A Crash Course into The History of Pre-1933 Gold Coins
When you look at a historic gold coin, what do you think of? Well, if you're an investor, you're probably looking at its long-term value, maybe it's short-term value if you're investing at the right time.
If you're a collector, you are probably in love with your coin and look at it every day with passion and admiration.
If you're a novice and want to get into investing in pre-1933 coins you may be looking for some value in it other than the investment value, you may not know what that value is yet. For novice investors looking to get into precious metals, it is a great asset to start with. Reliable, especially in uncertain times.
The Coinage Act of 1792
The Coinage Act of 1792 allowed for the creation of the eagle gold coin. The Eagle gold coin was originally created in multiple denominations. It served as the base-unit for the gold Quarter-Eagle $2.50, the gold Half-Eagle $5, the Eagle $10 and the Double Eagle $20. Since 1933, it has been a denomination that is no longer in circulation.
Historically, the coinage prior to 1933 was usually linked to the precious metal or semi-precious metal that the coin was made from. Other than a few other exceptions such as the three-cent nickel, five cent nickels, gold 3 dollar coin and the gold dollar coins, most of the coins in circulation at the time were linked to the alloys they were composed of.
Keep in mind that we want to make sure you are not confusing the Pre-1933 gold eagle with the more recent American gold eagle bullion coin that has only been in circulation since the mid 1980's.
Pre-1933 Eagle Gold Coin's Production & Composition
The composition of gold and the gold standard has evolved throughout the years and continues to evolve. The original Eagle's gold standard is said to have been 22 karats per unit of coin when it was originally released in 1795.
The gold Eagle's release lasted between 1795 to 1933 when it was discontinued and taken out of circulation. Throughout this time all other eagles were also release.
Their release are as follows:
- The half-eagle saw its debut in 1795 as well and lasted throughout 1929.
- The quarter-eagle wasn't released until 1796 a year after it's sisters and was discontinued in 1929.
- The double eagle didn't see it debut until the 1850's and was kept in circulation until 1933 along with its sister the gold eagle.
The 22 karat gold standard was modified in the 1830's in order to meet the needs of the changing times. In 1834 the legal evaluation of gold to silver that the mint placed on an eagle was 15:1 ratio.
What does this mean?
It means that 15 weight units of silver was equal the value of 1 weight unit of gold and that meant that they were worth the same in monetary value.
However, due to the profitability others saw in shipping out the U.S. Gold Coins and melting it overseas, the ratio of silver to gold was changed to 16:1. Changes were also made to the metal's weight content standards for both silver and gold. These changes were implemented to decrease the marginal profit per unit an exporter can make. With lost in exporting value, there is also a lost in exporting interest from those who export it.
This drop-in value was quickly modified again in 1837 when the fineness of gold was increased to 90% or .900 fine. When this change was made the alloy from both copper and silver in the gold coin was legally again only 10% with 90% gold. This blend of both copper and silver was also made to equal each other with silver weight content at only 5%.
In 1838 to 1840 the mint decided to go back to the traditional English practice of combining 90% gold and 10% copper. Effectively replacing silver altogether from the gold eagles. The standard created in 1837 resulted in the lowest gold standard for gold coins in circulation during its time with only .9675 Troy Ounces for a Double Eagle and only .48375 for an Eagle.