In the past few months, I’ve noticed a trend amongst my clients: many of them are using bullion or generics to finance their rare coin purchases. I personally think this is extremely clever, and I’d like to share their secret with you.

Let’s say you are a collector of Liberty Head half eagles and you see a nice Uncirculated Charlotte piece on my site which is priced at $12,500. You have the cash for this purchase but you really don’t want to write this big of a check.

As part of your numismatic holdings, you are likely to own some bullion or some generic gold; it makes a great way to buy rare coins.

Today’s spot price for gold is around $2,000 which makes the buy price of an MS63 Saint Gaudens double eagle around $2,150-2,175, and an MS64 at around $2,275 to $2,300. You pull out five MS64 Saints and lock them in at $11,375, leaving you with an owed balance of $1,125.

But here’s the good news: you’ve owned the MS64 Saints for a few years and your cost basis is $1,675 per coin; multiplied by five coins, this gives you a cost of $8,375. You’ve made $600 per coin or $3,000 for the group.

When you apply this $3,000 profit to the Charlotte half eagle you are buying, it lowers your cost to $9,500.

This isn’t an inconsequential amount. Your cost of $9,500 is very likely well below my cost on this specific coin and it is at a level where, if you wanted to, you could flip the coin for a profit. I’m not saying that you should do this but isn’t it nice to know that you just purchased a great coin and you saved a bunch of money doing it?

This scenario isn’t always going to work for you but even it if does just once or twice, it seems worthwhile to me.

If you’d like to use bullion or generics to purchase a coin from my inventory, please feel free to call me at (214) 675-9897or email me atdwn@ont.com.

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