Premium on common double eagles

Things are getting strange. Check out the category listings and pricing this afternoon from Money Metals:



Why are "AU" raw Saints priced the same as slabbed MS62 Saints, and higher than raw "BU" examples?

Also note the very small price increments from 62 to 63 to 64. Only at 65 do the significant increases start, and the premium there is still less than 10% over raw examples.

 

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The difference between ( I dont want a 62 ) and I will have more ( 64,s please )
is just crazy stupid !! but again if were just talking about bullion here, from a buying perspective I guess it just doesn't matter.

 

AU raws could be cleaned (Details) or even lower than AU so you really don't know what you are getting. But a true AU Saint could be NICER LOOKING than a low-60's beaten up Saint.

Yup, that's the way it was in the past except the very small price increments were at MS-60 thru 63.

MS-65 common premiums were normally around 25%, normalized for a steady gold price.

 

Jeff, we are in totally unchartered territory with a big rise in gold that we have seen before in % terms...but NOT in absolute terms. When gold was bottoming in the late-1990's and early-2000's the premiums were highest (see charts before).

I can see it with my flagship Saint, an MS-66 1923-D. I bought it at FUN 2020 when gold was just under $1,700 and paid about $3,500 (might have paid a bit more for a nice-looking coin). Gold is now $4,000 and the same coin is $5,500 or a bit less.

So gold up 135% and the coin is only up maybe 55%. At least that same phenomenon of premium erosion might help me with a purchase in 2 months.

 

Well, they do have a separate entry for cleaned/ex-jewelry coins.

Absolutely could, but isn't guaranteed to - and when considering ordering sight-unseen from categories like this, I always assume that the coins I would receive would be the absolute worst capable of achieving the grade.

 

If it hasn't been to a TPG, then there's no way to tell if it's DETAILS or even a Jewelry piece, right ? Though I suspect a jewlry piece could be identified by visible damage.

MS vs. AU vs. EF could just be more wear on the high points.

Agreed !

 

I think if they frequently sold details coins as AU at $(xxxx) instead of as cleaned/ex-jewelry at $(xxxx - 100), they'd quickly have so many loudly unhappy customers that they'd cut it out.

I'm not someone who believes only TPGs can determine a coin's condition.

 

OK, back to your central thesis:

(1) Was the hierarchy of AU-Raw = MS-62 and both > BU-Raw...in effect months or years ago when gold was lower ?

(2) Yes, at MS-65 is when you separate and now that separation for many common coins (1908 NM, 1924 Saint, 1927) is maybe 20% down from 20-25% the last few years. Pretty if we get to $4,500 you'll really need to goto MS-66 to see separation. Another poster ATS said he can see MS-67's (but probably just the 1908 NM) losing THEIR premium if/once we get to $5-$6K on gold.

 

No idea, unfortunately.

If that happens, I'll absolutely burn a few hundred dollars to swap an AU Details Saint for an MS-66, or even an MS62 1908 NM for a 67.

 

The Greysheet from November 2018 had a really interesting cover story entitled "Is It Time For a New Perspective On Generic Gold ?"

The article talks about how at that time (2018) the premiums had come down bigtime on Type Sets and individual coins.

Back in 1998 (20 years earlier).....gold was $290 an ounce. Generic MS-60 Saints were listed for $510, an 80% premium. $10 Indians MS-60 were $360, a 155% premium. $2.50 and $5 coins were listed for $185 and $250, respectively....425% and 350% premiums !!

2018 ? Well, with gold $1,200 an ounce at time of publication (> 300% increase)....premiums fell, as we have seen today with gold over $4,000. MS-60 Saints in Fall 2018 were $1,220, $60 over spot (< 10% !!) adjusting for the gold content.....MS-60 Indians about $660 ($80 over spot, 13%)....$5 and $2.50 were about $380 (30% and $85 above spot) and $270 ($145 and about 90% premium for the smallest coin).

 

Much rare gold numismatic material is changing hands at spot, and many great coins are getting melted down. Saints have never been rare, even the better dates have sizable mintages. By contrast, many gold world coins are also trading near spot but with miniscule mintages. For anyone just now getting invested in gold, some of these world coins (not all) will have downside protection if the market drops. Unfortunately, I don't think that is true for pre-1933 US gold. I doubt the hefty premiums will ever return for these coins. In hind sight, it was crazy these premiums existed to begin with on many of them: Paying an extra $225 for a 1924 Saint in MS64 instead of MS63 twenty years ago was clearly a bad move.

 

I've always heard that rare world coins (PM or not) trade at a lower premium than US coins due to lower demand. Do you see this changing? If not, what do you think will make the premiums increase in the future?

 

You make an excellent point, I would borrow a bond term here and say that some numismatics have "hedged convexity." They rise less when gold goes up but also go down less when gold goes down as premiums expand.

Well, the ABSOLUTE price was so low that it actually wasn't a bad deal to buy Saints 20 years ago or 25 years ago when they were the cheapest they've been since the TPGs commenced operations.

Of course, if you wanted to just make an investment, bullion did best.

 

No question it is all demand driven. But if hesitancy to sell at spot affects the willingness of future owners to offer the coins at melt, the premiums would have to increase though the sales velocity (inventory turn) would likely have to decrease as well. A good example at the moment would be modern (1950-1970) Peruvian 100 Soles gold coins (and the 50, 20, 20, 10, 5 Soles seated liberty coins to a lesser extent). For many years these traded strictly as bullion coins. But they have incredibly low mintages from some years, and in MS66 and MS67 almost non-existent populations. The high price of gold has drawn a tsunami of consignments at Heritage Galleries in the past year, and many of them are once again selling close to melt even with the 20% buyers premium. Probably my favorite date is 1969. They only struck 540 and it is reasonably available even in MS66 if you watch the auction listings. ALL of the 1950s issues are better coins, not only because of low mintages but also because the surviving number of gems is quite low. Terrific article in Coin World from 2016:

https://coinweek.com/world-coins-peru-100-soles-gold-coins-offer-low-mintages-rich-beauty/

 

It's hard enough to get American collectors or investors to look at pre-1933 gold like Double Eagles, with their great story.

I think foreign gold coins, except to those who have done their homework, remain an esoteric area that is off-limits to most people.

I have a nice Vatican coin...I'd be interested in more....but that's the exception in my (gold) collection.

 

First world gold coin I ever won at a live auction was a 1933/34 Vatican 100 Lire from Richard Ponterio at the Chicago International Coin Fair (CICF) in 1990. Back when nearly everything sold was still raw.

 

I agree in America its a tougher sell. The US market has always been weird for anything non-US. I buy in the US much cheaper most foreign/ancient coins than the price I have to pay internationally. So much so I have kind of stopped buying European stuff with the tariffs and trying to mine US auctions harder.

 

Part of that could be the much greater mintage and survival numbers for U.S. gold coinage.

Even if their central banks minted gold coins, they were often hoarded by farmers and peasants fearful of having their life savings wiped out. Some CBs even said that it was useless to strike more gold coins for circulation as they would be hoarded upon receipt.

Here's part of an article from an October 1931 NY Times article that notes that a shipment to settle trade and gold flows included a request for $20 DEs.

 

Fabulous information gathering there...,,. Any chance of posting the entire article? The lead sentence implies comment on an earlier portion of the same story. I would guess many of these DE included Carson City coins and other very desirable coins. I doubt any of it has been melted down, instead returning to the United States over the years, perhaps a great deal of it just in 2017.

 

I have the entire article, but it's in PDF format and we can't post those here for some reason.

I'll try and transform it to JPEGs when I am back from a family gathering this weekend.