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A Little Treasure Story
(August 28, 2007) Today’s afternoon London gold fix was $666, a portentous number to some. But since March the market has been consistently saying that an ounce of gold is worth two-thirds of a thousand American dollars. Deviations from that level have simply been noise.
As always, the “perpetual machinations of alternating avarice and fear” have been at work, but have recently played to a draw in the gold markets. Gold started this year in weakness, breaking down in early January to around the $608 level, but by March had recovered to $660 and has fluctuated on both sides of that level since. Even the recent turmoil in the credit markets has had little effect (except that harrowing Thursday a couple of weeks back when gold prices shed $24 in short order). There has been a recent flight to safety (gold), but demand has been offset by large traders needing to liquidate that which is always most liquid (gold again).

But that’s all we’re going to say about the recent boring gold market. Now it’s time for a little $40,000 treasure story.

At our retail store here in Phoenix, the Coin Gallery, we from time to time have people come to show us their inherited or collected treasures. Early this summer, a couple of our regular silver customers came in with a friend of theirs who had a couple of gold coins, and he was curious about their liquidation value.

It seems that in 1932 his great-aunt, having experienced that $2.50 face value U.S. quarter Eagles were becoming somewhat hard to get, finally obtained a pair of nice specimens at a bank in a small town in California. She put them away, convinced that this $5 investment, back in an era in which five dollars was real money, would be a good thing to have in the future.

In 1957, this fellow’s mother was given the coins by the now-elderly great-aunt, along with a note that read, “these coins are not very valuable today, but in the future they will likely be of great value to collectors.”

This 40ish man showed me a piece of cardboard about 5 x 3 inches, with two holes cut in it, each about the diameter of a quarter. Scotch-taped in both of the holes, with very old crumbling tape on both sides, were two 1911 Denver-mint $2.50 gold coins. Even through the yellowing old tape, I could see flashy mint luster rotating in the fields of the coins.

The Indian head $2.50 gold coin was minted from 1908 to 1929, but with many interruptions, and the whole production of these little dime-size gold coins ended up being produced in only 15 different date and mintmark combinations. 12 issues were minted in Philadelphia, and in three years they were struck in Denver – in 1911, 1914, and again in 1925.

This little 15-coin series is very popular with numismatists, as it is one of the only series of US gold coins that can be collected in its entirety without major damage to a collector’s budget. All of the $2.50 Indian coins can be obtained for around $200 for a nice lightly circulated coin (with Mint condition coins bring several hundred dollars and up, depending on their exact grade by market standards), with the exception of the 1911 Denver issue (mintage only 55,680 coins), which in even circulated condition trades for over $2,000.

In mint condition, the 1911-d $2.50 is a major rarity. On this day in July, two of them walked into our coin shop.

This fellow first wanted to confirm that the little “d” by the Eagle’s tailfeathers did in fact signify the Denver Mint (it did). More importantly, what could he expect to get for these coins?

Our first step was to free the coins from their cardboard-and-scotch-tape traps, and see what we could see.

This was a job for a steady hand, some acetone (the active ingredient in fingernail polish remover), and some Q-tips. As all three of those were immediately available, we retired to the lab for some high-stakes coin conservation work.

It took some time, as the mummified glue residue down in the cracks of the incuse-struck coin were tenacious and seemed virtually bonded to the coins. Repeated soakings in acetone, and persistent but gentle coaxing out of the gunk with a soggy Q-Tip achieved the desired results. The coins were finally free of any contaminants, and were essentially in the same condition as when the great-aunt had taped then into place many decades before.

As for the mercantile details: Both coins were submitted to one of the most reputable independent coin grading services in the country, both were rated as Mint State-64 (a very high rating for this issue, on a coin grading scale which runs from 1 to 70, with seventy denoting a coin which is virtually flawless under magnification), and the owner received well over $40,000 for his great-aunt’s $5 investment.

The nice part was that this money went to a fellow and his new bride who, at that time, were looking to buy their new family a house.

A few weeks ago I told the story of a $700,000 gold and silver deal, which occurred on a $10 million piece of ground, as part of an old-money estate of untold wealth. I didn’t mention that when we wired the money for that deal, we were faxed a sheet of over twelve different banks accounts, variously designated for proceeds from stocks, bonds, funds, real estate, and the myriad other components of a solid 9-figure estate. Our $707,000 basically went into a miscellaneous account. I never met the person who received the money, and in fact it didn’t go to a person, but instead to a list of institutions, trusts, and banks.

This summer, we also effected at $3.6 million liquidation involving three pallets of gold and silver, for a client looking to get the heck out of Texas. Another client raised $1.2 million so he could buy his dream house in Santa Fe.

But none of these other deals was as enjoyable to me as this forty-something thousand dollar transaction involving two little coins. A woman, long dead, did not know that some day her great-nephew would be getting married for the second time, and therefore would need the down-payment on shelter for a new family of seven people.

Her prescient $5 investment seventy-five years ago bore fruit in 2007, and, amazingly, it couldn’t have happened to a nicer guy.>br>

-Richard Smith


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