Gold Coins: Fun Collectibles That Offer Financial Security

In 1688, somewhere in the city of Agra, a metalsmith placed a gold nugget on a die, set another die atop the nugget… and slammed it with a hammer, fashioning it into a beautiful coin. The coin was minted to commemorate the reign of Aurangzeb, ruler of the Mughal Empire that stretched across South Asia from the 16th to 19th centuries. Aurangzeb’s mother, Mumtaz Mahal, is the woman for whom the Taj Mahal was built as a grand burial site in Agra in the mid-1600s.

All these centuries later, the coin—what’s what’s known as a gold mohur—remains in pristine condition, looking as though it was minted just yesterday. It now sits in a safe-deposit box in south Louisiana. My safe-deposit box.

I’ve been a rare coin collector since I was a kid. As part of that hobby, I have a habit of wandering into rare coin shops all over the world when I’m traveling, looking to grab a gold or silver coin to add to my collection at a reasonable price.

That’s how I came into possession of that gold mohur from Aurangzeb’s reign as Mughal emperor. I was in London, not far from Trafalgar Square, and I popped into one of Britain’s oldest coin dealers—A.H. Baldwins & Sons, a staple of the British numismatic community since the 1870s.

In a second-floor room with a glass wall overlooking the Strand below, a dealer and I chatted about a variety of coins he’d laid out for me in a velvet-lined tray. Ultimately, I snapped up the gold mohur and a silver Roman denarius from the year A.D. 141, during the reign of Emperor Antonius Pius. As with the mohur, the denarius looks as though it left the mint yesterday.

To be clear, my hobby isn’t so much about coin collecting as it is lifestyle protection. I imagine that sounds strange. But my concern is that we’re living through a time when the government has decided debt doesn’t matter and that the dollar can be sacrificed in the pursuit of wild overspending.

Which makes investing in collectible coins not just a fun hobby, but a sensible financial strategy.

Why I Buy Gold Coins When I’m Traveling

In my 57 years on this earth, Uncle Sam’s debt has expanded from $320 billion, or a paltry 40% of America’s economic output, to $31.5 trillion, or 122% of the size of the country’s gross domestic product. Add in all the off-balance-sheet debt America owes for its various unfunded liabilities like Social Security and Medicare, and the U.S. debt-to-GDP ratio is right up against 600%.

I don’t think it’s unfair to call that banana republic levels of financial mismanagement. Nor do I think it’s unreasonable to worry about what all this debt means for the long-term stability of the U.S. dollar and financial system. So, I buy gold and silver as my way of protecting myself against what I am certain is a coming monetary crisis.

I hear naysayers panning gold all the time. But since its peak in 2002, the dollar is down 15%, while gold is up more than 525%. That tells me savvy investors are buying and holding gold as an antidote to a potential dollar crisis.

Yes, gold is archaic. It’s old school. But precious metals have been the solution to virtually every monetary crisis in history, and there’s no reason to think that this time would be any different.

Plus, there’s a historical reason why owning collectible coins makes sense. In the 1930s, President Franklin D. Roosevelt confiscated gold as a way to stabilize the dollar and then repriced the metal higher, thereby devaluing all the dollars people held. However, while FDR confiscated gold bullion, he did not confiscate collectible rare coins.

Now, I’m not saying confiscation is likely again. But I’m also not not saying that. And if it were to come about… well, a nice proportion of my gold holdings is in collectible coins.

I first started adding gold and silver coins to my collection about a dozen years ago. In that time, I’ve strolled through coin shops in London, Copenhagen, Prague, Moscow, Hong Kong, Singapore, as well as the Estonian capital of Tallinn and the Latvian capital of Riga. I haven’t bought coins in each of those locations, typically because I didn’t find anything I liked, or if I did, the price wasn’t right.

But in many places, I’ve been a buyer.

In St. Petersburg, Russia, I found a small coin shop half an hour from the Hermitage Museum. There, I picked up a lovely five-ruble gold coin from 1898, during the reign of Russia’s last czar, Nicholas II (the one who was murdered, along with his family, by the Bolsheviks).

