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Veteran coin dealer sees gold at $1,500

This article was originally printed in the latest issue of Numismatic News.
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Gold hit a new all-time high of $1,308.50 a troy ounce Sept. 28 and silver was trading at 30-year highs of $21.929 a troy ounce by the close of trading on the COMEX market.

Next stop for gold is $1,500 and for silver it is $25, said  coin dealer Pat Heller of Liberty Coin Service Lansing, Mich.

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He expects those milestones to be reached by the middle of October.

“I fully expect these targets will still be passed, and sooner than the general public realizes,” he explained.

Premiums on some popularly traded bullion coins have risen in the wake of announcements from the U.S. Mint and the Royal Canadian Mint, Heller pointed out.

“The U.S. Mint notified its primary distributors that it had ceased production of 2010-dated gold Buffaloes, with the result that premiums are up,” he said, and “the Royal Canadian Mint discontinued sales of 2010-dated silver Maple Leaves, leaving several dealers unable to fulfill orders they had already accepted.  It will soon be possible to take delivery of the 2011-dated silver Maples, but there is a temporary supply squeeze for coins for immediate delivery.”

Greencastle, Ind., dealer Julian Jarvis was seeing little evidence of a supply squeeze in the popular bullion coin issues, but he said there was a continuing demand for bags of 90 percent U.S. silver coins.

“Buffalo gold sales have really dropped off for me over the past two or three months,” he said. As for the end of sales of the 2010 date by the U.S. Mint, “I don’t think its going to affect the ones that are out there a whole lot,” Jarvis added.

Supplies of gold American Eagles also remain ample, Jarvis said.

“They’re very plentiful as far as I can tell. They are selling on the secondary market for less than the Mint is selling them for.”

As for silver American Eagles, “My sales have slowed way down on the 2010s. We sold the last ones we had today. If anybody wants silver Eagles, I’ve got plenty of older dates.”

Jarvis explained that he wasn’t going to move quickly to replace the 2010s in his inventory.

For him, the main story is the continuing demand for bags of 90 percent U.S. silver coins. He said he has one new buyer of these who had only bought gold in the past.

Jarvis sells bags containing $1,000 face value for just about spot melt price. At the time he spoke, silver was trading for $21.90 an ounce, giving a bag a melt value of $15,658. He said he would sell a $1,000 face value bag of quarters for $15,600 and a bag of $1,000 face value halves for $15,700.

Why the difference?

The halves are easier and quicker to count, and apparently in a fast moving market, that means a $100 premium.

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