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50% greater than gold, with 100% less risk.

David Ganz, author of Rare Coin Investing, has an interesting article on government seizures of gold. Ganz is a lawyer by trade, and has laid out precisely how any seizure could happen.

Many of our friends have said they would hide their gold bars, perhaps burying it in the back garden to prevent the seizure, which is understandable.

Setting aside the possibility that if discovered, one could end up spending some time in a cell at the government’s pleasure, how would that have worked out with today’s record bullion prices?

It is quite easy to calculate. Using the 1933 seizure by Franklin Roosevelt the price of gold has risen from just $20 per ounce, to the recent high of $1,900.

That is an effective compound rerun of 6% per annum for 78 years.
    
Not bad when compared to stock markets, which according to Citibank have shown just over 3% return over the past 100 years.

Now let us, just speculate that one had decided to establish a “rare and unusual” coin collection to stash your hoard and not gold bars. First, your collection would not have landed you in prison.

Second, using the same price of $20 face value on a Double Eagle, the base price today is around $2,400, which is a compound return of 6.3%.

Had one had the courage to spend a premium, let’s say double the melt value for a Carson City $20, the average compound return would have been in the region of 7.1%.

Far more interesting, are the smaller denominations. Using a 1920’s Indian head $2.50, with just 0.12 Oz of gold, the average compound rate of rerun would have been in excess of 9% per annum.

A fifty percent greater return than bullion and 100% less risk of prison.

Now obviously, the government would need to know that you actually had the gold, which is probably why they have introduced stringent reporting requirements. But as Ganz points out, during all seizures and exchange controls of the past 100 years, “rare and unusual” coins have mostly been exempt.

Starting a coin collection does mean conducting some due diligence, but probably the most important part is finding a dealer that knows what you want, and can find what you need. It is this relationship that will make or break your collection. If there is a chance that we can be of help, call us on 44 12 6872 5001 or email me directly on stuart@scoinsandbullion.com

Rare coins and about protection, not speculation. Prices for numismatic coins currently have the lowest premium over melt I have known in 24 years. Once in a lifetime rare coins are coming on the market, and we need a few good men to help preserve them. Our priority is eliminating downside risk, if we can do that, the upside will come.