For your serious consideration . . .

Several years ago I came up with a rather unique way for my clients and subscribers to move some of their assets out of the United States with relative ease and at relatively low cost.  Take a look at the type of asset I was discussing:

 

This is, in the opinion of many, the most beautiful coin ever minted in the United States. It is:

  1. 95% gold and 5% copper.

  2. .9375 ounces of gold.

  3. Designed by sculptor Augustus St. Gaudens of New Hampshire.

  4. Minted between 1907 and 1933.

  5. It is called a Double Eagle because its stated value is $20, as you can see on the reverse pictured above. An Eagle is a $10 gold coin.  This particular coin is called the St. Gaudens Double Eagle.

 

Confiscation

In 1933, as you may recall, Franklin Delano Roosevelt issued an order making it illegal for Americans to own gold, with only a couple of exceptions. Americans could own gold in certain amounts if they were in the jewelry business, and all Americans were permitted to own gold coins with numismatic value and gold jewelry.

Roosevelt paid those who owned the gold he was about to confiscate $20 an ounce. Immediately upon completion of the confiscation, Roosevelt raised the price of gold to $35 an ounce, and thus completed one of the greatest thefts in human history.

Americans who owned gold were pretty intelligent in those days. Millions of these “Double Eagles” quickly found their way out of the United States. Many of them found their way into the private collection of King Farouk of Egypt. Others were scattered across the globe, and only began to be repatriated once President Richard Nixon made the ownership of gold legal again in the 1970s.

Value

As of this writing, an ounce of gold is worth approximately $1,321.50. A Double Eagle like the one above, having only .9375 ounces of gold, is worth about $1,238.91. However, that is merely its gold “melt value.” All of the remaining St. Gardens Double Eagles have some numismatic or collector’s value because of their scarcity and their beauty.

Condition

Over the past 40 years or so the grading of coins in terms of their condition and their quality has become a much more exact science. In 1948 a system was developed by Dr. William Herbert Sheldon with which all coins could be graded on a scale of 1 through 70.

A coin graded 70 did not exist until a few years ago, when it became possible for a coin to be struck perfectly in a press and then to travel literally “on a cloud” until it could be examined by a certified professional and placed into a sonically sealed, tamper-evident clear plastic holder.

There are two basic types of coins: those minted for circulation, and those minted with the intent that they be collectors’ items, never to be circulated. The latter type of coin is called a proof coin. A proof coin is struck from a special, highly polished die. These days, the technology is good enough that the dies can have either a highly polished background or a highly polished relief, making for a very distinctive image. The St. Gaudens proofs had “Satin Proof” backgrounds and relief.  We will only discuss coins designed for circulation in the remainder of this article.

Two companies have become the primary and most highly respected grading services in the world, the Professional Coin Grading Service (PCGS) and the Numismatic Guarantee Corporation (NGC). These companies set the standard for coin grading and have graded and “slabbed” millions of coins. Coins designed for circulation may have a couple of letters added to their grade number. For example, EF means Extra Fine; AU means Almost Uncirculated; MS refers to Mint State, a coin graded 60 or above. MS60 is the lowest level of uncirculated coins; MS63 is considered the lowest grade of a beautiful uncirculated coin.

Pricing

The coin pictured above is known as a 1907 Saint.  As you can see, it bears the motto “In God we Trust” on the reverse. In 1908 that motto was removed on thousands of the coins that were struck that year, and then added back on to all subsequent strikes.  The 1907 Saint is not a particularly valuable member of the series, but its pricing is indicative of the importance of careful grading:


From this table you can clearly see the importance both of condition and scarcity. The 1924 coin, the most common date in the series, is exceptionally rare graded MS 68. The less common 1907 Saint is scarcer in all the uncirculated grades except for MS 68.

This idea involves taking advantage of the numismatic value of these gold coins without paying a significant premium over there “melt value.” You want to make sure you get the most gold for your dollar. To this end, I recommend that you focus on the MS 63 and MS 64 grades of the more common date coins such as the 1924, the 1908 No Motto, the 1914-S (“S” stands for the San Francisco Mint), the 1927, the 1925, and the 1928.

 

 

 

 

 

 

 

 

 

 

 

 

Above: An encapsulated coin graded by PCGS.

By the way, when FDR confiscated gold he ordered all the 1933 St. Gaudens Double Eagles to be melted down.  Only a couple of dozen are known to have survived.  Do you think they might be valuable today?  Take a look at the Price Guide at www.pcgs.com to find out.

The idea

  1. Gold is real money. Unlike currency, it cannot be created out of thin air or with paper and a printing press. It has value because it is held in esteem by people all over the world, and because it is relatively scarce.

  2. Governments around the world are desperate for revenue.  In addition to high taxation at all levels of government, governments are utilizing tools like “civil asset forfeiture” to help them meet their budgetary demands. As was already mentioned, our Federal government at the behest of Franklin Delano Roosevelt confiscated gold. This was not the first such confiscation in American history; it was Abraham Lincoln who, during the Civil War, confiscated both gold and silver coins. Lincoln also was responsible for the creation of the “greenback,” at least the second American currency created by government fiat which failed.

  3. It is reasonable to anticipate that gold will be confiscated once again. In 1933, the only coins that were not confiscated were those with numismatic value.

  4. A St. Gardens Double Eagle encapsulated in a clear plastic slab by a grading firm like PCGS is by definition a coin with numismatic value, and might not be subject to confiscation the next time around.

