Bullion investing, graded or not? or a little of both?

Hi to this part of the forum where I expect I will spend most of my time

Copy and Paste of my welcome board post so you know where I am coming from:

So is that a decent way of looking at things? Mix it up a bit?

When I started with my first purchase silver was 41.50 spot...the local dealer charged me 45 on the bullion coin....$58 on the mint box and $ 60 on the 1986 Cameo. I looked at this and felt he pretty much charged me spot price on the cameo because the grading is what $12-15 from NGC.

My thought is that as we have some panic in the markets right now the value of the graded coins falls more in-line with spot and as the economy get's better and "collectors" have more disposable income then the higher quality pieces would stand out. Also pretty decent premiums on the Panda's and Philharmonics while the Maple leafs seem to be closest to spot.

Just wanted to get opinions on if this "mixed bag" strategy makes sense, as I mentioned above I have a 20-25year time horizon and am not looking for the quick $$. Any input or thoughts would be appreciated and considered.

 

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Welcome to CoinTalk.

I think one ounce coins are best. I like ASEs but it is a matter of personal preference. You should buy what you like. If you can buy a graded & slabbed coin for little or no premium, I think that is the way to go. A lot of people will tell you it doesn't matter with bullion. This is true now but may change in the future.

 

Since you are just getting your feet wet my recommendation would be to start with more generic bullion so you can avoid some of the premiums. I agree that premiums could get wiped out by base price and are a wildcard with resale value. Proof coins are nice, and if you like to collect them there's nothing wrong with that (I do my share), but if your goal is wealth preservation you could get cheaper silver like Buffalo rounds or generic bars. Junk silver (1964 and older US dimes, quarters, halves, morgans and peace dollars) is 90% silver and is something I would consider part of a 'mixed bag', although you do have a good variety.

You should be able to pick up generic rounds and bars for $1-$2 over spot if you shop around, where as I am not seeing Silver Eagles or Maple Leaves for less than $4-$5 over. Philharmonics are usually a little cheaper than those two, but not much. I do like the Maples because of 99.99% purity which is required for solar panels. Junk silver you can usually buy at spot price because of its 90% content, but it also has less resale value. Some people would argue that the premiums will increase with resale value, and I would agree with that in the short term, but I don't think the premiums will ultimately outpace the base price.

 

Premiums on various coins fluctuate, sometimes significantly. There was a bullion trader at the flea market selling proof silver eagles in capsules for $50 yesterday, and platinum eagles at spot. I know buyers paying more than those wholesale prices, sometimes significantly more. I have been at coins shows where the premiums on eagles even go down to spot for cash buyers. There are buyers of those for $50 an oz. over current spot price, etc..

There will always be buyers interested in certified, slabbed bullion. Just don't pay crazy premiums unless you have a rare issue year. I would check to see what Apmex is selling for, they also post some of their buy prices for the same items. Tight spreads on popular items is an indication of low risk. Big buy/sell spreads is usually an indication of speculative areas that will probably be hard to get your money out of the investment for the premium.

 

I think that if gold hits 2000 them most common date collector coins will be worth melt with premiums being eaten away. We are seeing that now with 1900 gold and Libs and Saints are being treated as bullion.

But remember, that either you "buy into" the idea of gold as an investment or you don't, but if you do then the point is that you eventually have to take a position into some form of physical of your choice and hang on like the rest of us. There are no guarantees, but many have spent the last 5 years or so trying to get ahead of this constant crisis our country finds itself in. I just pray it isn't a matter of trying to get a better seat on the Titanic, but being prepared is always the best option for the unknown. Sounds like you have made a great start and keep up the accumulation as well as you can. JMO

Matt

 

Type gold is worth a premium over melt, but only for solid, non cleaned coins. I think Heritage generally pays 3% over on the cleaned and jewelry pieces, while many dealers try to make a market in *slightly* cleaned coins. (If you could just give it some time in a Wayte Raymond holder it would numerically grade Hah!)

