Not a good time to sell gold
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34 posts in this topic

Gold coins sell for less than melt. Do tell. Melt is a starting point for bid sometimes but an MS 62 coin less than melt ? Anybody want to give me your gold for free cause I'll come get it to save you shipping !

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Seller must be to blame, not necessarily Stacks. Don't sell your gold or any coins you have unless you need the cash. Its a bad time for the market as a whole. I kick myself for selling beautiful Smith & Wesson revolvers in 2004 only to find people asking for them after O'bama was elected !

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I think that this is a reflection of the overall weakening of the US Classic market, which has been overdue for some price corrections.  Collectors just aren't flocking to those coins the way they once did, and the largely overinflated prices for that material are starting to come down.....but wow, gold under melt is crazy!! Also, I don't intend to get political here, but we are certainly in some uncertain times.......times that are so uncertain that some people aren't wanting to part with cash for many things, including high dollar numismatic coins.  They're worried about being able to get cash back out of the coins quickly if the need arises, I'd theorize, so they're just holding onto their cash to have it on hand or they're going for bullion with no collector premiums attached.  It's often easier to move Maple Leafs and Krugerrands in a hurry than pre-1933 US Gold, and I think people are factoring this into their purchasing decisions.  In talking to my local dealers, they've said that most of what they've sold recently has been bullion.  The most popular items are 90% US and 80% Canadian Junk Silver, 1 ounce silver bullion coins and gold bullion coins.  They also said that they do not understand why the markets are acting the way they are currently with metals being so low, considering everything that is going on and I have to say that I agree here as well.  It's weird that so many businesses are going under and the markets aren't showing the impact of that, and some of these businesses are huge, like Sears, KMart and Toys R Us. 

But.....they also said that some collector coins are still selling well, also, particularly non-US material of all eras and US Moderns.  However, US Classics aren't selling as well at the present time according to them as well and these guys are savvy, they're definitely in the know here and I trust their observations and judgment.  So, I think it's a combination of uncertain times combined with price corrections in the US classic market that are accounting for things like this.

Edited by Mohawk
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I'm going to a show this weekend. I am going to try to talk to a few dealers and get their take.on the current market.

Edited by Just Bob
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1 minute ago, Just Bob said:

I'm going to a show this wekend. I am going to try to talk to a few dealers and get their take.on the current market.

I'd be very interested to know what some other dealers have to say on the issue.  The larger the sample, the better the findings!

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8 hours ago, numisport said:

Seller must be to blame, not necessarily Stacks. Don't sell your gold or any coins you have unless you need the cash. Its a bad time for the market as a whole. I kick myself for selling beautiful Smith & Wesson revolvers in 2004 only to find people asking for them after O'bama was elected !

I’m not placing blame, anywhere, and certainly not with the seller. Despite what you said, it’s generally considered a bad  idea to sell when you “need” to. 

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For something as horrific as 100 year old gold selling for less than melt, someone or something is to blame. That puts these coins in bullion category ! Blame has to be on the person that decided he had to sell those coins. It just looks bad. I'm sorry it happens and I wish I had the answer. Maybe this information should be suppressed to protect innocent naïve people like myself. :frown:

 

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RE: " For something as horrific as 100 year old gold selling for less than melt, someone or something is to blame. That puts these coins in bullion category ! "

Yet, that's all those coins are or ever were in inflated "grades" -- bullion.

Further, we don't know if the auction house advised the owner of options and how to realize maximum return. There are quite a few collectors and bullion hoarders who are "know-it-alls" and won't listen to anyone else.

Edited by RWB
Remove references to apatosaurus and Twinkies.
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I spoke with several dealers this past weekend, and all were upbeat about the current state of the market, although most expressed concern about the uncertainty of the future, specifically the stock market and oil prices and their effect on the price of precious metals. Bullion seemed to be selling very well, as well as 20th century collector coins. According to dealers that sold other than US coins, tokens and currency were selling well.

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Blame the seller?  Pardon me, but that sounds like blame the person who got raped.  You buy and you sell, and while you hope your timing is good, sometimes it isn't.  For all we know the seller might be into these coins for $250 - $300 a coin.  C'est la vie.  

 

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This might sound funny but if this classic gold sells for less than 'melt' then 'melt' price is no longer valid. This means melt is down which means gold spot is down which is not quite the case. Think about this for a second..... gold must be close to a huge adjustment. Maybe that is why Mr. Hall says its a god time to buy - so he wont get stuck at a loss when gold tanks. I'll admit I'm usually wrong about speculative purchases but nothing I see here makes sense. So now we are back to what I told my buddy about 5 or 6 years ago when he bought gold at around 1600 and I said Ill just sit on my silver thank you because gold is way too high in proportion to silver. Is 500 dollar gold on the horizon ?

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2 hours ago, numisport said:

This might sound funny but if this classic gold sells for less than 'melt' then 'melt' price is no longer valid. This means melt is down which means gold spot is down which is not quite the case. Think about this for a second..... gold must be close to a huge adjustment. Maybe that is why Mr. Hall says its a god time to buy - so he wont get stuck at a loss when gold tanks. I'll admit I'm usually wrong about speculative purchases but nothing I see here makes sense. So now we are back to what I told my buddy about 5 or 6 years ago when he bought gold at around 1600 and I said Ill just sit on my silver thank you because gold is way too high in proportion to silver. Is 500 dollar gold on the horizon ?

