Gold Surpasses $1,000 Barrier Again

Posted on 3/17/2009

According to this month's market analysis from NumisMedia, in spite of worrisome economic conditions, there does not appear to be any better venue than numismatics to position your money.

A guest article from NumisMedia

Back on March 17, 2008, when Gold broke through the $1,000 mark for the first time, most buyers were skeptical and it was a foregone conclusion that it would retreat. And it did; it fell to as low as $712.50 in October. On February 20 of this year, Gold again moved over the $1,000 barrier. There is still skepticism, but this time it has more to do with the economy. People fear for their economic future. They are so concerned, they are willing to pay much higher premiums than they did a year ago when Gold climbed to more than $1,000 per ounce. The following chart shows the difference in FMV for various Gold coins from April 2008, compared to the current issue.

Denomination     April 2008 FMV   March 2009 FMV
$20 Gold Liberty AU 58 T II   $1,240   $1,560
$20 Gold Liberty AU 58 T III   $1,160   $1,480
$20 Gold Liberty MS 60 T II   $1,260   $1,710
$20 Gold Liberty MS 60 T III   $1,180   $1,570
$20 Gold Liberty MS 63 T III   $1,880   $2,380
$20 Gold Liberty MS 64 T II   $2,380   $2,880
$20 Gold Liberty MS 65 T III   $6,410   $5,400
$20 St. Gaudens AU 58 W/M   $1,160   $1,520
$20 St. Gaudens MS 60 W/M   $1,180   $1,620
$20 St. Gaudens MS 63 W/M   $1,290   $2,010
$20 St. Gaudens MS 64 W/M   $1,370   $2,100
$20 St. Gaudens MS 65 W/M   $1,980   $2,460

Every issue, except the MS 65 $20 Liberty, is up more than 25 percent in the past year, while the price of Gold is virtually the same price of $1,000. A year ago, the coin market was flying high and most collectors found their collections continually on the rise. This is no longer the case because segments of the coin market have mirrored the overall economy. Several series have fallen about 25 percent in the past six months, although there are still some rarities that continue to attract those buyers who have plenty of money in reserve.

Just as popular today is the $10 Gold series. Again, premiums have increased since last year due to very heavy demand. Collectors and investors want physical value in their hands and this has caused a strain on current supplies. As we observe the wholesale teletype networks on a daily basis, it seems like some dealers offer specific Gold deals at what appears to be in advance of current levels, only to see it sell to another dealer faster than the blink of an eye. These actions confirm today’s advances and strong premiums. The chart below compares $10 Gold over the past year, with bullion at $1,000 an ounce.

Denomination     April 2008 FMV   March 2009 FMV
$10 Gold Liberty MS 60 W/M   $613   $840
$10 Gold Liberty MS 63 W/M   $1,410   $1,630
$10 Gold Liberty MS 64 W/M   $2,840   $2,410
$10 Gold Indian MS 60 W/M   $760   $890
$10 Gold Indian MS 63 W/M   $1,580   $1,650
$10 Gold Indian MS 64 W/M   $2,670   $2,460

Here you will notice that the MS 64 $10 Liberty and Indian are lower than they were last year. This illustrates the impact that the absence of many collectors can have on specific grades or series when they fall from favor. In the two charts, it is obvious that the market has strengthened due to buyers looking for not only Gold coins, but collector value as well. Even though premiums are high at this time, today’s buyers are looking for Gold coins that are as close to bullion as possible without sacrificing potential collector profits. This demand has compounded the problem of locating adequate supplies.

Even as the coin market adjusts to these new FMV prices, we are finding that there are still thousands of collectors with money to spend. However, they no longer buy just anything that strikes them; now the coin has to have that extra eye appeal that makes every collector take a second look. Collectors are being very selective, and well they should be. They have seen much of their savings and retirement accounts shrink at a frightening pace in the past year. They no longer have a secure feeling about where to store their money for potential investment. They fear that coins are headed in the same direction as all other investments. Nonetheless, many numismatic analysts feel this is the time to take advantage of those sellers who would rather be in a cash position. If you can buy more quality coins today than you could six months ago while spending the same amount of money or less, then you should be better off in the years to come. Because of these fear factors, there are more quality coins available in today’s market than there have been in the past couple of years. Opportunities exist, although buyers know they have to be just as persnickety as dealers are in today’s market.

It is important to note that the Modern market for bullion related coins is just as strong as early US Gold. With all the metals moving higher over the past month, Silver Eagles, Gold Eagles and Platinum issues are advancing in all charts. However, this only applies to the bullion value of these issues. Even though the premiums are higher than normal, the rare issues that command FMV prices well above the bullion value of the coin may not be as strong. These low population issues require collector buyers and we have not seen many of them actively pursuing these rarities of late. Now, Registry collectors may still be in the market for these highest grade rarities, but we are not seeing much of this activity by dealers over the teletype systems or in major auctions lately.

With all the negativity in the financial markets, one important fact to keep in mind: there does not appear to be any better venue than numismatics to position your money. As an added benefit, when collectors and investors make profits from bullion related purchases, much of the time a percentage of those profits are used to purchase numismatic coins.

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.