About the Gold Export Trade

The Connection Between the U.S. Rare Coin Market
and European Banks

The principals of Morgan Gold have been involved in the recovery of classic United States gold coins from Europe since 1985, bringing these coins directly to market where they are made available to collectors, investors and even other dealers. Few other professionals active in today's rare coin and precious metals markets can claim such an intimate and long-standing relationship with our nation's classic gold coinage. In short, Morgan Gold is the best source in today's market to obtain beautiful and historic United States gold coinage from the late 19th and early 20th centuries.

The highest-denomination coin ever struck in the United States Mint for commercial use is the Double Eagle, or Twenty-Dollar gold piece. First produced in 1850 as a direct result of the 1848 discovery of gold in California and the subsequent California Gold Rush, lawmakers initially conceived the Double Eagle as a convenient storehouse for the vast quantities of gold being mined on the West Coast. By the late 19th century, however, the Double Eagle had also become useful as a vehicle for the transfer of wealth between the United States and foreign governments and other institutions. Indeed, the vast majority of Double Eagles struck during the late 19th and early 20th centuries were produced expressly for use in the United States' export trade. Conversely, the federal government expected average Americans to make use of less-desirable silver, nickel and bronze coins, as well as paper money, for everyday transactions within the borders of the United States. As early as 1895, in fact, the need for gold coins to prop up the financial standing of the United States in the global market was so great that the federal government was forced to call upon Wall Street financiers such as J.P. Morgan to contribute many of these coins from their own holdings so that the nation could meet its international obligations without draining the bullion reserves of the United States Treasury to dangerous levels. The need for Double Eagles to use in international trade would only increase during the early decades of the 20th century, especially given the then-unheard of cost assumed by the United States in financing and fighting alongside the Allied Powers during the First World War.

Not all Double Eagles were exported, however, and by the 1930s millions of examples remained in the United States as part of government and private reserves. The onset of the Great Depression with the Stock Market Crash of 1929 gave those coins the potential to help shore up the United States' economy during the worst years of the depression. In 1933, in fact, President Franklin Delano Roosevelt put forth the Gold Recall Act that required institutions and individuals to surrender all gold coins to the United States government (pieces with established collectible value were exempt) in exchange for paper money. The gold coins taken in during the recall were melted to provide precious metal for the nation's bullion reserves. Of course, any gold coins that were already being held by the federal government at the time the Gold Recall Act became law were also melted, creating many actual and perceived rarities in the United States gold coin family.

During those decades immediately after issuance of the Gold Recall Act, the availability of pre-1933 United States gold coins was largely limited to those pieces with established collectible value that had been exempt from the recall. Most such pieces were known only to dedicated collectors or those few Americans with an interest in using coins to diversify their holdings in tangible assets. By the 1950s, as more people began to develop an interest in classic United States coins, dealers and collectors started to realize the rarity--real or perceived--of many gold coins created by the Gold Recall Act. Many individual gold coin issues, such as the 1933 Indian Eagle and the 1927-D Saint-Gaudens Double Eagle, had certainly become instant rarities as the Gold Recall Act led to the destruction of virtually all-known examples. Yet for most Double Eagles struck during the late 19th and early 20th centuries, however, the rarity was only perceived. For there was one supply of United States gold coins that was not affected by the Gold Recall Act--the millions of examples that had been shipped overseas as part of international transactions. The holders of those coins--most of which were European governments and banks--certainly had no interest in exchanging Double Eagles with their high precious metal content for United States paper money or other types of coins with lower intrinsic values. This preference for precious metal over paper currency on the part of European governments and banks allowed millions of Double Eagles (and other United States gold coins) to escape the Gold Recall Act and survive until the circumstances arose under which they could be brought back to the United States.

The first flurry of interest in bringing classic United States gold coins back from Europe came during the early 1970s when the gold spot price finally reached a level at which it became profitable for dealers to begin importing these coins. The process has been ongoing since then, and it accounts for the vast majority of classic United States gold coins dated from the 1880s through the early 1930s that are available in today's market. The number of such pieces recovered in Europe, in fact, is sufficiently large to make the more common-date issues from that era ideal vessels for those with an interest in investing in gold bullion in coin form.

To the average American living in the 21st century, coins are a form of money to be spent in the course of everyday life to buy items as diverse as a loaf of bread and a diamond ring. Indeed, the vast majority of coins produced by the modern United States Mint are intended for general circulation--the Cents, Nickels, Dimes and Quarters that rattle around in people's pockets or are tossed into cookie jars as a storehouse of wealth. During the late 19th and early 20th centuries, however, the United States Mint was also busy making large numbers of coins that were never intended to pass through the hands of the average American. Rather, those coins were produced solely for the use of the federal government, foreign governments, banks and a few other wealthy individuals and powerful institutions. The coins to which we refer are large-size gold coins that, during the years in which they were struck, represented such a tremendous sum of money that even one solitary example would have comprised a large percentage of the yearly income for the average American laborer.