The melt price - whatever it is at the time - is simply the melt price and is perfectly valid. It doesn’t say anything about gold spot being down (or up).

Edited by MarkFeld
Edited for typo, in which I had written “stay” instead of “say”.
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1 hour ago, MarkFeld said:

The melt price - whatever it is at the time - is simply the melt price and is perfectly valid. It doesn’t stay anything about gold spot being down (or up).

I agree. 

The market for the most common pre-1933 US gold is also less liquid than bullion since some or many of this coinage doesn't meet the quality standards of today's collector.  To me, it makes sense that this coinage would on occasion sell for less than the gold melt value because it might be time consuming to find a buyer who wants it as a collectible.  Then there are a few of these coins that are really common and the supply is a lot larger than the real collector base.

As for the prospects for $500 gold, not in the foreseeable future unless silver also crashes (far) below $10/oz.  It's my contention that the gold/silver multiple is much higher than it used to be because silver is primarily an industrial metal and isn't bought in meaningful amounts by very many wealthy people.  It also has no monetary role in the financial system; used as a reserve asset by central banks and I have never heard of it being leased.

Even in 1976 which is when I first recall seeing the price of either at age 11, the ratio was 26.  In 1980, at the bubble peak, about 17.  In 2011 at the most recent bubble peak, about 38.  But since 1980 or the last 37 years, mostly not that different from where it is now.

Edited by World Colonial
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3 hours ago, MarkFeld said:

The melt price - whatever it is at the time - is simply the melt price and is perfectly valid. It doesn’t say anything about gold spot being down (or up).

May I take a stab at this. Melt price is based amount of pure gold a piece contains based on spot at the time. Is that too far off for a naïve collector that knows nothing about bullion ? Step outside the dealers dugout and look at this from the outside as if you were a retail buyer.

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41 minutes ago, agentjim007 said:

Premiums have dropped. Not much more difficult than that. Sometimes that ends up less than melt.

Correct.  The NGC and PCGS population count for the 1904 double eagle is over 400,000 with most (at first glance about 90%) in MS.  Given the price spreads, likely not many duplicates below a 65.  There are nowhere near 400,000 collectors who can first afford and second want this coin, as by my estimates that would mean as many as one of five active (as opposed to casual) collectors would own it.  Even my estimate is far too low, still equals likely in the vicinity of one in 10 (or less).

The most recent Heritage sale in PCGS MS-63 was for $1320 on May 16 with four others in NGC MS-61 and MS-62 since then also for the same price.  These prices already indicate it is effectively treated as a bullion coin, since the prices include a buyers fee which the seller does not get and bullion hasn't changed much in the last six weeks.

If a noticeable supply of this date are placed for sale in close proximity (a tiny fraction of the total supply), it isn't hard to see how it would sell for less than spot price.  Same concept applies to the most common Saints or other common $10s, $20s and maybe $5s in AU or lower grades.

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Bottom line, it's not a very good time to sell any common coins, at least classic US. Further, it has been my experience that GC is a great place to easily dispose of common coins, but not the best place to wring money out of such coins. That takes work. The bidders on the common gold that sparked this thread were likely dealers who expect to move these coins at or near melt rather than hold them in inventory. Since they have to make a living, it isn't surprising that they would win them at below melt prices. With some searching a nice gold date set or type set can be put together using 58/62 coins, So, this gold market has a silver lining.

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2 hours ago, LINCOLNMAN said:

The bidders on the common gold that sparked this thread were likely dealers who expect to move these coins at or near melt rather than hold them in inventory. Since they have to make a living, it isn't surprising that they would win them at below melt prices. With some searching a nice gold date set or type set can be put together using 58/62 coins, So, this gold market has a silver lining.

Another possibility is that a dealer will attempt to sell it at "retail", whatever that level is now.  I don't know what the typical cost of capital is for dealers now but if the opportunity cost is low, it might be worth it for someone who doesn't mind speculating on the future metal price. 

I have also read of many accounts where they will sit on a coin indefinitely until the right (possibly uninformed) buyer comes along.  These coins (in all metals) are all over eBay and BidOrBuy (South Africa's equivalent).

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And, there is also the possibility that a happy collector got a good deal. As to WC's comment, I see a lot of the "sit and hope" type dealers at shows as well. I'm not in retail, but I've understood that turnover was the way to make money. 

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9 hours ago, LINCOLNMAN said:

And, there is also the possibility that a happy collector got a good deal. As to WC's comment, I see a lot of the "sit and hope" type dealers at shows as well. I'm not in retail, but I've understood that turnover was the way to make money. 

I only buy on occasion from a few dealers due to what I collect and check inventory for a few more.  There is one in particular who is highly regarded by both this forum and by PCGS members whose inventory turns over quick.  The prices are usually high or "strong" but they have the ability to get coins collectors want and price them fairly or else the inventory wouldn't turn over so fast.

The others I consider more "reasonably" priced but the coins don't sell as fast.  Some sit for a long time but it isn't like eBay (or BoB) where it's a "stupid money" ask price.

As to which is better, I agree that faster inventory turnover seems like a better business strategy.  But then, it's their money.

Going back to the coins which are the subject of this post, $500 for $10 Liberty and Indians sounds like a real good deal because the discount to the metal content is noticeable. 

As a general rule though, I don't consider minor discounts on really common pre-1933 gold a bargain.  The 1904 double eagle is an example.  I consider it a bullion substitute because it is so common, though I presume almost no one else agrees.

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