The situation with gold and the Sarasota Coin Show

I went to the Sarasota coin show yesterday. It was interesting to see how the numismatic gold coin market is going. The short answer is that it almost isn't. One dealer put it quite simply with respect to St. Gaudens $20 gold coins. If it's not graded MS-66, it's selling for bullion.

I bought a couple gold coins, like lemming racing toward the cliff. The first one was this 1900 $5 gold in NGC MS-63. This piece was struck with somewhat worn dies, but is very high end for an MS-63. It the old days, it might have been cracked out, but it doesn't make any sense. It would have to get an MS-65, more like MS-66 to make the cost of doing that worth it.



My second purchase was the 2007 Thomas Jefferson First Spouse $10 gold coin. I bought this piece for 1% over melt, actually a little less that that because the dealer knew me and gave me a break. This piece grabbed my interest back in 2007 because of Draped Bust design on the obverse. It has long been one of my favorites. Unfortunately the piece the mint sent was was infected with die polishing disease and looked awlful. I blew it off when bullion went up. This is the Uncirculated version.



The same dealer was selling certified examples in "First Strike," MS or PR-70 holders for 2 and a half percent melt. Unfortunately this type was no among the pieces he had with him.

Some people are happy about this situaiton with precious metals, but I am not. In the old days, a middle class collector could buy a common date $20 gold piece for type for anywhere from $400 a while ago to $1,600 later. Now you might buy it for melt or close to it, but it's over $4,000. The numismatic market for these coins is dead, unless incomes go way up, which would be driven by a lot of inflation, or the gold market collapses. Either way is ugly.

 

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I wholeheartedly agree.

 

I agree also!

 

I totally agree. It is irritating to me that at shows all the customers now look at anything precious medal on a dealers table as bullion coins.

I do own some historic gold coins that are now worth more melt than what I paid for them. When it comes time to sell will there be a premium? I hope so but don't know how it gets back to that point.

 

The grading companies seem like they're tough on these. I got this one at a show back in April of 2011 for $500 in an old PCGS slab with a white label. Said it was a MS-60. lol I crossed it over with NGC that year and they upgraded it to a MS62. I'd give it a 63 at least. But, it is what it is and the dollar value again doesn't change much in that grade range so don't care. It's a very attractive orange gold with high luster. The $$ it took to get it in 2011 doesn't seem as painful as it would be now. It wasn't that big of a deal at the time to me.

I always had a feeling as time went on that gold was going to get out of reach for the average working man and I wasn't far off. Your report and everything we're seeing proves the numismatic market has zero effect on the gold market and is just along for the ride as the dollar gets inflated to oblivion.
The solutions (cuts) were too painful before and only get more painful to implement as time goes on. In WWII they sold war bonds to somewhat finance the extra costs (gave the appearance of fiscal responsibility) and that was a major burden on people. After the 70s, cash was unleashed. Social security dumped into the general fund budget. Gold standard gone. I'll make a bold prediction that golds never coming down. At least not to early 2000 levels ever again. I'd be happy to be wrong.

 

Wages will have to catch up, if they ever can.

 

Most all of my gold is historic gold. Most was purchased twenty years ago or better so regardless I am to the good….. But I doubt any of my historic gold holds any numismatic value over and above melt. I am a type coin guy so I don’t really hold rare dates….. Heck I remember looking at $400.00 St. Gaudens wondering if I would ever have that kind of money. If I were a young collector now, I wouldn’t even dream of owning a $4000.00 St. Gaudens. And silver is following suit. Remember five dollar silver dollars?

 

My first silver dollar was a gift from my grandfather. He went to the bank and withdrew a dollar for each grandchild. Face value.

I wasn't actively buying them when the going rate was $5. Closest I came was in 2018 when melt got down close to $12.50 or so - I nabbed several eBay lots at around $10 per coin. I flipped most of them at local shows for a few bucks profit per coin. Now, of course, I wish I'd waited.

 

@johnmilton You are a dealer correct? I have a related question about cracking out vs asking for reconsideration or crossing over for grades. Which process is the best to choose from? Does sending a coin in it's current holder lend bias to preventing a possible upgrade? (completely ignoring the fact that grading fees might be a complete waste of money? Thanks.

