Value of Gold & Guns

There is an old saying which goes something like this, “A good pistol is always worth an ounce of gold.” Having heard that many times in the past, and in reviewing articles written over time, this author decided to revisit the subject from a slightly different angle.

Looking back over the last 150 years or so, the saying has remained true — part of the time. However, there were also discrepancies in the price of an ounce of gold and a good pistol (even a good Colt pistol, as was commonly used as the benchmark). At times the spread was fairly substantial. But when reviewing the collectible versions of each, namely a first generation Colt Single Action Army pistol and a $20 Gold Double Eagle (both of late 1800s vintage), their values seemed more closely related. Therefore our focus in this article will be on the antique version of a $20 Gold Double Eagle and Colt Single Action Army pistol because they are of greater interest to collectors.

In 1873, an ounce of gold was worth $20.67 (as set fourth by Congress under the Fourth Coinage Act). At that time, the dollar was officially put on the Gold Standard by President Grant (replacing silver) and this remained the case until 1971 (when President Nixon took the dollar off the Gold Standard).

Coincidentally, in 1873 when the Colt Single Action Army came out, it cost roughly a $20 Gold Double Eagle to purchase one ($17.50 to be exact, but with accessories, it could easily come to $20). And if you look over random times in history between then and now, you will see a close correlation in the value of the $20 gold coin and the Colt pistol.

Colt Single Action Army pistols (often referred to as the gun that won the west) are among the most desirable revolvers to collect and are highly sought after. The same can be said about the $20 Gold Double Eagle. Even though the value of the coin is closely tied to the price of an ounce of gold on the open market, they also possess what is know as numismatic value (which means they are more valuable than their weight in gold because of collectibility).

At the time of this writing, an average condition $20 Gold Double Eagle will sell for around the low $2000 range. Which is closely correlated to the value of a Colt pistol of average condition from the same era. Of course, there are exceptions. There are certain coins which sell for many times that amount, just as there are certain Colt pistols which will sell for many times that amount (and poor examples can go for less). But in general, the average gold coin and average Colt pistol are still worth approximately the same amount of money to collectors. That being around $2000 each, with finer and more rare examples going up from there.

Is this just a coincidence? While the actual price of an ounce of gold and a brand new pistol often vary from each other over time, in the collectors world, the price of a $20 Gold Double Eagle and a Colt Single Action Army (of the late 1800s time period) have remained closely correlated. Coincidence or not, it is an interesting fact. And it is good news to people who collect as a potential investment.

While the purpose of this article is definitely not to give financial advice, it is interesting to note that at pretty much any time in the past, if you invested in a $20 Gold Double Eagle, oran antique Colt pistol, overtime the investment would drastically outperform investing in the U.S Dollar. Meaning that owning some gold coins or Colt pistols leaves you better off financially than just saving money. According to statistics readily available online, between the early 1900s to now, the U.S. dollar has lost more than 96% of its purchasing power it once had. This is largely due to inflation. For example, 2022 metrics show that $1 in 1913 would equate to over $30.00 in purchasing power today.

What does the purchasing power of a dollar mean? Simply put, it is how far your money goes when purchasing goods or services. You see, it really doesn’t matter how much money you have — as it does how far it goes when you spend it. In 1913 the Federal Reserve Act created the Federal Reserve bank and back then, it took just under $4, to be worth about the same as a $100 bill today.

So back to our point that a $20 Gold Double Eagle or a Colt Pistol, as a collectibleinvestment, was better than keeping it in US dollars, had you spent $20 on either of those items back in 1913 and sold them today, you would have over $2000. While if you had a $20 bill back then and just saved it, you would still have $20, but would have lost 96% of your purchasing power between then and now. Even assuming you had put it in an interest bearing savings account, you would still have less than $200 today (assuming a 2% average rate over 100 years).

Not that we are telling you to go out and invest in $20 gold coins or antique Colt pistols, but facts are facts and these are interesting ones. There is another old saying which comes to mind, “God, gold, and guns is what made America great.” Whether you agree with the statement or not, it is a hard argument to overturn without making up alternative facts and using opinion. And historically gold and guns have definitely outperformed US Dollars when it comes to beating inflation. Why have the two collectibles remained so closely correlated though? Perhaps it is because both are considered to be desirable to collectors at about the same rate. Who knows?

Happy collecting y’all!