I was looking at the weekly Great Collections email today and a thought occurred to me. It is common to see high grade (MS62 and above) silver halves and dollars routinely trading at four figures. Two weeks ago we had a thread on a Franklin half trading at six figures!...... Yet for the most part it seems the higher grade late 19th-early 20th century gold is trading for not much more than spot. Is this a discrepancy in the market or is there something at play here I am not seeing?
Main reason is gold circulated very little, and many MS coins still exist. Most gold can be had at fairly close to spot even in MS grades. Supply and demand...
There are also a LOT more collectors of the silver denominations than there are collectors of gold. Much smaller collector base means a very small base that collects top end rare coins. So there are enough to go around and less upward pressure on prices. Like Sully said supply and demand and there is more supply than there is demand.
Randy a general rule of thumb is that common date/mint gold in grades up to and including MS63, (and in a few cases even MS64) can usually be purchased for about 10% over melt. And this includes Libs and Saints. This is especially true of the large denominations, less so the smaller denominations.
With numismatic silver, the intrinsic value of the silver is irrelevant. The market value is based on the value of the coin to a collector. Compare this to junk silver, where the numismatic value is below the intrinsic value, and the value is tightly coupled to the spot price of silver. With the exception of very high end gold coins, numismatic gold behaves a lot like junk silver. The value of the gold can be so high as to overtake what would have been the numismatic value of the coin. So if the real numismatic value of a coin would have been $500, but it contains $1200 worth of gold, the price it trades at is going to be tightly coupled to the spot price. If the price of gold was to tank, you'd see true numismatic values emerge and set a floor above the intrinsic value.