 

There are about 1/2 dozen shops in town, been to all of them. Some I got a good vibe from other I did not. The two best I thought were the ones where the owner told me "hey I gotta stay in business but I don't need to gouge my customers I charge 3.50 over spot and will pay anywhere from spot to $1.00 above on the buyback". The ones that did not impress me was the shop pushing MS 70 proof eagles at $90-100 a pop and another trying to tell me the Carson City @ $450.00 could not lose money, even after I had said I was just starting/learning.

As far as the slabbed ones...don't know I just like those cameo eagles, and I figured if I could just get them at a reasonable price then why not...they sure are good looking.

 

Never tell a dealer you are just starting out. Just do a lot of listening and ask one good question per visit (no one likes their brain mined all at once) until you get the layout. This goes for women and poker tables as well.

 

Broke down today in a moment of weakness and picked up the 2006 Eagle Anniversary set....I knew if I saw it I would buy it, I suppose my weakness was self inflicted but what a pretty set.

 

There is a premium on all good type gold.

Heritage provides the current price indications:

[TABLE="width: 100%"]

[TABLE="width: 100%"]

[TD="bgcolor: #ffffff, colspan: 5"]The Heritage Gold Fax

[TD="class: ten-point-font, width: 33%, bgcolor: #ffffff"]Call Doug Baliko ext. 1335
(DIRECT 214-409-1335) OR
*Lee Sanders ext. 1233
(DIRECT 214-409-1233)
*Works Tuesdays, Wednesdays & Thursdays Only [/TD]
[TD="class: nine-point-font, width: 33%, bgcolor: #ffffff"]Are you interested in possibly selling
some of your coins in one of our
auctions? Contact Doug Baliko to get a
great rate and a cash advance against
your consignment.
Doug@HA.com
1-800-872-6467
[/TD]
[TD="class: ten-point-font, width: 16%, bgcolor: #ffffff"]Date: [/TD]
[TD="class: ten-point-font, width: 17%, bgcolor: #ffffff, align: right"]9/7/2011 18:00 [/TD]

[TD="class: bold eleven-point-font, width: 16%, bgcolor: #ffffff"]Gold Spot: [/TD]
[TD="class: bold eleven-point-font, width: 17%, bgcolor: #ffffff, align: right"]$1,820.00 [/TD]

[TD="class: ten-point-font, bgcolor: #ffffff, colspan: 2"]



[/TD]
[/TABLE]
[/TD]
[/TABLE]
[TABLE="width: 100%"]

[TABLE="width: 100%"]

[TD="class: white ten-point-font, bgcolor: #505050, colspan: 7"]BUY/SELL INDICATIONS FOR UNCERTIFIED GOLD
[TR="class: bold ten-point-font, bgcolor: #ffffff"]
[TD="width: 16%"] [/TD]
[TD="width: 14%"]Jewelry[/TD]
[TD="width: 14%"]VF[/TD]
[TD="width: 14%"]XF[/TD]
[TD="width: 14%"]A[/TD]
[TD="width: 14%"]B[/TD]
[TD="width: 14%"][/TD]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$1 TYPE 1

175/205
190/220
195/225
215/245

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$1 TYPE 3

225/255
240/275
255/285
280/310

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$2.5 LIBERTY

260/295
280/310
290/320
295/330

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$2.5 INDIAN

245/275
260/290
270/300
285/315

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$3 GOLD

0/0
0/0
0/0
0/0

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$5 LIBERTY

442/477
447/482
459/494
473/508

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$5 INDIAN

450/485
456/491
479/514
489/524

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$10 LIBERTY

902/942
911/951
922/962
937/977

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$10 INDIAN

907/947
925/965
953/993
963/1,003

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$20 LIBERTY **

1,805/1,880
1,815/1,890
1,825/1,900
1,840/1,915

[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$20 SAINT **

1,810/1,885
1,820/1,895
1,830/1,905
1,845/1,920

[/TR]

[TD="class: white ten-point-font, bgcolor: #505050, colspan: 7"]SELL INDICATIONS FOR NGC CERTIFIED GOLD UNLESS INDICATED [/TD]
[TR="class: bold ten-point-font, bgcolor: #ffffff"]

