When the U.S. Mint was formed by an act of Congress in 1792, the coins it was authorized to mint were backed by silver and gold. In 1792, the Dollar was fixed by law to contain 37.14 grains of silver, and was equal to 24.75 grains or 0.05156 troy ounces of gold. Gold was legally defined to be 15 more times valuable as silver.
The first gold coins were minted in 1795 - the eagle, which contained $10 worth of gold and had a $10 face value, the half-eagle, $5 and $5, and the quarter-eagle, $2.50 and $2.50. Because gold in its pure form is a soft metal, these coins were produced from gold that also contained an alloy of silver and copper to make them more wear-resistant. These coins were therefore ".91670 fine," or 22 karat gold.
In 1849, with the rush of gold from San Francisco, the gold dollar and the double eagle was introduced, with a face value of $20 and gold value of $20. The U.S. Mint continued to produce gold coins until 1933, when the nation went off the gold standard, and private ownership of gold was made illegal, except for numismatic purposes. Most collectors, afraid of the ruling, turned in their gold even though it was legal for them to keep it. However, enough collectors did not, and there were plenty of gold coins in banks overseas, to assist the modern-day collector.
These de-monetized coins are highly sought after by collectors, who pay a premium for the rarity of the coin, on top of the value of the gold it contains. While the value of the dollar fluctuates against other currencies and can go up or down, the value of gold has always gone up, and will continue to go up, which is why investors have been purchasing gold since the dawn of time.
As of the time of this writing, gold is selling for $750 per ounce and is confidently expected to go over $1,000 per ounce. Sixty percent of those people investing in gold are doing it in the form of gold coins, in particular the American Eagle, Gold Buffalo and First Spouse coins.
The American Eagle comes in a variety of weights. The 2008 one ounce proof sold by the US Mint is selling for $2,000. Of the 24-karat coins, the 2008 one-half ounce Elizabeth Monroe proof is selling for $620 and the $50, one-ounce Gold Buffalo is selling for a little over a thousand dollars. The 2007 Gold Buffalo is already sold out.
But what about the classic gold coins of yore? Because of their rarity, many Gold Eagles and Double Eagles have commanded enormous prices when recently sold at auction. The 1933 Double Eagle sold in 2004, the only one in the world that is legal tender, sold for $7,590,020 (the last $20 was the cost because it had been made legal tender.)
The 1787 Brasher Doubloon was sold a few years ago by Heritage Auctions for $2,990,000. The 1927-D Double Eagle, even rarer than the 1933 version, sold for $1,897,000. The finest known 1920-S Eagle sold in March, 2007 for $1,725,000, and the 1796 No Stars Quarter Eagle was sold in 2005 for $1,380,000.
Gold and especially gold coins have been and continue to be a sound investment in today's troubling economic times. While paper money may become worthless because there is little to no inherent value in paper, gold will always have value as a commodity.
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