gold Eagles, you know the premiums are higher than one-ounce coins (the smaller the coin, the greater the premium). If this continues, expect the premium on these gold coins to rise farther still.

Happy Investing!

Welcome To Gold Investing Simplified's Blog

Hello and welcome. I hope you visit often and find information you can use when deciding what type of gold you want to invest in. Look for one or two posts a week from me as I look for good information to share with you.