 

I am a retired dealer. Back when I played the crack-out game, I would not have even considered sending the coin for grading in the original holder. My impression, and that is all it is, is that you are putting yourself behind the eight ball from the beginning if you do that.

First, PCGS and NGC are rivals. PCGS is not keen on crossing NGC coins in the same grade, let alone upgrading them. I imagine NGC is similar, although most migrations seem to go from NGC to PCGS.

Second, the grade on the holder will start the grading process off against your interests if a higher grade is your goal.

My attitude was to do it cold turkey. Crack the coin out, and send it in if you really think that it is under graded. That might be old school, but that would be my approach.

Of course, that is risky. You could get anything from a “details” grade, a lower grade or win the lottery and get a higher grade. The worst I ever heard was a story from a dealer cracked out a Proof Morgan Dollar, and had it comeback as a P-L. He got that fixed, but it was an expensive hassle. He had to submit the coin three or four times, cracking it out each time. In the end he ended up with the same grade.

As for reconsideration, I have never tried it. Perhaps others who have can give you some idea of their success rate. Of course, all of this predicated on the ability of the person who is asking for a reconsideration to grade coins. Given some of the posts I have read on the blogs, some people have no idea how to grade coins.

 

Thank you for your well thought out answer. You are the first person to attempt it, I've asked before. Like me and most people, nobody really knows. The TPGS do not like their practices publicly disclosed. Someone in an unrelated post once said that the grader never knows what the existing grade is, the manager covers up the grade so that the grader has no idea what it's existing grade is. I have a hard time believing that. How does a grader really expertly grade something encased in what's usually scratched up plastic? I'm not buying that scenario. In any case, it's a gamble to crack out a coin already graded to ensure it at least maintains it's current grade. Thank you sir.

 

But these coins have less downside risk.

 

If you assume that gold at its current high prices has no risk of going down. I am old enough to remember when gold hit $850 and then fell to the $300s.

 

We may be talking about different types of coins. I was referring to coins which once carried a numismatic premium but has lost its premium due to the spike in the price of gold. If the price of gold goes back down there is a point where the coin should re-capture that premium.

 

When I was a dealer I bought and put away a common date, certified MS-64 St Gaudens $20 gold @ $1,600. That was over a decade ago. I only made money when the price of gold started going up. If gold falls to the old levels, it could be $1,600 or less. $4,000+ gold makes me nervous. If it’s for real, the people who are pushing it think the U.S. dollar is worthless.

I’ll take cheaper gold and a stronger dollar. We are better off with that.

 

10 years ago spot gold was in the $1200.00 range. You buy that same coin you paid $1,600.00 today @ spot of say $4300.00 and gold then falls down to $1200.00. You could probably sell the coin @ a price closer to $1600.00 instead of the $1200.00 spot price because it re-captured its numismatic premium on the way down.

 

Well, tomorrow I'm selling a couple of Maple Leafs, a couple of Kruggerands, and 25 one ounce silver Krugerrands. Just taking profits to fund some upper end numismatic acquisitions next year.

I don't have a crystal ball on where PM prices are headed, but since I'm not a stacker or a survivalist I don't want to miss what might be the highest price we'll see in a long time.

I've never completely understood the inverse relationship between PM price and numismatic premium for common gold coins. I've always interpreted it as just the collecting community's aversion to spending more when prices are so high. Maybe some reluctance to spend more due to disbelief that PM prices will stay high.

 

What's the point of expensive gold when food prices soar through the roof?

 

There's a limit to how much food you can eat, but apparently not to how much gold you can crave...

 

Collectors only have so much to spend on coins. At $1,600, collectors with a moderate could afford to buy a double eagle. When the prices increase to over $4,000, a great many of them are out. The number who are out, puts an end to the numismatic premium. At that price, a common date St. Gaudens double eagle in less than MS-65 becomes a hunk of bullion.

As a collector of 65 years, I have serious reservations about paying over $4,000 for common date double eagles. The down side could be huge. All they have is bullion speculator support.