In Copenhagen, I walked about 30 minutes from my hotel to the tiniest of coin shops I found online. There, the owner spent the better part of an hour chatting with me about gold coins from Scandinavia and that part of northern Europe. In the end, I picked up a shiny-as-new Dutch 10-guilder gold coin minted in 1897 in neighboring Netherlands, with a very young-looking Queen Wilhelmina on its face.

Wandering around Prague, where I live, I’ve come upon an unusually sizable number of coin shops, all packed with coinage from central Europe, particularly pieces from the Austrian Empire, of which the Czech Republic, then known as Bohemia, was a member state. In those stores, I’ve bought an eight-florin gold coin from 1887, and several Austrian gold 100-coronas from the 1910s, just before World War I ended the empire.

Back at A.H. Baldwins on a different trip through London, I added another mohur from the reign of Shah Bahadur, the last Mughal emperor, from the mid-1800s… a gold Kahavanu from Sri Lanka, circa the 10th or 11th century… and my favorite coin yet—from the rule of Mongol Emperor Genghis Khan, minted in the year 1222, and one of less than 300 known to exist.

Here’s the big question people ask: Why buy coins when you’re traveling when you can just buy gold coins in the U.S.?

Fair question.

Several answers: I see coins as unique souvenirs from my travels, much more valuable in the end than, say, refrigerator magnets. I like finding coins unique to the region I’m visiting, such as a 1924 silver one-ruble coin from the early days of the Soviet Union, and designed in a constructivism art style that was popular at that point in history.

I also like that I can very often find greater value locally. I found that 1924 silver ruble (in lovely condition) at a rare coin shop in Riga, Latvia, and it cost me the equivalent of about $37. I’ve seen them elsewhere in the $70 to $90 range. I’ve found extremely nice gold coins at prices of just 2% to 3% above the spot-price value of their gold content. More often than not, even basic gold coins are going to cost at least 7% to 10% over spot.

How to Buy Gold Coins Overseas

To be sure, you’re not going to find bargains—or even fair deals—at every coin shop you stumble upon in your travels.

At an antique/rare coin store in Old Town Tallinn, I found a nice, three-ruble platinum coin from Catherine the Great’s reign as Russian empress (these three ruble coins were the first platinum coins ever minted). Alas, the shop owner had wildly overpriced the coin and wouldn’t negotiate.

Before I travel, or if I’m on the road and suddenly get a hankering to grab a coin somewhere, I just Google “numismatic shops in [insert place name].”

The term “coin shops” doesn’t typically generate the right results because a lot of gold buyers, jewelry stores, and antique dealers sell coins. They too often pop up in the search results, and I’ve found they’re not where you want to go. Because they’re not coin experts, they usually overprice the coins they have, just like coins on eBay are almost always overpriced.

Legitimate numismatic dealers are much more rational with their pricing because their business is based entirely on coins. Sure, the super-rare coins will be rightly pricey, such as that Genghis Khan coin I bought for close to $10,000 at the time.

But your run-of-the-mill historic coin is basically priced as bullion. Its primary value is its metal content rather than its rarity. True numismatic dealers know their buyers recognize this fact and so don’t try to rip them off—not always the case with antique shops that only have a few coins here and there.

Don’t be afraid to negotiate.

It’s not like buyers wake up every morning and think, “I’ve run out of gold coins! I must go to the gold coin store!” By which I mean a lot of rare coin shops don’t have a regular stream of customers flooding in every day. So, store owners are often willing to haggle a bit. Don’t expect to pay less than the value of the underlying metal, but for raw bullion coins it’s often possible to negotiate down to a few percentage points above spot price.

Which means, know the price of the underlying metal on the day you’re shopping. That way you can calculate the coin’s intrinsic value on the fly with your smartphone calculator.

Ask the store owner how much gold is in a coin, or Google it. Coins from the last couple of centuries are generally known, uniform weights. For example, those Austrian 100-coronas I mentioned all contain 0.9802 troy ounces of pure gold.

Coins from ancient times were not typically uniform, but a good numismatic dealer will be able to tell you the weight and composition of the coin.

And with that, you’ll have a souvenir from your travels literally worth its weight in gold, and which will help you preserve your lifestyle as inflation and America’s worsening fiscal situation continues to erode the value of the dollar.