NumisMedia Market Report: Collect or Invest?

Posted on 4/10/2012

The focus of the coin business for the past few years has been in modern bullion coins, essentially because of the rise in the price of metals and a lackluster economy.

At the same time however, we have monitored a slippage in premiums for classic US Gold coins dated prior to 1930. With all the new buyers concentrating mostly on low premium gold, we have seen demand fall for earlier US Gold. This has created a vast pool of excess supplies that has forced dealers to lower their premiums to try and compete with the modern coin.

The following charts show prices for common $50 Gold Eagles in MS 69 and $20 Saints in MS 63 and how they have shadowed the Gold market over the past seven years. You will note that the premiums for the $50 Gold Eagle have been fairly consistent since Gold mounted its charge beginning in 2007. In addition, the MS 63 Saint attained a rather large premium in 2010 because the demand for all Gold increased with dramatically higher bullion along with a struggling economy.

$20 Saint MS63 FMV Gold Bullion Premium
Jan 2005 - $770 $427.75 80%
Jan 2006 - $850 $530.00 60%
Jan 2007 - $910 $639.75 42%
Jan 2008 - $1,250 $846.75 48%
Jan 2009 - $1,440 $874.50 65%
Jan 2010 - $2,010 $1,121.50 79%
Jan 2011 - $1,920 $1,388.50 38%
Jan 2012 - $2,120 $1,598.00 33%

$50 Gold Eagle MS69 FMV Gold Bullion Premium
Jan 2005 - $585 $427.75 37%
Jan 2006 - $670 $530.00 26%
Jan 2007 - $800 $639.75 25%
Jan 2008 - $1,000 $846.75 18%
Jan 2009 - $1,110 $874.50 27%
Jan 2010 - $1,340 $1,121.50 19%
Jan 2011 - $1,690 $1,388.50 22%
Jan 2012 - $1,940 $1,598.00 21%

Supply and demand always dictates the premiums. As the price of Gold began to rise intensely from 2007 and thereafter, demand for Saints was strong and premiums were significant. With the $50 Gold Eagle, premiums have been equally steady after 2005. Nonetheless, the first chart shows how the premiums started dwindling after January 2010 and the next year Saints had an FMV that was just 38% above the value of one pure ounce of Gold. This downturn in premium can be attributed to the fact that more buyers were putting their money into modern Gold coins acquiring the metal closer to its weighted value. In order to compete with modern Gold coins the MS 63 Saints (along with all earlier generic Gold) had declining premiums. With competition being as aggressive as it has been recently, premiums could remain low for some time.

Keep in mind you do not get a full ounce of Gold in the $20 Saint; another reason that investors have concentrated on modern gold coins instead of collectable U.S. Gold. However, with premiums this low for much of the common US Gold coins, many dealers think it is just a matter of time before these coins will head back toward normal historic levels. Which is it going to be, collector or investor? The coin market has transitioned over the last few years with much of the trading occurring in modern bullion coins. However, what are the long term consequences of this trend?

Who will be better served; the collector or the investor?

Over the last couple of months we have been adding new FMV prices series to the online NumisMedia Price Guide. We have added the $1 and $2 ½ Cameo and Ultra Cameo US Gold coins. As you can imagine there are lots of dates where coins have not been certified in these highly desirable issues and some have not traded to allow for accurate pricing. More prices will be updated as legitimate data is located. We are in the process of adding $3 and $4 Gold in Cameo and Ultra Cameo so watch for these FMV prices in the near future at www.numismedia.com

This article is a guest article written by:

The thoughts and opinions in the piece are those of their author and are not necessarily the thoughts of the Certified Collectibles Group.