Government Issued Gold Coins vs. Privately Issued Gold Rounds

Gold Coins
American Gold Eagles

This week’s article addresses the issue of privately minted gold rounds vs. government issued gold coins.  The inspiration of this post came from a recent customer who informed us that his mother-in-law was recently convinced by a coin broker to exchange her government issued gold coins for privately minted rounds due to the risk of government confiscation.  The coin broker shared with his mother-in-law that President Roosevelt signed into law Executive Order 6102 in 1933, which made it illegal to hold government issued gold coins. Only numismatic gold coins were exempt from this order, which the coin broker said extended to gold rounds; although, there’s nothing to indicate that gold rounds were also exempt.

While there is no denying that the government ordered citizens to turn in their gold coins, gold bullion and gold certificates in 1933, it would appear that a relatively small percentage of citizens voluntarily forfeited their gold coins, as we frequently buy and sell pre-1933 gold coins.  A few high profile prosecutions took place due to citizens failing to comply with the order, but by and large, a majority of citizens held on to their gold coins with little fanfare.

In our opinion, there’s a relatively small risk of gold coin confiscation in the future and believe that you shouldn’t avoid government-issued gold coins out of fear of being forced to forfeit them.  However, if you believe that this is a risk worth hedging against, then we recommend that you consider pre-1933 U.S. issued gold coins rather than gold rounds, which are considered numismatic coins.  You may also want to consider purchasing gold coins from a local coin dealer as opposed to from an online coin dealer to help keep your transactions private.

Below are just a few benefits of owning government-issued gold coins (including pre-1933 gold coins) over privately issued gold rounds:

  • Guaranteed by the issuing government to contain the exact gold weight and purity as outlined in the specifications
  • Are legal tender in the country of origin
  • Much more recognizable by potential buyers over privately minted gold rounds
  • Are less likely to be counterfeited than privately minted gold rounds
  • Are more liquid than privately minted rounds
  • Will bring a higher price when the time comes to sell your gold coins

Another potential issue with privately minted gold rounds is that the private mint that produced them or the company for which the rounds were produced may no longer be in business in the future.  This is especially true if the company uses unsavory sales practices to convince prospective customers to purchase these items.  Coin brokers and dealers have been fined in the past for these practices with many eventually closing shop due to excessive fines, penalties or a blow to their reputation.  It’s quite apparent that an American gold eagle or Canadian gold maple leaf coin is going to be much more marketable than a privately minted gold round from a company that most people have never heard of.

If you’re still convinced that there’s a risk of your gold bullion coins being confiscated, you may want to consider certified coins from well known third party grading companies such as PCGS and NGC.  Coins that have been professionally graded are typically referred to as collectible or numismatic coins.  If you’re purchasing these coins strictly to avoid future confiscation, we recommend that you focus on more reasonably certified coins, such as those with a grade of MS69.  In fact, you can oftentimes find MS69 gold coins for an additional premium of only a couple of percent over raw or ungraded gold coins.

We hope that you found today’s article to be helpful and welcome you to contact us if we can be of any further assistance.

 

 

Tony Davis
Tony Davis