NumisMedia Market Report: $1,300 Gold: New High, or Just the Beginning?

Posted on 10/3/2010

Now that gold has broken through the $1,300 barrier, what is next? Will the public continue to demand more of the precious metal or will they take profits?

There has been a notable increase in buyers for gold coins this past year. Many analysts remain steadfast in their predictions that gold still has a ways to go. There are no guarantees that gold will continue to rise, but the Long Beach Expo has indicated that buyers are being very aggressive. Prices are still reasonable enough to attract new buyers, many of which feel there is no viable alternative for their investment dollar.

The best news for buyers coming out of the Long Beach Show was that premiums have dropped on many bullion-related coins, with the exception of new mint products. Common Twenties are trading closer to their melt value than they have in quite some time. Gold Eagles have tighter spreads than in previous months, although there are still several coins that are difficult to acquire. A number of $25 Gold Eagles carry strong premiums because supplies are limited. These include the 1986, 1988-1992, 1995, 1996, 2001 and 2007. For the buyers wanting to take advantage of gold coins at reasonable levels, it is best to stay as close to melt value as possible. However, there are many buyers considering bullion and rarity to position their investments into two avenues to profit.

With the price of gold reaching new highs almost daily, more collectors are becoming infatuated with US gold coins minted prior to the 1930s. It also helps that mainstream media is highlighting gold on a regular basis. Heritage offered another high-class auction at Long Beach. The story here was better dated US gold. The highlight was, without question, the 1856-O $20 Gold Liberty. With less than 25 coins thought to exist, this coin attracted many interested potential buyers. It was graded XF 45 by NGC and brought $345,000. This is the rarest of the New Orleans minted $20 Liberties. In addition, several other rarities found new homes at substantial prices. Here is a short list of highlights. For complete prices realized, please contact Heritage Galleries.

Denomination Grade Price Realized
1796 Bust Half 16 Stars VF 25 PCGS $69,000
1848 $2 ½ Gold CAL. MS 61 NGC $74,750
1876 $3 Gold PR 64 Cameo NGC $54,625
1805 $5 Gold MS 64 NGC $40,250
1929 $5 Gold Indian MS 63 PCGS $46,000
1801 $10 Gold MS 62+ NGC $40,250
1891 CC $10 Gold MS 65 NGC $74,750

At the beginning of January 2005, gold was at $427 an ounce. Common date MS 63 $20 Liberty Gold posted an FMV of $950. We listed six dates as common. Today, gold is at $1,309 and the MS 63 common date is $2,380. We now list four coins as common for this grade. However, five other dates are considered nearly as common with an FMV within 10% of the four most common. The Pop Reports tell a story that goes way beyond the original mintage of a coin. Every year that goes by reveals additional information about the value of each coin. Normally, populations will increase and values will be determined by supply and demand for the total availability of that coin. If the population of a specific grade does not increase, that tells a story as well. If it is a popular issue, it is likely the value will increase. This assumes that there is no more than a normal supply of coins available on the market. We are using the $20 Liberty as an example because there is a large pool of coins that trade in this series on any given day, although the majority of the coins traded fall into the common date category.

Many of today’s buyers are collecting and investing in these common dates in an effort to protect their assets and gain some profits. One of the ways advanced collectors take advantage of the current market is to purchase coins that are relatively cheap and have a low population within the grade and all higher grades. Using the $20 Gold Liberty as an example, we have seen a marked increase in demand for this series. There are numerous levels of buyers interested, from the bullion enthusiast to the advanced collector looking for a very specific type of coin. We have mentioned the Carson City Twenty over the past few months and these coins seem to be gathering more steam. In just about every auction, Carson City Twenties are near the top of the list. In a quiet way, the New Orleans Twenties have been on the radar as well. With the sale of the 1856-O Twenty, it looks like more buyers will be searching for these elusive O Mint coins.

Keep in mind, it is not just twenty dollar gold coins that are driving this market; it is all US gold. There are buyers in every series, whether the coins are common or rare dates. Advanced collectors look to the Pop Reports for potential. New collectors will take heed and follow suit. This market has the potential to grow even further as more buyers develop their skills and study history of past performance.

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.



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