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United States $20 Gold Double Eagle – Golden Potential in a Falling Market

Justin Brigandi

Introduced in 1849, the $20 Double Eagle was one of the first gold coins minted by the United States Government. The Double Eagles were issued as regular currency as the market price of gold at that time was set at $20.67 per ounce! (for comparison, a good travel horse in 1850 cost between $10-$25)

Following the Gold Reserve Act of 1934, the U.S. Department of the Treasury recalled the entire country’s gold reserve and banned the private possession of the precious metal. This brought the price of gold from $20 an ounce to $35 per ounce, and the $20 Double Eagles were discontinued!

The $20 Double Eagle is composed of .9675 AGW. (30 grams of .900 pure gold)

   Liberty design: 1849-1907                      St. Gaudens (common) design: 1907-1932

A lot has happened in the coin collecting world in the 167 years since these coins were minted, especially in the last two decades.  Twenty dollars in face value in 1849 is the equivalent of about $600 today, but with gold currently trading at about $1,250 per ounce, the $20 Double Eagle is worth more than that. With that being said, today's premiums are not nearly as high as they were twenty years ago.

Starting in the early 1990’s, most Uncirculated Double Eagles were selling around $450 - $700, on a gold market that never broke $400 per ounce (20%-90% premium). In 2005, gold was raised to an average price of $425 per ounce, and the realized price for the $20 Double Eagle jumped to $700-$950 (70% - 100% premium, sometimes even more!)

In the coming years, as the price of gold continued to spike, the value of the Double Eagle simply could not keep up! While most of us in the coin collecting universe figured the Eagles would continue to soar with the gold market, this was not the case.

As the saying goes… what goes up must come down!

By July of 2008, gold reached a then-record $900 per ounce. July auction records from that time indicate that the U.S. Double Eagles were bringing a mere $1,000-$1,200, dropping premiums to as low as 15% (premiums were nearly 12x higher just a few years earlier!)

Almost a decade later, where are we now?

At Brigandi's, we are currently offering graded MS60 common date Double Eagles for $1,350, a mere $150 over the scrap value of the coin (figure an additional $40 per coin for grading expenses). With current premiums less than 20%, what happened and what went wrong?

Clearly, the once-highly collectible $20 Double Eagles failed due to their inability to survive a rapid gold spike. Collectors and investors who had purchased the coins in the early 1990's and 2000’s were getting prices they had never seen before and yielding significant returns. Even shrewd collectors cashed out! Those who were used to paying $500-$800 to fill their sets were now looking at well over that just in the scrap value of the gold. On an extreme scale, if today’s premiums were the same as they were in 2005, the Double Eagles would retail for $3,500-$4,500!!

As gold continued to rise into the late 2000's, dealers lowered their premiums on $20 Double Eagles to keep their collectible alive. By 2010-2011, the price of gold reached an all-time high - trading between $1,800 and $1,900 an ounce, and these premiums essentially disappeared.

Investors will always tell you to “buy low – sell high!”

So… is this a buying opportunity?

Here are the facts!

1. Scarcity
           - Large quantities of Double Eagles were melted during the 1930's when gold was recalled, and again during                the 2009-2012 gold rush
           -the already low population can only drop if collectors continue to melt them for gold
           - these coins are over 100 years old, or close to it, and will never be minted again       

2. Premiums have never been lower

3. These NUMISMATIC coins cost slightly more than a modern 2017 1 Oz. Gold Eagle (.999 pure bullion coin)

 

 

**please note** gold price and premiums subject to chance

 



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