Pre-1933 gold coins are highly sought-after by collectors and investors worldwide. These coins survived the 1933 legislation from President Roosevelt that prohibited anyone from holding monetary gold, ordering all gold coins to be sent back to the Treasury. The surviving pre-1933 gold coins are collectible, rare coins and are highly sought-after by collectors and investors worldwide because of their rarity and value.
Before 1933, the Gold Standard was in place, requiring all U.S. currency to be backed by real gold. At this time in history, most speculate that the U.S. and most other countries could not easily return to the gold standard.
Why Buy Pre-33 Gold?
Buying pre-1933 gold refers to purchasing gold coins minted before 1933 in the United States. The year 1933 holds significance in the U.S. gold market due to President Franklin D. Roosevelt’s executive order requiring U.S. citizens to turn in their gold coins, bullion, and certificates to the Federal Reserve in exchange for U.S. dollars. The idea was to combat the Great Depression by removing gold from the monetary system and devaluing the dollar.
There are many reasons why investors and collectors are interested in pre-1933 gold:
Historical Significance
Pre-1933 gold coins provide a tangible connection to American history. They reflect the artistry, craftsmanship, and events of their era.
Numismatic Value
In addition to their precious metal content, many pre-1933 gold coins carry a premium because of their rarity, condition, and demand.
Diversification
Owning pre-1933 gold coins can diversify your precious metals portfolio. While modern bullion coins are valued mainly for their metal content, older coins may also have numismatic value.
Potential Exemption from Confiscation
One reason sometimes cited is that pre-1933 gold coins may be exempt from potential government confiscation or mandatory buyback scenarios, as they were in the 1930s due to their numismatic status.
Privacy
Older coins may be purchased with a degree of privacy, while modern bullion transactions may not.
Tangible Asset
Like all physical gold, pre-1933 gold offers the benefit of being a tangible asset. It does not rely on electronic markets or banking systems to realize its value.
Limited Supply
Many of these coins may become harder to find in good condition as time passes, potentially increasing their rarity and value.
Risks of Purchasing Pre-1933 Gold
Every investment comes with risks, even old gold coins. Here are few risks to consider,
Higher Premiums
Due to their numismatic value, some pre-1933 gold coins may have higher premiums over their gold content than modern bullion.
Need for Expertise
To ensure you are not overpaying or buying counterfeit coins, it is beneficial to have some expertise or consult with experts when buying numismatic coins.
Liquidity
While there is a market for pre-1933 gold, it might not be as liquid as modern bullion coins or bars, depending on the specific coin and its condition.
Types of Pre-1933 Gold Coins
Pre-1933 gold coins come in various denominations and each coin has seen an essential part of history through its design and the denomination itself. Most of these coins underwent various design changes through the years due to revisions by different engravers, updates in design philosophy, or technical challenges in minting. These variations can significantly influence the rarity and value of specific coins.
1849-1889 $1 Gold Coins
- 1849-1954 Type 1 Liberty Head
- 1854-1856 Type 2 Indian Princess
- 1856-1889 Type 3 Indian Princess
$2.50 Quarter Eagle
- Capped Bust (1796-1807)
- Capped Head (1821-1834)
- Classic Head (1834-1839)
- Liberty Head (1840-1907)
- Indian Head (1908-1929)
$3.00
$4.00
- 1879-1880 Stella
$5 Half Eagle
- 1795-1829 Capped Bust
- 1834-1838 Classic Head
- 1839-1908 Liberty Head
- 1908-1929 Indian Head
$10 Eagle
- 1795-1804 Capped Bust
- 1838-1907 Liberty Head
- 1907-1933 Indian Head
$20 Double Eagle
- 1849-1907 Liberty Head
- 1907-1933 Saint-Gaudens
One of the rarest is the 1879 or 1880 four-dollar Stella. NCG estimates that a MS (Mint State) 67 to be worth $400,000 to $2,750,000 (2021-2023). PCGS (Professional Coin Grading Service) reports a similar range for this rare gold coin.
If you are considering collecting or investing in pre-1933 gold coins (video), it is essential to research these coins by consulting with numismatic experts and your financial advisor. Also, take in mind that a coin’s “worth” may change frequently.
The Gold Standard: Before 1933
The Gold Standard refers to a monetary system where a country’s currency or paper money has a value linked to gold. Under the Gold Standard, the government can only print as much money as its country’s gold reserves.
