Trade like a professional. With a little knowledge comes GREAT power:
“Confiscation”
In 1933, President Roosevelt issued an executive order that required all Americans to turn in almost all of their gold – jewelers were allowed to keep small amounts for their work and people were allowed to keep up to $100 worth (at that time this was almost 5 ounces of gold). His order exempted “gold coins having a recognized special value to collectors of rare and unusual coins” – also known as numismatic coins. The government never literally confiscated gold from the people, although the executive order did call for up to 10 years in prison and/or a $10,000 penalty for those caught in violation of the executive order.
There are coin dealers out there who promote investing in numismatic coins for this reason. They might offer bullion for sale, but when you call they will give you a sales pitch in an attempt to up-sell you to something on which they will make a much higher margin (see my Risk Disclosure page). They claim that you will be protected from confiscation if you own numismatic coins.
Here’s my opinion: Just because the government did something a long time ago in one manner doesn’t mean that if they do something similar again (such as calling in people’s gold) that they will do it in the same manner. Although I don’t put ANYTHING past the sociopaths in the government, I don’t think that they will again call in the people’s gold nor do I think they will attempt to confiscate it. However, if the government does try something like this, will they exempt numismatic coins? And if they do, who will decide the difference between a bullion coin and a numismatic coin? This will likely be government bureaucrats. If you own numismatic gold coins, do you trust government bureaucrats to recognize your coins as numismatic? Do you think that they will do their best to fairly evaluate your coins to protect you? Do you think they will have the knowledge to accurately decide?
Bait and switch
Many coin dealers will advertise very competitive rates on bullion. However, when you call them, they will try to up-sell you to numismatic coins on which they can make a much higher profit. They may try to use the Confiscation myth argument as described above, or they might tell you a beautiful sounding story about the coin. While I deal in numismatics, I will NEVER try to up-sell someone on a numismatic coin.
“Semi-Numismatic”
This phrase does not actually have a meaning. It’s a fake phrase that was invented by certain unscrupulous coin dealers. They were often using this term to describe “Old World Gold” coins such as Great Britain Sovereigns and French 20 Francs gold coins. These coins are not rare nor do they have any special value. Most of these coins I would sell for somewhere between 2%-6% over their melt value.
Roman Numeral Gold, certified/graded bullion
There is at least one company, they make themselves look like a big company although I doubt this to be the case. They promote American Gold Eagles from 1986-1991. These coins were struck with their date in Roman Numerals instead of numbers (Arabic numerals). The regular one ounce gold coins from these dates are not worth more, but this company gets these coins certified and graded, they give a beautiful story about the coins, how the Eagle gold and silver coin legislation was signed by Ronald Reagan and how the Director of the Mint under Reagan has signed the labels that are sealed in the encapsulation with the coins. If I have a 1986 1 oz Gold Eagle that is in the condition they typically come (essentially perfect, they would be graded MS-69), I would sell it for the same price as a 1 oz Gold Eagle from 2015. The former coin is not special, it is not rare. If you’re trying to invest in gold and silver and a coin dealer tries to sell you on something like this at a higher premium than a random date Gold Eagle, STAY AWAY from that dealer.
Counterfeits
When I started in this business, there were essentially no counterfeits of bullion coins and bars. There were counterfeits and forgeries of numismatic coins, both completely fake coins and real coins that were altered (the counterfeiters attempt to change date and/or mint mark on the coin). However, as the price of gold remains highly elevated from where it has been historically, criminals have the incentive to produce fakes and bad dealers have the incentive to pass these along as authentic. This is the reason you want to deal with an honest, experienced dealer. In addition to visual inspection, there are several steps in verifying the authenticity of a coin. It’s nearly impossible to make a fake bullion coin or bar with the exact weight and dimensions. However, it’s completely impossible to make a fake with the correct weight and dimensions that passes an electromagnetic analysis. I visually inspect every piece I buy and sell. I also own device that tests electromagnetic properties of a given piece against known properties of various metals and finenesses; I use this device on every single bullion item I buy and sell.
When dealing in numismatics, any coin that I own that is commonly counterfeited (for example, a 1909-S VDB Lincoln Wheat cent), I will only offer for sale if it is certified and graded by a major third party grading company.