Premiums On Pre-1933 Gold Coins (Saints, Liberty's, Eagles, Halfs, etc.) DISAPPEARING !

Premiums on Double Eagles for MS-63's and MS-64 commons are now practically zero. Even MS-65 commons that used to sell for 20-25% over spot gold are now < 10%.

And some of the smaller coins -- like Half and Quarter Eagles -- which sold for 50-100% premiums (raw or AU/MS grades) have seen their premiums totally melt away. Rising gold prices PLUS hoards like the Fairmont Collection have increased those coins availability which were always suspected of being quite common.

It's a Brave New World, folks. If gold should hit $5,000 an ounce (I thought it might happen by 2035, now it could happen maybe by 2030 !) you could even see the premiums on MS-67 commons start to approach zero.

Wow.....

 

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Isn't this easy to understand? In the past month, gold shot up 15% and then dropped 6%. What buyers want to tack on another 25-100% "collector value" when the melt value is that volatile?

 

I knew that the premiums in the 1990's when gold was ~ $400 would not hold. Back then, about a $400 premium was tacked on which turned out to be the same amount as when gold was $1,500 - $2,000...of course, it was a much higher premium percentage (~100%) vs. 25% 20 years later.

To me, the numismatic premium was always the rarity of the gold coin plus the artistic beauty. Their limited numbers -- no more are being struck -- means they are different than modern gold coins which can be struck in any volume this year or next.

A few years ago, someone having to decide between a modern and a Saint had to ask themselves if the Saint-Gaudens was worth the extra 20-25%. Now, they only have to ask themselves if it's worth an extra 7-10%.

 

I think there's a lot of gold price speculation baked into the so-called collector premium. Most of these coins are very common. When there's no perceived up side to the gold price, the "collector premium" disappears. The price of the truly rare ones has very little to do with bullion price.

 

Intuitively you are right...BUT....paying that premium historically has NOT been the way to make the most $$$ if gold is going higher !!

The SMART move was to buy pure bullion, as my Gold vs. Premium charts have shown.

The only time that paying a premium was worth it was when you were making a bet that the PREMIUM itself (and/or the gold price) was going higher, i.e., a bubble.

We saw that in 1979-80 and again in 1988-90.

 

So what are everyone's current thoughts on whether those premiums will recover if gold drops heavily? When silver was at its hottest (circa 2011), I figured that coins formerly holding a numismatic premium were a better choice than pure bullion -- but I haven't paid enough follow-up attention to know if I was right.

 

Summed up:

PFFFFFTT (the sound produced by a Squirrel suffering from Flatulence)

 

.....while flying "high".....

 

It depends on the gold price and the trajectory.....is it spiking up ?

If so......then the premiums are gone faster than Aaron Judge can deposit a belt-high fastball into Monument Park.

If the price flatlines and normalizes in the low-$3,000 range for months or better yet a year or two....then I think numismatic and quasi-investment demand comes back and you see premiums gently and marginally expand from LSD to DD.

 

?

 

Low single-digit to double-digit.