The United States effectively adopted a bimetallic standard (gold and silver) with the Coinage Act of 1792. This act established the U.S. Mint and set the dollar’s value at a specific amount of gold or silver, making both metals legal tender. The fixed ratio of gold to silver was 15:1.
This legislation officially established gold as the only standard for redeeming paper money. It set the value of gold at $20.67 per ounce, where it would remain until the 1930s.
The stock market crash of 1929 and the subsequent economic downturn put immense pressure on the gold standard. As the Depression deepened, people began to hoard gold, leading to bank runs and a contraction in the money supply, which exacerbated the economic situation.
By 1933, facing a severe banking crisis and the ongoing Depression, the U.S. began taking steps to move away from the gold standard, culminating in President Roosevelt’s decision to take the country off the gold standard and prohibit hoarding of gold.
History of Pre-33 Gold
From 1795 to 1833, U.S. gold coins minted by the U.S. Mint contained 22-karat gold, also called English crown gold. These coins were mandated to have a composition of 11/12 pure gold and 1/12 alloy. The alloy was limited to silver and copper. During these years, U.S. gold coins comprised 91.67% gold and a blend of silver and copper. The silver content could not exceed 4.167% of the coin’s total weight, while copper ranged from a minimum of 4.167% to a maximum of 8.33%.
In 1834, the gold content of U.S. coins was reduced. This adjustment was made because the rich gold content in the coins made it lucrative for traders to export and melt coins abroad. Between 1834 and 1836, U.S. gold coins contained 89.92% gold by weight.
Beginning in 1837, the composition of pre-1933 U.S. gold coins was standardized, a standard that persisted until gold coin production ceased in 1933. These coins now had 90% gold and a 10% alloy made of silver and copper. From 1837 to 1840, the alloy was set to have a maximum of 5% silver, with the remainder being copper, not exceeding 10%. However, by 1841, silver was eliminated from the alloy, resulting in pre-1933 U.S. gold coins having a composition of 90% gold and 10% copper.
What Happened in 1933?
The Great Depression, which began in 1929, caused distrust in the banking system. Many people withdrew their deposits in the form of gold or gold-backed currency because they feared bank failures. There was a growing concern that the U.S. might devalue its currency against gold. Hoarding gold was a way for individuals to protect their wealth from potential devaluation.
As the government’s intent became clear about moving away from the gold standard and potentially confiscating gold, which eventually happened with Executive Order 6102 in 1933, people began hoarding gold in anticipation. This may be why our great grandparents may have hidden their money or gold under their mattresses or in a can buried in the yard. Now, many of us rarely carry currency, nonetheless gold.
In 1933, amidst the Great Depression, the United States took a series of measures related to gold, dramatically affecting the gold dollar and gold in general.
Executive Order 6102
In April 1933, President Franklin D. Roosevelt issued Executive Order 6102, which required U.S. citizens to exchange their gold coins, bullion, and certificates for U.S. dollars at a set price of $20.67 per ounce. This order criminalized the possession of monetary gold by any individual, partnership, association, or corporation. The order made under the authority of the Trading with the Enemy Act of 1917 aimed to stabilize the banking system and boost the economy by removing gold from private hands and increasing the gold reserves of the U.S. Treasury. The only exceptions allowed were certain jewelry types, industrial-use gold, and rare coins.
Gold Reserve Act of 1934
This legislation passed in January 1934, gave the U.S. government title to all gold coins in possession of the Federal Reserve and halted the minting of gold coins. It also established the Exchange Stabilization Fund, allowing the U.S. Treasury to control the exchange value of U.S. dollars.
Effect on the Gold Dollar
The gold dollar, a coin minted primarily in the latter half of the 19th century, was not being minted by 1933. However, like other gold coins, those in circulation would have been turned in during the gold recall unless they were deemed as collectibles or numismatic pieces. After 1933, no further gold coins were minted for circulation in the U.S., marking the end of the gold standard era for U.S. coinage.
The impact of these decisions was profound. By moving off the gold standard and increasing the price of gold, the U.S. government aimed to devalue the dollar, which they hoped would stimulate the economy by making U.S. goods cheaper and more competitive in the global market. However, the decision also represented a significant shift in U.S. monetary policy, moving away from a tangible gold backing for the dollar to a fiat currency system.
So, should you invest in pre-33 gold? If you have the means and want to diversify your portfolio, perhaps. Review the risks and consult with your financial advisor before making a large purchase.
