I have a gold coin assed at 15,000$ ,would I get my most value by selling this and buying bullion or contine to hold after y2k?

-- Tricia Hintlian (fnwyss5@aol.com), September 21, 1999

Answers

Tricia

I'm assuming that it's $15,000.00 value is due it's collectibility and not that it's just a great big lump O gold.

Whether or not you hold it, depends on just what you expect to happen next year, and how long you are willing to hold it.

Even in a mild Y2K scenario, there's a big chance of the collectibles market going in the tank, for at least a few years. I think that will hold true whether you're talking about collectible coins, antique furniture, or old toy trains - the prices will be wayyyyy down.

I've done a lot of dealing in the collectibles market, over the last few years. I'm already seeing a slow down. That could be because of changing tastes - I'm dealing primarily in 40's, 50's, 60's retro, and no nostalgia craze lasts forever. However, other dealers that I know, who deal in different collectibles are complaining about business, as well. I'm now letting my stock deplete, but then I'm expecting it to get bad and I need the space to store food (My basement is my "warehouse").

My best advice is, if you think it's heading toward a 4 or worse, sell it. It may be a long time, if ever, that it will get back to it's current value.

Let's put it this way: If I were holding an old coin that was worth $150.00, I'd probably take a chance and hold it. You gotta hedge your bets a little, and i wouldn't die for the lack of $150.00. But $15,000.00 isn't exactly chump change, and I'd really hate myself, if the price plummeted to weight value while I was holding it.

-- Bokonon (bok0non@my-Deja.com), September 22, 1999.

Other than the fact that gold is used as an international standard for currency, what inherent value does it have? You can't eat it, you can't fuel your vehicle with it, you can't heat your home with it, etc. So what's the big deal with gold, anyway? I'd rather have a 10,000 gallon tank of gasoline and a ton of rice and beans.

-- billyjoebillybob (jamf@aol.com), September 22, 1999.

Sell it. I agree with all of the above. Collectibles may not recover thier current value in the next 10 years.

If you already feel well prepared, food etc. then I would convert to gold bullion.

-- LM (latemarch@usa.net), September 22, 1999.

Tricia

The coin you have (probably a 1 ounce coin) has a base value which is determined by the amount of gold...sometimes called the melt value. Let's say it is $260 per ounce.

You claim that the coin is worth $15,000. I assume this means you have at least one dealer who has seen the coin and is willing to pay you $15,000. Did you ask a second dealer?

In any case, all of the value above the melt value is called the premium.

In general, when the market for gold heats up (which it is not right now) it has often been the case that the premium (collectors value) will rise even faster than the base value. So, many coin dealers are advising clients to buy rare coins now that the market is down.

In a serious economic downturn, caused by y2k, and involving a lot of bankruptcies and forclosures, there will probably be a problem with liquidity. In this case, many wealthy people may be forced to liquidate their valuable gold coin collections to pay for basic needs and this could quickly drive the prices of collectible coins down.

From a purely value based analysis, if you sold your coin and used it to buy 1/10 ounce bullion coins, you lock more of your money into the melt value and will not loose if collectible premiums fall. Remember that you (officially) may be required to pay taxes on the "profits" from that sale. Since you want to stay in gold coins, you can get around this by "trading" coins...in that case you need a dealer you can trust. You could trade over into a coin type or mixture of coins which have only a very small premium.

Perhaps this coin was a gift many years ago, and you have always held it for a "rainy day". If so, the rainy day is here..sell it and invest in other more solid value.

-- Thom Gilligan (thomgill@eznet.net), September 22, 1999.

Tricia,

The answer to your question is "I don't know", in the mumbled form a-la Homer Simpson.

Monolithic articles of high value only remain that way so long as there is someone willing to buy them; they are by definition extremely volitile assets. If (when?) the economy turns bad, such collectables are the first thing to suffer in value -- they will only be worth the materials they're made from. This is exactly what happened during the 1930's. Sounds crude, but if everyone is broke then an $8 million Leonardo da Vinci masterpiece is nothing but a bit of rotting canvas covered in tacky paint.

On the other hand, after (if) the economy has recoverd then your coin may be worth a whole lot more; for instance, similar rare coins may have been lost or melted down during the crisis.

Tricia in these few days remaining before Y2k you must decide whether $15000 would be of better use to you right now, or if you think the coin might serve you better as a long-term investment. It's a gamble either way; but that is what "investing" is all about.

But my gut instinct, as someone who knows nothing about valuable coins or other collectables, is this. Convert that single high-value volatile asset into many lower-value assets whose value should remain more or less the same if there is a Y2k crisis. Make no mistake you will probably lose money if you sell your coin and Y2k turns out to be a fizzer. BUT better to buy yourself some "insurance" in the form of extra food, gold, etc., rather than going hungry whilst clutching a worthless heirloom. And remember this is insurance against not just Y2k, but against any kind of downturn in the economy.

Thanks for listening and good luck for the future whatever you decide!

-- JQ (onca@hotmail.com), September 23, 1999.

Of course, the primary concern is food and water (a ton of rice is going for about $480 right now, by the way). 30 tons of rice would go a long way! (Well, maybe not if you are the only one in your community who prepares.)

But an investment option may be the 1999 fractional Platinum Eagles. Although Platinum is up from its low a few months back, the fractional (0.50 oz, 0.25 oz, and 0.10 oz) pieces may now be obtained at bullion prices. This December, when the mintages are published, prices should jump into collectable (numismatic) ranges by January. At least this is what has happened each year since the coins have been minted.

The same strategy can be applied to some extent with the 0.50 oz Gold Eagles, but mintages are typically considerably higher for Gold vs. Platinum.

Of course, Y2K may negate or lower any collectable premiums, but the trick is to buy them now at bullion prices, lowering your downside risk.

-- Zach Anderson (z@figure.8m.com), September 23, 1999.