The $80 difference between the price of the coins ($285) and the bullion value ($205) represented the premium - about 39% in this case. But they only cost around $285 each for lightly circulated XF to AU specimens with good eye appeal. At the time, each coin contained about $205 worth of gold (with spot trading at $1,700). I could buy myself pre-1933 gold Indian Head quarter eagles (with a $2.50 face value) to get gold exposure while limiting my downside risk via numismatic value. This led me to a tangible investment epiphany. As the gold price rose, premiums on these coins (the amount you paid over the intrinsic value) seemed to inexorably compress. gold coins had been declining for years beforehand. I wanted some exposure to gold, but I also wanted to hedge myself against the possibility of a future decline in prices. The price of gold had recently peaked at just over $1,900 an ounce in 2011 and, after a small decline, was carving sideways in choppy action. Around 2011 I had a really great investment idea.
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