Hi all, I was wondering what everyone's opinion was regarding the price of gold related to the price of coins. In other words, do you think that the rising price of gold has helped the value of coins rise? If this is the case, should the price of gold take a dip to a lower level, say $1000 an ounce, do you think the price of coins will see a similar drop? Just wondering... -StephenS
The price of gold is the base price of what gold coins are worth. Then add numismatic value depending on rarity, condition and popularity of a coin. Gold itself is an indicator of the value of the dollar, so if the price of gold dips substantially, I would expect the price of coins to drop but not the value.
Ok, I didn't mean the price of gold vs gold coins. I meant the price of gold vs coins of other metals. Does the rising price of gold have an effect on the price of liberty head nickels, for example, or an effect on lincoln cents. And if so, if the price of gold dropped, would the price of these other coins drop accordingly?
I don't think they would since these coins are not gold and not influenced by the price of gold. What they are influenced by the most are the demand for them and what those seeking them are willing to pay for them. Those gold coins with lower numismatic value than the price of gold are essentially bullion. If gold drops these coins may be worth more than the price of gold by may not. I know my wheat cents are not influenced by gold since they are not gold. I believe though that no matter who decides something is worth so much unless you can sell it for that than it is not worth that. What someone is willing to pay is what it is worth.
Rising PM prices historically has added more funds into coin collecting. I am guessing this is having the effect of increasing prices right now, but offfsetting that is the recession. Basically I am guessing the two forces are offsetting each other to a degree. If gold goes down but the economy stays down, I would expect coin prices to decline.
I would have to write a thesis on economics to explain this properly, but I will try to give the short and sweet answer. If the price of gold drops, the worth of the dollar is higher. Coin prices would follow accordingly. Say a Liberty nickle costs $100 with the price of gold at $2000. If the price of gold dropped to $1000, the price of the Liberty nickle would be $50. Not because the nickle is suddenly worth less, but because the value of the dollar is more. This is a very over simplified version of it and many other factors would be involved, but this is essentially the gist.
Like I said, there are many other factors to consider. I didn't really want to type to my fingers fell off to make a quick point.
By the same token, since gold has recently dropped by 20%, my $5 block of cheese now costs $4. Oh, wait. It's actually still the same price -- just like nearly everything else that I shop for.
It's pretty simple really. Everywhere in the world gold is valued in US dollars. In other words, x amount of US dollars will buy x amount of gold. But the US dollar can go up or down in value as compared to the currencies of other nations, without the price of gold ever changing at all. That's because gold and the US dollar are not connected to each other or dependent upon each other in any way shape or form. When it comes to gold, the US dollar is nothing more than a unit of measurement used for the sake of convenience. And to answer your primary question, no the price of gold does not affect the price of non gold coins.
really. That is interesting. So if the Euro becomes stronger than the Dollar for some reason, then the price of Gold is likely to rise for reasons having nothing to do with the cost of Gold per se on the world market since it might well be the same costs as before in euros. Ruben
The only way I could see the price of gold affecting the price of non-gold coins is that as the price rises collectors get priced out of the gold coin market and their funds are redirected to other coins. More money chasing the non-gold coins then causes their prices to rise. If gold goes back down some money may be redirected back to gold, but since many collectors will now be "locked in" to collecting these other non-gold coins I would not expect a great reduction in collectors so there would be a small decline in values if any. So non-gold coin prices will lag the rise of gold and either greatly lag or not be affected by a fall in gold prices.
Not only might they get priced out of buying new gold, they might decide to take profits by selling off the gold they already have, again directing more money toward non-gold coins.
In fact, if you go to Kitco's gold-price page, you'll see the gold price change broken down -- part due to the dollar's strengthening/weakening, and part due to predominant buyers/sellers of gold. When I checked just a moment ago, gold's value had increased by $1.50 due to predominant buyers, but gold's price had dropped by $5.50, because the dollar's value had increased.
