Premiums on Double Eagles and Gold Coins Collapsing

How are those small premiums attractive? If the $3,000 gold bubble pops, those pieces lose value so fast it will make your head spin.

 

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The "bubble about to pop" voices are hard to hear over the "new normal" voices and the "still being artificially suppressed" voices.

More likely, the reasoning is something like this: "When gold was $2000, these went for $2500. Now that it's $3000, they go for $3200. If gold goes to $4000, they'll probably go to $4200. If gold falls back to $2000, they'll still get $2500."

I've got no inside information on whether this reasoning is correct.

 

Except they "go" for $3500.

 

The ones that went for $2500 when gold was $2000?

 

Yes.

 

Locally (north Texas), the supply of gold seems to have tightened up. Dealers that had deep inventory at $2k have just a few coins at $3k.

To me, that seems like a recipe for premiums to rise, especially on smaller AGW pieces (1/4 & 1/10 ounce).

I'm still long on silver. The historic 12:1 ratio leaves room for a major correction: silver to rise, gold to fall, or some combination of the two.

 

I think the historic range is just that -- history. I can't say that the gold-silver ratio won't ever return to that level, but I don't see any reason to think it will. Too many things are different today. Never mind the collapse of film photography, too much of silver's previous territory now belongs to stainless steel and aluminum. We've got lots of new ways to make shiny things. And given the fights over silver vs. gold coinage in our own (US) not-so-ancient national history, I don't see the country returning to a fiat (arbitrarily declared) gold-silver ratio.

 

That's been the explanation and in fact what happened with the price charts: gold makes a move....premiums rise on numismatics.....bullion reverses and buyers of bullion lose $$$ and buyers of numismatics lose even more $$$.

I hate to use the phrase....but what if THIS TIME it's different ?

 

I don't know why the premium falls in both absolute $$$ AND %-terms....but it seems to be the case once gold has established a new level (i.e., not a bubble spike).

If this form holds....then we could eventually see even MS-66 common Saints trade for virtually NO premium !! What was the case for years (decades ?) at only the MS-62 or MS-63 level is now taking hold at MS-64 and even MS-65.

Of course....it will still be BETTER to pay a 40% premium with gold at $2,000 than to pay 5% premium with gold at $4,000 !!

 

I am old enough to remember when gold hit $850 an ounce for a brief time in the early 1980s. After that it fell to the $250 neighborhood.

Don't think that where is it now is "permanent." Gold is not like stock market prices where the performance or perceived future performance of a company effects its price. Gold has and always will have value. The question is how much is “real value” and how much is driven by panic buying?

 

You're right, this could be a top and we might not see $3,000 for another decade or two.

But I don't think so.

Gold isn't spiking like it did in 1979-80 or 2011-12. It's a slow...steady....rise....like we saw pre-1973 going back to the mid-1960's (if you go by the black market where it traded freely)....and then the 1970's where it went up 15-to-20 fold.

Bubbles and spikes are inherently unstable. They're bad for pricing if the item is used as a benchmark for other items (i.e., gold bullion being used to price numismatics).

If you told me that central banks would be net sellers for a few years or that crypto would go mainstream, then I might think this rally is long in the tooth. But I don't think that is happening.

Gold crossed $3,000 and nobody cares. Ultimately, it's better to buy gold coins at $2,000 an ounce with 20-40% premiums than at $3,000 and higher with miniscule or no premiums. So yeah, the collapse of premiums is interesting but the higher cost is the dominant factor going forward for most buyers of gold (as opposed to those of us in the hobby).

 

I think common MS-65 Saints are going for ~ $3,200. $3,500 seems a bit high, but I guess actual condition and particular year could bump it up a bit.

 

I guess it's "nice" that the premiums have collapsed and you can buy investment/Gem quality Saints and other coins at close to gold content.

But the buyer -- assuming they had the chance -- still would have been better off and gotten in CHEAPER had they bought when gold was $2,000 and the same coin had a 20-25% premium.

 

Go buy from Ms. Sperber. Let me know. I don't care about particular year stuff...nice to know, but it is April 2025. That is what is important. I think you know the price is $3500, because you read her (and others) commentary and opined.

I suspect you may be referring to pieces without the assurance of CAC or CACG positive review.

That is fine. I personally don't find comfort in pieces that have not received a CAC or CACG problem free Grade.

Common 65? Not very common without any problems.

 

You seem fixated on making a profit by speculating about all of this stuff, and more power to you I guess. Personally I can't be bothered with it. Coins are a hobby, not an investment.

 

At this point the main profits that will come from common date double eagles will be from increases in the price of gold bullion. The numismatic premium has slowly been wrung out of them.

A collector might buy one as a type coin, as I have done with the American Gold Eagles, but you can’t afford to pay $3,000+ for every date and mint mark, especially when it's common. I consider purchases on that level to be "major buys."

There are many collectors who are primarily interested in profits. That's why there was so much emphasis on key dates and varieties when I was a dealer. The common dates were "stuff" and not "worthwhile." The result was items like the 1937-D three legged Buffalo Nickel became so expensive, even though it's really pretty common.

 

Of course, they would have been better off still if they'd bought bullion at a 3-4% premium.