by Louis Golino for CoinWeek ………
As regular readers of this column probably know, I believe one of the best ways to acquire gold and silver is to buy coins that are semi-numismatic. In my view, semi-numismatic precious metal coins are primarily modern bullion coins that have low mintages yet sell for a relatively small premium over melt value.
Common-date pre-1933 gold coins in lower grades can also be characterized as semi-numismatic, as they also carry relatively low premiums over melt value that rise with higher quality examples. These coins have not fared so well in recent years due to an oversupply on the market, and in particular a glut of lower-quality pieces, which sell at a discount if the coins have been cleaned or have other problems. However, the premiums on higher-grade certified examples have risen compared to what they were a couple years ago, especially double eagles in MS64 or better.
Modern world gold coins from several countries, especially Mexico, China, and Australia, typically sell for about the same premium over spot as similar coins from the U.S., Canada, South Africa, and Austria. But what a lot of buyers don’t know is that the first group of countries issues coins with limited mintages that tend to become harder to find with the passage of time, whereas the second group issues gold coins that are considerably more common.
Moreover, because they are issued in lower numbers, gold coins from Mexico, China, and Australia are often unavailable from many dealers, even when physical precious metal is more abundant than it is these days.
Chinese gold Pandas and Mexican gold Libertads in particular include many coins that sell for substantial premiums years after they were minted. They started out as bullion but became collector coins with time. Australian Lunar coins, particularly the one ounce versions, also have a decent track record.
If you are looking for coins that are reasonably priced today but have excellent potential to increase in the future, the Mexican gold Libertad series is in my view the best choice, as no other modern world gold series has coins with mintages anywhere as low as those of the uncirculated and proof gold Libertads.
Many of those coins are minted in the hundreds, and typically only available from a handful of American dealers, or on e-Bay. Some earlier Chinese Pandas also sell for many multiples of gold value, but their mintages have been increased in recent years, though they are still much lower than those for American Gold Eagles, gold Maple Leafs, Krugerrands, and Austrian Philharmonics.
If purchased at the right moment, generally soon after they are issued and therefore usually more readily available, uncirculated gold Libertads can typically be obtained for only a little more than what much more common gold coins cost, especially at a time like now when premiums on all bullion coins are higher than usual. Of course the proof coins are more expensive since those have higher production costs than the uncirculated coins.
This year’s gold Libertads were just issued, first the proof coins and then the uncirculated pieces. The timing could not be better for investors as it coincides with a major dip in gold spot prices, although gold has by now already made up more than half of what it lost in the middle of April.
I recommend these coins and buy them myself, to the extent I can afford to do so, because over time as they become harder to source, their premiums over metal value increase substantially. Plus the buyer has the protection of the underlying melt value of the coins and the potential for premiums that should continue to increase, particularly as the market for modern Mexican coins expands. If one also has a high-grade coin that was obtained for a reasonable premium over a raw coin, then you have a real trifecta.
Last year at a time when spot was about $250 higher than it is now I purchased a PCGS MS70 2012 one ounce gold Libertad for about the same cost as a raw coin. Although the mintage of that coin at 3,000 is not a low for the series in that size, PCGS has only graded 42 coins as MS70. Plus, a raw version today sells for about $200 over melt. So when combined with the additional premium for the top-grade, which is more now than when I bought the coin, the coin has held its value despite the decrease in melt value since I purchased it, which I would have lost if I had purchased a more common gold bullion coin.
As I have suggested before a considerable amount of intrigue is associated with Mexican Libertad coins issued in gold and silver, especially in the past two years when some of the usual products have not been issued, or were only sold in certain markets.
Unlike the silver Libertads, whose mintages are not preannounced, the gold coin mintages are available when issued, though they are not easy to find.
Pat Stovall of Lois and Don Bailey and Son Numismatic Services, one of about ten American distributors of the Libertad coins, and one of only a couple that sell retail, kindly provided me with the mintages of the 2013 gold coins.
For the proof coins this year, 250 five-coin sets were minted, and only the one-quarter proof coin was also available individually with a mintage of 500, including those in the sets. That is the lowest ever for the quarter ounce proof.
For the uncirculated coins mintages for this year are as follows: 1,850 one ounce, 450 half ounce, 700 quarter ounce, 2100 tenth ounce, and 550 twentieth ounce coins.
For the BU coins, the 1/20th sets a new mintage low, and the half ounce and one ounce coins become the third lowest in their respective series after the 2003 and 2008 coins. Those are the three coins I recommend most strongly from this year’s line up if you can find them. Naturally, the 1/20th carries a much higher premium over gold value than the larger coins, even for more common gold coins in that size.
If you want to take advantage of lower gold prices, obtain a coin with a beautiful design that is an expression of “Mexico’s cultural wealth,” according to Pat Stovall, and invest in coins with excellent potential for higher future value based on precious metal value, low mintage, and scarcity, this year’s gold Libertads are a great choice.
But bear in mind that this a growing market, one that still needs to mature some more, as I expect it will. As that happens I anticipate that mintages of future gold Libertads will be much higher. That is precisely why some of this year’s coins and some of the earlier issues offer such great opportunities if you can find the coins and get them for a competitive price.
Author’s note: If you wish to contact Mr. Stovall regarding availability of gold Libertads, you can reach him at firstname.lastname@example.org
Louis Golino is a coin collector and numismatic writer, whose articles on coins have appeared in Coin World, Numismatic News, and a number of different coin web sites. His column for CoinWeek, “The Coin Analyst,” covers U.S. and world coins and precious metals. He collects U.S. and European coins and is a member of the ANA, PCGS, NGC, and CAC. He has also worked for the U.S. Library of Congress and has been a syndicated columnist and news analyst on international affairs for a wide variety of newspapers and web sites.