Graded double eagles going for spot?

Dont get me wrong there are specifics, gut in general what are you paying the
extra premium for ? especially with a bullion coin most come out of the mint
in a very high grade anyway and I am not going to carry a loop around just
so that I can prove its a 69 or better...LOL

 

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I get your point...and no, I would NOT buy alot of those PF70's...I just wanted one.

If I was making a big GOLD investment -- not a numismatic or coin investment (speculation really) -- I might buy a few "trophy" and graded coins, but most of the coins would be bullion or bullion substitutes.

Maybe 90% pure bullion and 10% for numismatics or coins with special features like Proof, MS70, a Saint in MS66 condition, etc.

 

I think you got the right idea, but for most its a real confusion trying to
get things lined up and being able to tell the difference between the to
philosophies.

 

It starts with deciding what you are buying....am I buying GOLD to track bullion dollar-for-dollar...or am I buying numismatics, which will NOT track gold dollar-for-dollar and has other risks ?

And buying a coin that sells for 50-100% premium above metallic content is different than buying one that sells for 10% over spot or 400% over spot.

You just have to ask yourself beforehand, just as with financial investments, what is my downside and why am I buying this.

 

Great minds think alike...LOL

 

There's a floor for the coins value. Essentially say the coin is $500 but spot price is now $1500 well its now a $1500 dollar coin but is spot fell to $300 it could still be a $500 and thus being a numismatic item again and not just fancy bullion.

During run ups a lot of numismatic things become bullion as the bullion value eats their value up

 

OK...I get that.....Santini had said:

I wasn't sure what he meant, hence my question to him.

Assuming he meant what you wrote above...you're basically just saying that the numismatic premium can go up or down, which I agree with. In fact, historically some of the HIGHEST premiums have been when the gold price has been lowest (i.e., 1998-2002). Intuitively, you'd think that with demand for Double Eagles low that the premium would be low, too....but it seems it's like dealers simply won't sell Saints/Liberty DE's for spot bullion when gold was $300-$500/oz.

Sort of like the floor for mortgage rates today where banks won't really lend much below 3% even though other interest rates have collapsed much lower than they were the last time mortgage rates were 3%.

 

Essentially yes. Some might but most will be more than happy to hold out for higher prices

 

What about holding out for higher prices to avoid losses, in general ?

I mean, dealers in theory are supposed to be like bookies -- they're not supposed to wager on precious metals prices, right ? So what happens if a BIG correction down in gold or silver renders the current market price for what a dealer has unecomomic to sell at.

What does he do then ? Wait for gold to bounce back ? Double-down and take on more inventory at the new lower price, hoping it's bottomed and doesn't go even lower ?

I've never understood how this worked.

Also, do you think some dealers today might even hedge by shorting liquid ETFs like GLD or other proxies for gold or silver ?

 

Coin dealers (generally not the big big ones) are FAMOUS for being stubborn enough to try and make money on everything they have. If the price goes down many won't adjust and you can see things that have been in inventory for a decade or longer.

Now with pure bullion they don't really have a choice but will take as long as possible to lower prices or just dump everything to a big seller or refinery to cut their losses. Prices always come down much much slower than they go up

The question of what they should do isn't always what they do. You can find plenty that will just hold out stubbornly, some that will just dump it all immediately to a buyer that will take it all, and some that will move with the market albeit it grudgingly.

The big boys almost certainly. They're always happy to sell huge amounts at basically any price knowing they're doing fine either way

 

Was reading an article in CoinWeek from years ago that said the reason that the premiums on Saints and other coins fluctuate is because of the telemarketers and infomercial people who will buy huge amounts of the low-60's Saints (and similar coins) and push the premium up.

The author estimated about 500 serious collectors of Saints and maybe 25,000 folks who are type collectors. The serious collectors can have on average 50 or so coins; the type folks maybe just a few on average.

After that, it's folks buying in place of modern bullion or those buying from the telemarketers and folks for investment, cultural, or whatever reasons.

Anyway, it's the first time I've ever seen a particular number given in regards to the number of collectors for a particular coin. At least it's a reference point.