High prices of gold bullion net effect on the numismatic value ofcollector gold coins

I've been thinking about this a lot lately. I began collecting gold coins, mostly world and mostly older and collector type coins not modern bullion type coins, since 2005 and since then gold prices has been on a very strong upward cycle so I've never really been through a bear gold market. I actively monitor the prices of gold coins of the type that interest me and are in or hope to add to my collection and its obvious to me that prices have risen substantially on some coins but not on other coins. In other words the huge rise in gold bullion prices has not affected the price of all collector coins the same.
With that said, I know numismatic values of world coins, or any coins for that matter, rise and fall based upon supply and demand due to popularity, collector base wealth changes, etc. and wouldn't expect that collector coins rise and fall in price across the board. I am thinking that because of the huge media and investor coverage of the rising gold prices that not only should collector coins rise in price due to bullion value but numismatic value should also rise because of all the focus on the bullion price.

The question I pose to everyone is ...

Knowing that the "bullion value" of a collector gold coin obviously rises with the market; does a rising bullion value have any real effect on the "numismatic" value of coin coins?

 

Log in or Sign up to hide this ad.

Yes it does.

 

In my opinion, no. By that I mean; the numismatic value may be surpassed by the bullion value and trade for more as bullion than as a collector piece. I'm not overly familiar with American gold coins, but I can give an example of this from the British gold coin perspective.

Some years of sovereigns, whilst collectable are extremely common, 1911, 1912, London mint sovereigns spring immediately to mind. Back in 2000 you could buy XF specimens for less than $100 (£55 each to be exact), rarer sovereigns such as the Canada mint ones were trading at double those prices or higher depending on the year.

In effect these common date sovereigns with mintages of over 30,000,000 were worth bullion value and the rarer Canadian mint sovereigns with mintages of less than 50,000 in some cases were worth their numismatic value (which was way above £55).

This year it now costs around £240 for a common date sovereign and £260 for a Canadian mint. So the common date ones have appreciated far more than the 'rarer' ones, but in reality both are selling on their bullion content much more than their numismatic value, whilst it's true that the Canadians prices are a little extra, I believe it's more of a token gesture than anything. Dealers perceive them to be rarer so they feel they ought to charge more for them, some even charge £340 for them, but these appear not to sell, and have been advertised again and again and again. If numismatic value really did rise relative to bullion then they would be selling for a wider margin than £20-£40 or so above the run of the mill coins. In effect if the true numismatic value of the common sovereigns had risen to £240 then the rarer Canadians should be around £500 each, but as you can see this is not so.

In fact to take the argument one step further, some sovereigns (Victorian shield reverses) are now trading at the same price as George III guineas, and the latter were always about four times as expensive, but it must be remembered that guineas and half guineas were never sold at bullion value as they were always viewed as collector coins and as such, even damaged ones traded at a premium well above bullion value.


When the gold price falls the common date coins are likely to be the first to depreciate.