Coin Collecting as Currency

“There is one standard against which (the current) debasement of currencies can be measured and one asset which investors can own to protect themselves: That standard and that asset is gold.”
Ian Lamont, writing in The Scotsman, Edinburgh
In my regular column for the Q Wealth Report this month, I would like to make a little diversion from my normal theme of banking and brokerage accounts. Why? Although bank accounts and stock market investments are an essential part of a balanced portfolio, there is another element which I believe is equally important: precious metals.
In 2002, I wrote here in the Q about the privacy advantages of Digital Currencies. Besides being a very good way of transferring money below Big Brother’s radar screens, systems like e-gold, 1mdc and GoldMoney (add .com to any of those names to visit their websites) are also a very convenient way to hold gold as an investment.
Anyone who, around that time, put a portion of their wealth into what is widely considered to be the only real money, has done very well. On the first of January, 2002, gold was at USD 278.80 per ounce. By the first of January 2005, it had risen to USD 438.80 per ounce. According to my calculator, that’s an increase of 57%. Of course the price varies (sometimes quite substantially) on a daily basis - but you get the general idea.
EDITOR’S NOTE: February 2008 update, Gold up to USD 920 per ounce and still rising!
Where is gold going next? A senior gold analyst for Merrill Lynch recently gave his opinion on CNBC: “I wouldn’t be surprised to see gold break $500 an ounce in the next few years, or to even test its highs.” Gold’s high, by the way, was $850 or more - so there is plenty of room to move up from current levels. Gold is still less than half its former high, while the International Monetary Fund recently warned that, “dollar depreciation will continue (on average) due to large deficits.”
I WILL REPEAT: February 2008 update, Gold up to USD 920 per ounce and still rising!
I agree. Gold has always been a safe haven during difficult times. And I don’t see the world becoming more stable any time soon.
But this article is not about investing in gold. It is about a less-known field of investment, but one which is very interesting for Q readers - rare coins. It is an investment which is certainly influenced by the price of gold, but which also acts on other factors.
What are Collector Coins?
Don’t confuse collector coins with bullion material such as Krugerrands or Maple Leafs. Collector coins are rare specimens which are usually (but not always) made of precious metals. They belong in your personal portfolio or collection. If you buy smart, they always have a liquid value - and can be easily disposed of at the world market price if you want to cash out. Like any other investment, this market price can go up and down.
So, why would you invest in rare coins as opposed to bullion? Basically because collectibles are not on Big Brother’s radar screen… and this is very, very good for you as a privacy seeker. Read on.
You might have heard of the Golden Rule: “he who has the gold, makes the rules.” Gold bullion translates into power. It is highly politically sensitive. The price of gold has a profound influence on the value of national currencies. That’s why the US government has so much of it, and why they stopped selling it in 1975. This calls to mind the old adage: “Do as I say, not as I do.”
Big business also sees gold as something that must be kept under control. In just one trading day, billions of dollars in gold, gold shares and contracts can change hands. That amount of money is hard to ignore.
So big government and big business do not want the price of gold to soar, and are trying hard to restrain it. In other words, gold is not an entirely free market.
And when it comes to buying, selling and holding gold, all kinds of complications can arise. Businesses dealing in bullion in the traditional financial centres such as the USA, UK and Switzerland are being watched like hawks. They are required to hold licences which are difficult to obtain. They are frequently accused of money laundering and have, in fact, been drafted as spies by Big Brother. They are required to make regular reports to government on virtually all transactions.
Anonymous bullion transactions are next to impossible. The days when you could just walk into a bank and buy bullion, no questions asked, are long gone. And if you cross an international border carrying gold bullion, expect to be asked a lot of intrusive questions by customs officers.

Privacy Advantages of Collector Coins
In contrast, the amount of money invested in collectibles each year is no threat to anybody.
This means you are still relatively free to buy and sell collectible coins without questions. You can buy and sell in cash, or make flexible arrangements with dealers. How many investments these days can you cash out anonymously anywhere in the world?
One of the most interesting ‘privacy features’ of collector’s coins is that many are legal tender in their respective countries. That means you can legally carry them across borders without having to declare them. For example, when entering or exiting the USA you are required to declare cash above $10,000. If you carry St Gaudens $20 gold coins, that is five hundred coins.
Yet the ‘real’ value of these coins is in the $600 - $1300 range - per piece! Grabbing the calculator again, in this example you could perfectly legally walk out of the USA with $650,000 without having to declare it. In fact, with collectible coins, it is quite possible to carry millions of dollars in your pocket. The customs officer (even if he knows anything about the value of rare coins, which is very unlikely) is obliged to count legal tender at face value. This is a loophole which few people have exploited, and therefore remains open.
Investing in Silver Coins
What about silver? Gold attracts such attention that silver often gets forgotten. But silver coins are of great interest as investments, too. In fact, coin experts are currently recommending silver coins as a better (albeit less liquid), long-term investment holding opportunity.
Talking of unusual loopholes, here is a titbit of historic interest. To this day, most people think that the American Morgan and Peace silver dollars contain an ounce of silver. For decades, in the last half of the 1800s, the US government maintained an official price for gold of about $18.67 an ounce. However, $20 silver dollars only contained about $15-$16 worth of silver at $1.00 an ounce. (Yes, the government made a profit on these coins just as they do today on their eagle bullion coins.) This meant that smart Europeans could exchange $20 silver dollars for a $20 gold piece and make a profit by melting them in Europe. Actually, this accounts for the rarity of many American $5 gold pieces of the 1820s and 1830s. Visiting Europeans loaded up on our world-class gold pieces and melted them upon returning home. Perhaps this paid for their passage on the ships of the era?

Don’t know where to get started?
If this opportunity tickles you, and you would like to find out more about investing in rare coins, I would be pleased to make referrals to a relevant expert. I have referred a number of clients to him in past years and all have been most satisfied. In fact, he is one of the most-respected names in rare coins and precious metals. He has been in the business since 1958, is there for the long term, and deals in coins ranging in price from under $100 to more than $1 million.
This chap is a professional who respects the privacy of his clients. Since he operates discreetly, he has also asked that we do not name him here in print. However, once you are in touch with him, you are welcome to check out his credentials publicly, or even to meet with him in person, before sending him any money.
Once you are in contact with him, he will be able to make specific, honest and up-to-date buy recommendations, as well as arranging delivery or safe custody.
If you would like a referral to our “Coyne Chap” please contact Peter Macfarlane in the Q Wealth Report offices in the first instance. Please specify the approximate sum you are looking to invest (as a rough guide, it’s generally not worth the hassle of privacy-friendly investments of less than $15,000, unless you are intending to transfer a regular monthly sum).