Collector vs silver or gold content value

Wow, with gold at $5000 an ounce, collector value vs gold seems to upside down. I used to be concerned paying so much for collectable gold coins with far less gold value than collector value. That's no longer the case, almost upside down.

 

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I am not much of a gold guy, I like buying it when the price was right. For me it is the constitutional silver I like varieties so I never had a problem paying up for a piece. With 110 silver. I really have to like the coin to buy it. My premium that I was collecting is now gone. I takes time for the premiums to build. If I sold them now, I would be taking a loss. I would make money on my investment, just for someone else to reap possibly a 100% profit.

I really don't see a major reduction in value. A think a levelling is happening soon.

 

We always said this was a hobby and not to worry about the investment implications.

I don't think we are LOSING money on our silver/gold coins....but we are finding out that the PREMIUMS we paid for are being eroded. In a bull market, bullion is king not numismatics....and we're learning that the hard way.

At least the premiums I paid for gold years ago have been more than offset by the higher gold price. I'm up (for whatever that is worth ) but not as much as the price of gold has risen since my purchase. Bigger premiums paid on silver have absorbed 70-90% of the rise in the silver price so I might need $150 silver to make up for the premiums I paid on many of the commemoratives and few MSDs.

 

Saw a promotional ad in the WSJ this morning for a 1908 No Motto St. Gaudens in BU for $4860, limit 1. No numismatic premium on that for sure! Of course, the real premium you pay is having to listen to their spiel to upsell you on their other stuff.

(I know that a Double Eagle does not contain a full ounce of gold so the numbers below are just representative to make the points, not to provide exact calculations. And the opinions are just my own, your mileage may vary.)

Back in July 2023 when spot was $1920 I bought a 1908 No Motto St. Gaudens in PCGS MS-65 for $2400. So the numismatic premium at retail was $400 to $500. Now it's essentially zero but I could sell that coin today for about $5000, making a profit of about $2600 in nominal dollars.

Now, if I was a dealer and I sold that coin and took the same profits, I couldn't replace that coin in inventory for less than about $4800 and then sell it at retail for more than about a $50 to $100 premium over spot. So, my profit margin going forward on these coins has been dramatically reduced despite having gained a bit of windfall profit on the first coin.

For collectors who need gold coins for their collections, if you believe that gold prices have stabilized or even might continue to rise (DeutscheBank has stated they think gold will go to $6K by year end), then now is the time to add the gold coins you need to your collection. Big money going into new and renewed mines in South Africa, USA, and Australia, so we know how they are betting.

OTOH, if you're nervous about the future price of gold and don't want to or can't put that much money at risk, then sitting tight and hoping for a big fall in gold is the right strategy.

For myself, the only gold coin I need is the $5 Liberty Head with Motto to replace the AU-Details-Cleaned example currently in the type set. Maybe sell the one I have for about spot and use the funds to buy a better date/MM/grade coin. Or, buy a new one and keep the old one for its bullion value. Choices, choices.

 

Our parents were forever advising us to invest in precious metals and property. At the time it was annoying but now we are very happy with the advice, aren't parents great, IR1.

 

Its a great point for collectors nervous about PM prices. Every time it spikes like this premiums compress for a while. Use this time to swap PM coins for better ones. Trade in a AU double eagle for a MS65 one if you always have wanted one. It should be cheaper right now for this trade than usual.

 

I've gotten Saints for basically spot gold or $20 above (when it was $1,700) so figure a 3-4% premium adjusting for the gold content differential.

Nice purchase....yup, the premiums have faded or been totally eliminated but a tripling in gold's price has made us all richer. Pretty soon even MS-67 No-Motto Saints might be selling at spot gold (~ $8,000 ??).

Great analysis and point !!

Can't see any new mines producing any significant gold before 2035. The fear is that CBs go from strong buyers to neutral or even sellers. When they sold in the 1980's and 1990's, it was a 2-decade bear market for gold.

I'm still gonna look for that 1908 NM Saint OGH CAC I didn't find at FUN 2026.

 

You mean the cheaper coin in the past...the one with less premium...has gained MORE...so now do the swap that was expensive a few years ago ?

 

We'd have been better off with stocks and bonds, or even just stocks.

 

Yes sir. If in the past a 65 was $800 over melt today it might be $200, (just guessing from prior movements), so now to trade a lower grade for higher is now cheaper. Same could be done for any PM issues, I am guessing most quality premiums are down for pm coins. Maybe a nice 32 S quarter used to be worth 50 silver quarters, but now can be had for 6 of them, (again just guessing from prior market movements). Use the PM spike to your advantage to swap out into better coins if the price is scary but you still want to collect.

 

Well I don't play much with the gold boys, but one thing I can say is a lot of harder to come by "common" morgans and being sold off with the silver price so high.. I've gotten some very fine examples that I would never have seen if it were not for this silver/gold bubble