61
62
63
64
65
66
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$1 TYPE 1
525
540
880
1,370
4,100
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$1 TYPE 2
1,640
3,050
7,050
12,000
0
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$1 TYPE 3
420
505
605
980
1,870
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$2.5 LIBERTY
495
510
665
895
1,560
1,900
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$2.5 INDIAN
410
430
1,010
1,380
2,550
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$3 GOLD
2,250
3,175
4,700
7,150
13,500
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$5 LIBERTY
565
585
935
1,385
2,625
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$5 INDIAN
625
845
2,060
3,220
10,000
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$10 LIBERTY
985
1,010
1,290
1,900
3,730
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$10 INDIAN
1,010
1,070
1,630
2,190
3,550
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$20 LIBERTY **
1,945
1,965
2,165
2,705
4,200
0
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$20 SAINT ** NM
1,935
1,955
2,005
2,125
2,380
2,930
[/TR]
[TR="class: nine-point-font, bgcolor: #ffffff"]
$20 SAINT **


http://coins.ha.com/c/index.zx?ic=Tab-Home-041408
1,935
1,955
2,005
2,125
2,380
2,930
[/TR]
[/TABLE]
[/TD]
[/TR]
[/TABLE]

 

Did you get it for a good price ?

 

Welcome!!! Congratulations on your 2006 anniversary set! i have been shopping for a while trying to buy one under 360, just havent found it yet.....went to my coin dealer and he has 2 set, downside is in both sets the only coin that is toned is the reverse proof As anyone knows the reverse proof makes the set and i want mine to be as virgin as possible. Anywho, I collect eagles also, they are beautiful coins period! If you can snag an eagle at a dirt cheap price (if you are using it as an investment) any date is a good buy, this is my philosophy when i buy, i find the cheapest and buy it. I do go out of my way to buy certain ones though, for example, i just threw a $365 bid at a 2008-w reverse of 2007 burnished eagle because it is probably the most prevalent in the series. Good luck and be smart about buying, if you have patience you will be amazed at what types of coins can fall in your lap for cheap!

 

$300 even, I felt better after I went on this board and looked at threads from 07/08 which were stating people buying them in the $275-300 range, at least I know the local shop did not gouge me as I see Ebay from $350-500. This set was original box with COA, the dealer said whatever I do dont slab them keep them original. He said he bought a bunch from the mint when it was released and this had been sitting in the back since. He is a nice guy who knows I will shop local and be in his shop frequently, so I think he gave me a little break.

He also was steering me to MS 60-64 walking liberty halves, he said that particular market was being ignored at the moment $60 on a '34 MS 61 is more then a fair price but I had enough for the day with the set, maybe next time.

 

I look at the 86 Proof that is NGC graded I paid $18.50 over spot. I know it is $15-30 for the grading itself so I was not paying any real premium over spot I just paid extra for the grading service. The local dealer advised me not to send in my proof eagles that were direct in the mint in original cases, however if you can find them already done then I figure why not...25 years from now it will be 50 years old and the extra $15 I spent may well be worth it.

Would seem reasonable to me that that when things are going good in the economy collectables would far outpace the bullion. When things are bad the collectables don't get hammered but at the same time they do not move up % wise the way the PM does. People have extra money they want to own quality, people are worried they just want the PM.

Seems to me then that when times are economically touch buy the graded stuff, when things are good buy bullion for the PM value.

Does that seem logical?

 

I don't think there is a formula or set of assumptions that will always work. PMs have been in a bull market for a decade, and it looks like it will continue for awhile. But someday it will end and all of them will go down -- graded and ungraded.

Some people like to buy whatever is cheapest, but those items also tend to be discounted below spot when they are resold. I like ASEs because even though they cost a couple of dollars more, they tend to be easier to resell for spot or better. And if you get them graded, there is a chance that there will be numismatic appreciation also as long as you don't pay too much. Someday the US Mint will discontinue the ASE series, and immediately every coin in existence will gain at least some numismatic value because demand will continue but supply will be fixed. Also keep in mind that we might be pretty late in this bull market cycle, and a few years from now the price of ASEs could be in the mid $20 range. Nobody knows for certain, but it would be a mistake to completely rule out a possible end to the bull market.

