Premium on common double eagles

Nope, don't remember. Just remember that I paid more for the better date, --something substantial like $50 more... Which doesn't sound like much now, but at the time could have probably gotten a 1904 Russia 5 Rouble with the $50 instead of the better date: A raw 5 Rouble which is now a $590 coin.

 

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It sold for $4,560 w/bp ($3,800 without).....gold was about $4,300 that day so only a 5% premium for the CAC bean and an OGH.

Wow.....

 

So the consignor, for this MS65 OGH double eagle, got almost 10% below spot?!

 

I guess so.

But that's what I have always had trouble understanding...unless you're a distressed seller and willing to take a lower price just to raise cash....aren't you always going to be losing all or most of the BP if you sell through an auction site ? Even GS is 10-12%.

OK, nobody works for free but a LCS or dealer probably has a tighter bid-ask spread.

And during the dealer-to-dealer part of a big show like FUN or other coin shows.....if the selling dealers get top dollar (full retail) then how is the buyer going to make $$$ re-selling and still being competitive (unless the price of the metal rises) ? Conversely, if the seller accepts less than full retail or wholesale...isn't he/she leaving something on the table as the buyer than got it at a price he can mark up ?

This aspect of the business always confused me as if the price of the metal was flat for a long period of time, it appears to be a zero-sum game and I'm wondering who would want to "help out" the other person by accepting less $$$/paying more $$$ ?

Good thing I'm a money manager and not a businessman !!

 

And an identical coin in January 2024 when gold was $2,050 sold for a 75% premium.

 

Interesting article in a September Numismatic News article that explained why pre-1933 gold was selling cheap tto pre-1933 gold:

"...The answer comes down to supply and demand. Demand for older U.S. gold coins is much smaller than it is for modern bullion coins. As the spot price of gold has increased more than 75% from the end of 2023 to this week, in America, there has been a significant increase in the number of sellers liquidating their holdings compared to the number of buyers wanting to purchase such products."

 

Amazing how many gold coins I saw selling at gold spot or a bit above at FUN 2026. I saw dozens of such coins....maybe hundreds.

Nothing like it at FUN 2020. Maybe a dozen or so.

 

Doug Winter noted this at year-end in his Gold Bargains column recommending AU-graded Type 1 Double Eagles: "...Five or so years ago when the spot price of gold was around $1770 per ounce, a decent PCGS AU55 1851 $20 was worth around $3,000. Today, it is worth around melt or $4,350. So how did a numismatic coin become a bullion coin with a cool backstory in five years?....It’s simple economics, really. When coins of this design type were affordable, they were popular. But when a common date $20 Lib in AU55 is worth close to five grand, it is no longer “affordable.” With this diminished demand came a seemingly endless supply of common date Type Ones, pouring in from overseas sources."

 

Pity the collector who ponied up all the extra dough to add common date Saints to the collection in the "much more sought after grade of MS64" instead of the lowly grade of MS63. Now both are trading back of melt, with about a $15 premium on the near-gem MS64. Makes me grateful I collect world gold coins, where the populations are so much smaller. There's been plenty of premium compression on much of the world gold out there too, but at least it's scarce enough to be considered collectable. Not so with much of the US gold material out there, even many of the better dates are no better than bullion, it's like the gold rally completely destroyed the collectability of these coins, though to be sure the Fairmont Collection helped quite a lot too in the years leading up to the price spike.

 

True, but at least the buyer has a somewhat nicer coin, right PoW ?

The rising price of gold bailed out his "investment" but that was out of his or her control.

If gold eventually goes to $7,500 you're gonna have even MS-66 and MS-67 coins that folks paid a huge premium for go to to waste.

 

It sounds like late-in-the-game gold buyers are beneficiaries of this, because they can now buy previously prized numismatic coins for substantially reduced premiums, and if the gold market is to ever correct or crash, these same coins will hold up relatively well. When I buy pre-1933 gold, I only aim for certified MS.

 

The premium is nil or very low, yes, Jol...but the TOTAL COST is still 2-3 times what they cost 3-4 years ago.

My 1908 No Motto Wells Fargo OGH CAC was $4,500 when gold was about $1,750 or a premium of 160%. Today, that same coin will cost me $6,500 with gold at $5,000 or about a 30% premium.

 

The melt value has gone up about 3x in a short period of time, but the cost of these numismatic coins has gone up modestly - $4,500 to $6,500 seems like a bump by comparison. I've been taking advantage of this by buying back numismatic coins I sold a few years ago - in some cases they have remained largely the same, although numismatic coins (at least the silver ones) will tend to adjust to rising prices over time. I've been a buyer of Indian Head gold coins and I ain't complaining.

 

The optimal strategy is to buy the cheapest common stuff you can find when gold is at its lowest, then sell it when gold is at its highest and buy the formerly-premium stuff. Then, when gold drops again, you'll probably retain some premium.

Of course, if you're able to do this, it means you're able to predict the future (to identify "lowest" and "highest"), so you should probably be doing more productive things with your time.

 

Yeah, to be fair no one could have predicted these premiums would have gotten crushed, but this can serve as a learning experience for the relationship between gold prices and premiums. If you are a collector or hobbyist, then these swings might be meaningless. But it does suggest that when gold is far below its all-time high, XF-AU coins could be advantageous; and when gold is at or near an all-time high, MS coins could be advantageous. With these premiums contracting, I have a newfound appreciation for MS gold coins. Back in the old days I would have bought them XF-AU - now I wouldn't touch those if I can get them MS and certified. In fact, I doubt I will ever go back to anything less than MS.