Gold is down. So is silver. But the nation’s coin dealers view this as a buying opportunity.
The short term forecast is that the metals market will stay down. “I believe it’s going to remain pretty close to where it’s at now,” stated Gary Rosencrans, owner of Gary’s Coins in Wisconsin Rapids, Wis. “If anything,” he noted, “we’re more likely to see $1,000 gold than $2,000 gold.”
As it stands right now, gold is at $1,259 and silver is $19.19 an ounce.
David Hendrickson, owner of SilverTowne, a large bullion distributor located in Winchester, Ind., expressed the same idea. He pointed out that “people are seeing the economy getting better, the dollar getting stronger and this puts pressure on lower prices. It all ties back to the economy.”
What buyers are interested in varies depending on their available funds. “Silver is outselling gold. We see a lot more smaller people buying smaller amounts, 1, 2 and 10 ounces, but we also have good numbers of larger orders too,” said Hendrickson. He also mentioned that SilverTowne’s privately minted rounds were selling well because of lower premiums. “Buyers want to get the most silver for their buck,” he explained.
John Krupka, owner of Point Coin in Stevens Point, Wis., notes that buyers were interested in silver American Eagles, generic silver rounds and junk silver. However, he pointed out, “People aren’t coming in to buy rolls of silver American Eagles. They’re coming in to buy American Eagles for their sets.” A lot of large investors are taking advantage of low prices, collectors are doing the same and filling in holes in their collections.
While silver and gold sell, Hendrickson noted that platinum “was not selling well.” The platinum American Eagle, he pointed out, was a very slow seller. But the high price of platinum at $1,478 an ounce could explain that lack of demand.
When asked about what coins they’d recommend for buyers looking to invest in precious metals, Rosencrans suggests purchasing $10 gold Indians, “in a grade where the price is close to the price of gold. That’s typically around the very fine (VF) to extremely fine (XF) range.” Those coins then, he figures, could see their numismatic values outpace the gold price in the long run.
“High grade, high quality coins are stable,” said Krupka. He also suggested Morgan dollars as an area where collectors and investors can play both the numismatic and precious metals market.
Buying motivations in today’s market vary. “People right now are looking to average out in the long run and are buying now believing the market is close to its bottom,” said Hendrickson, referencing the many buyers who purchased when silver was at $45 and gold was at $1,800. As stock market gains boost the wealth of investors, some are hedging their bets by taking money out to invest in precious metals.
“The price is right, the price is low,” Krupka pointed out as the primary motivation. Time, it seems is a minor factor. “I also get the idea that people think ‘where’s the rush?’”
“This is the target area where the active level is at,” explained Rosencrans. He warned that, despite low prices, some buyers may be too worried about even greater price drops in the future to take advantage of the market now. He figures, “Most people behave the exact opposite the way they should.”
Few investors are selling. Krupka said, “those that have the gold and silver aren’t willing to part with it unless they have to.”
In the long term, Hendrickson noted a big factor in the precious metals market: the 2016 elections. Each election season has seen fluctuating prices depending on the candidate and their economic platform, he explained.
“The factor that has played a role has been inflation, though we have yet to see much of that” Rosecrans explained. He suggested that another big factor in the future of the market would be how the investor reacts to the political environment. “The last few years of high prices have been generated by political rather than economic factors,” he said.
“I think, if you would see the stock market retreat, that would renew interest in precious metals,” Krupka said. He alluded to a belief that when the stock market is up, precious metals are down. Then, when the stock market is down, precious metals are up.
“I get the feeling most people believe gold and silver aren’t that glamorous right now,” Krupka said.
But that’s the best time to buy.