 

Guess what I meant by that Cloud was the set I bought yesterday for $300. I went back on this forum and read numerous posts from 06/07/08 where people were saying "yeah $275-$300 on that set is about right" at the time those posts were made silver was $10-$15 oz. Now 3-5 years later silver is at $40+ and while the ASE are selling at $45 this set is still being sold at 2007/08 pricing. Would seem to me that people are far more worried about owning the PM then the "collectable" version. If all thing were relative to each other this set should be going for $700+. I will hypothicate that if silver dropped to $25oz the Anniversary set would probably still be worth the $300.

 

You may be correct. Sometimes coins with numismatic premiums seem to ignore the underlying value of the metal.

 

To the OP, I say if you wish to invest in PM, then buy the cheapest you can find per ounce. However, it has risen so much that a lot of good material is selling for spot, (basically). If that is the case, feel free to buy some better stuff at spot, but I would not pay a premium for anything. Yes, if PM goes down it can go down less, but if you believe PM is going down, do not buy.

I have seen tons of premiums eliminated on the way up, and those who bought "better" coins are simply out that extra money right now. Those who bought cheap effectively have higher profits than those who bought the "better" stuff. Look at items like US coinage, and try to cherrypick some better stuff at bullion pricing. It will give you a little downside protection for free.

Chris

 

Went through a little research and spoke with some local dealers today...picked up a '21 Morgan PGCS MS64 for $70.00 and a '23 Peace Dollar PGCS MS63 for $55. I look at the cost of the coin, subtract out $15 for the grading and say ok I paid $13 over spot for the Morgan and got the Peace for under spot.

The grading does hold some value to people especially to those interested in circulated coins. He grabbed a 4yr old guide..(don't know the name of what the dealers use but seems to be a weekly issue) and that same Morgan was selling for $165. He noted what they have seen and what they have heard from others in town and in the business is that the "collectables" had slowed down to a snails pace. People were selling the collectables in order to flip over to strait bullion; the market has become a bit saturated and it is forcing prices on down. All this to me appears to be an area of value where this flight to quantity over quality gives me an opportunity to pick up better stuff @ lower prices.

Conversely should things get better we should see a flight from quantity back to quality at which time I should just be picking up bullion and not worry about the good stuff as the prices should rise.

All of this is hypothetical, as stated in my opening post I figure best to be diversified. When I am 65/70 and wanting to move some of these coins I do not know if Quality or Quantity will be in play, however hopefully I will be able to go either way due to being diversified. I am beginning a 25 year process here, don't know if prices are going up or down...If I accumulate at all levels then it will all work out in the wash.

I am not buying any gold now as for someone just starting. If I totally screwed up on that Anniversary Set then I made a $300 mistake...If I had bought that set in Gold it may end up being a $3000 mistake. Just getting my feet wet knowing that if next year silver is $20/oz then I can just buy double what I am buying now.

 

Then you are not investing in bullion. This is fine, but you need to know that. A bullion investor simply wishes to track the PM market, not make a play in collectibles.
WHat you are describing is buying inexpensive collectible coins, hoping the collectible market comes back up. Again, that is fine, but its not bullion investing.

Btw, I never would count the TPG fee as value received. Think of it this way, the dealer sent in ten, and 2 came back high grade, which more than offset the fee to grade ten. THe other 8 are in slabs, but not by choice as much as by accident. I always consider a slab a sunk cost, unrecoverable by you, unless you are buying the coin to invest in the coin, not bullion. A future bullion buyer will either ignore the slab, or crack it out to get to the PM.

Chris

Edit: Btw pulling out an old price guide is an old trick. I could pull out a 1989 price guide that would show even higher prices. What does that mean? Its fine to hear what they were 4 years ago, but I am just warning you its an old salesman trick to make you believe you are getting exceptional value. What does that same publication TODAY show as the value? That is an even more important question. THe salesman could very well be right, they will come back, and STILL be priced to high for his example versus the market.