Separating You from Your Money
From Blanchard in New Orleans I received a postcard screaming “Protect your wealth with something solid!” Beneath that headline was a picture of an American flag and two St. Gaudens double eagles. On the back the card asked if I was tired of losing money, etc. It offered to solve all my problems by selling me uncirculated $20 double eagle gold pieces. “These heavy, gold-rich coins provide intrinsic value, liquidity, and privacy benefits.”
Gold-rich coins? Heavy? These are investment criteria? Somebody give the copywriter some imagination pills. And mercy, there’s that old red herring “privacy benefits.” What privacy benefits?
Now Blanchard’s the same company a year or so ago that sent out a “special report” to all its clients advising them that they had finally discovered that gold was a terrible investment that was never going to recover. They had also discovered that you had better (quick!) send them your American Eagles and Krugerrands so they could swap you into—rare coins! Like these “heavy, gold-rich” double eagles.
That made me want to go back and check some statistics.
Back in July 1999, spot gold was nearly at its bottom at $254.50, while the “heavy, gold-rich” $20s sold for $440 each (MS62 St. Gaudens). Four years later, in July 2002, Gold was trading at $323.80, up 27.2% from 7/99. Meanwhile St. Gaudens $20 golds were selling for $415, a 5.7% loss.
What’s the lesson? If you want to invest in gold, then invest in gold, not quasi-rare coins with inflated prices pumped up by companies with boiler-rooms full of telephone salesmen. Buy what makes sense for you, not what makes money for them.