  5. We may be due for another round of inflation, perhaps one leading to hyperinflation because of the extensive “money printing” by the Federal Reserve. Because gold is money, its value is independent of the value of the currency in which it is being traded.

  6. We may actually see the collapse of our currency, our Federal Reserve Notes, which have no basis or backing in any tangible asset whatsoever. They are a true “fiat” currency and have value only as long as people esteem them to have value. A fiat currency is basically a confidence game. In a currency collapse, gold could retain its value while its price in dollars could soar.

  7. The final aspect of this idea involves internationalizing your gold coins. Following recommendations from Doug Casey, whose ideas I have trusted and respected for decades, I suggest that if it is possible you might want to store your gold coins in a safety deposit box in Canada, particularly at a branch of the Royal Bank of Canada.

  8. Royal Bank of Canada is one of the very few Canadian banks with very few ties to the American banking system. This “arm’s-length” distance can make it just a little bit more difficult for the IRS or any other government agency in the US to seize or confiscate your gold.

  9. The transportation of valuable items including gold, silver, and other precious metals as well as currency of any nation is subject to reporting requirements when national borders are crossed. The minimum amount that needs to be reported is $10,000. If you were to take, for example, 25 gold St. Gardens double Eagles from the US to Canada, when you talk to the customs agent at the border you need only say that you’re carrying 25 $20 gold coins, with a total face value of $500. That is perfectly legal, or at least it is as of this writing. That may change in the future. However, these coins will always be legal tender in the United States at the dollar value stated on each coin. (Just don’t spend them, please!)

  10. What if you transport more than $10,000 in face value in gold coins across the border? You simply report at the appropriate time and place, and you will be questioned by customs agent about the transaction. I did so on one occasion when I was bringing more than $10,000 in Canadian currency into the United States from Canada. I fulfilled my legal obligation by declaring what was I was transporting, and when I spoke with the customs agent he simply asked me why I would be transporting that much currency. I replied that it was part of my trade has a financial advisor, and that was the end of the matter. I crossed the border and took the money with me. Nothing was reported to either the American by the Canadian governments. In the not-too-distant future that too might change.

  11. Finally, you are doing this for asset protection and privacy more than for significant appreciation potential.  If you wanted appreciation potential as well you would be better off with silver. However, the thought of carrying a couple of hundred pounds of silver across the border (also completely legal) and renting enough safety deposit boxes to hold it all kind of boggles the mind.  I took a full 75 pounds of silver on a Southwest Airlines flight many years ago; I don’t want to do that again.

 

Who should do this? 

  1. Those with money they can literally “sock away” in a less-accessible place than usual.  

  2. Those who want to protect themselves through owning tangible assets.

  3. Those who are concerned about the massive changes taking place in America as the creep of socialism turns into a full gallop.

  4. Those who are concerned about the further devaluation of our currency through inflation, money printing and foolhardy schemes foisted upon us by our elected representatives.

  5. Those who want the convenience and portability of rare coins rather than less liquid, hard-to-transport works of art, expensive wines, and other high-value items.

 

If you feel this strategy is appropriate for you, here is what you do:

  1. Apply for a U.S. Passport. If you will be opening a joint account in Canada, both spouses will need passports.

  2. Find a convenient branch of the Royal Bank of Canada that will open an interest-bearing savings account for you and provide you with an adequate-sized safety deposit box.

  3. Make an appointment to visit the bank.

  4. Purchase your coins.  If you don’t know how to go about it, we will be happy to provide common-date $20 gold St. Gaudens Double Eagles certified MS63 and/or MS64 by NGC or PCGS.  The price you will pay for these coins may be well under the prices quoted in the PCGS Price Guide (available online at www.pcgs.com at no charge).  Those prices are “full retail,” the kind of price a regular dealer might charge – though he might add a small markup as well.  Instead, we have often been successful at buying gold coins at a discount of 7%-15% from the PCGS-quoted prices.  We will mark them up 3% and charge you for shipping via registered mail.

  5. Travel across the border to Canada (I recommend driving instead of flying – the TSA will also question you about what you are carrying if you fly, but they cannot legally stop you from taking the coins to another country.)

  6. Open your new account, obtain your Safety Deposit Box, place in it your coins, and enjoy the rest of your trip.

  7. If you wish to insure your coins, ask the banker about available insurance coverage.  Coverage obtained in the U.S. for these items is difficult to obtain and may not serve for assets physically located outside the U.S.  If the banker cannot make a recommendation, call some local Canadian insurers on your own.

 

Important

Always be courteous and give as little information as possible to U.S. and Canadian officials in Passport Control, Customs, and everywhere else.  In this day of Civil Asset Forfeiture resulting in the confiscation of billions of dollars in cash and valuables every year, we Americans don’t have the security we once enjoyed in our own property.  Remember the statement I gave you previously; you are transporting gold coins with a face value of $20 each, not valuable coins for which you may have paid between $1,400 and $1,750 each.

Remember also that everything you are doing is perfectly legal – today.  Tomorrow may be different, so time is somewhat of the essence.

One last note

It looks like premiums have returned to these coins. Several years ago you could purchase these coins at a discount to their retail value in the PCGS Price Guide.  Today (March 2019) most St. Gaudens Double Eagle graded MS63 and MS64 are selling at a significant premium to their PCGS price.  The premiums are higher than they have been in years in terms of the amount you pay for these coins over their “melt value” in gold. The best value at this moment seems to be in the MS66 coins, a much scarcer condition whose value is not at present fully reflected in their prices.

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