Is the New Double Eagle Coin a Good Buy?

2009 Ultra High Relief Double Eagle Gold Coin

Dear Alpha Consumer,

The U.S. Mint will soon be coming out with a gold coin that is a modern version of the 1907 Double Eagle. It's being billed as the most beautiful coin ever created, and I was thinking of buying one each for my preschool-age granddaughters. When the girls reach college age, will they be likely to thank me, or will they secretly think that Grandpa should have put his money in a 529 savings plan instead?

Don't let the gorgeous golden design fool you: From a purely monetary perspective, you should probably stick with a more traditional investment vehicle such as a college savings plan. But if you want to spark a lifelong appreciation for historic coins, buying the new version of the Double Eagle is the way to go.

The 24-karat gold coin, which was originally designed by the sculptor Augustus Saint-Gaudens in the early 1900s, is considered by many to be the most beautiful coin the United States has ever produced. It's essentially a piece of sculpture embedded on a coin, says U.S. Mint Director Ed Moy. And unlike in 1907, the Mint is now able to create the coin in as high relief as the artist intended. "We figured out how to do it. We can marry the needs of commerce and artistic beauty," says Moy.

The cost of the coin, which will become available in 2009, will depend on the price of gold and will probably be well over $1,000. (The Mint adds a modest margin to the value of the gold plus manufacturing costs, says Moy.) The Mint will produce as many as are demanded in 2009, so a key factor in determining the coin's value—how many of them exist—has not yet been decided.

"If they make hundreds of thousands or millions, then the coin is going to be common," says Ron Guth, president of the Professional Coin Grading Service. He adds that if you want to give the coin to spark an interest in coin collecting, it's a great choice, because even noncollectors "will look at it and say, 'This is a cool coin.' "

Professional numismatist Richard Nachbar suggests that instead of buying the new coin, purchase 1-ounce "gold eagles," which look similar but are available for just slightly over the price of gold. If you are buying gold coins because you believe gold will go up in value over time, then you should pay the smallest "premium" over the gold price as possible, he explains. (The new Double Eagle coin is expected to be priced at a possible 50 percent premium, which includes both the manufacturing costs and the additional margin, says Nachbar.)

Historically, certain rare coins have appreciated quickly. The original 1907 coins currently sell from between $50,000 to $1.5 million, Moy says. But coin investments also tend to be volatile and difficult to predict. If you're looking for something your grandkids can cash in on when it's time for them to go to college, then you're probably better off sticking to the stock market (through a tax-protected 529 plan). Because if your granddaughters fall in love with coin collecting, then they probably won't want to part with the 2009 Double Eagles their grandfather gave them, anyway.