If market tops are characterized by frenzied buyers paying any price to get in on the action, then activity in the coin business indicates we are still not near one in the current gold market.
Trading on the world’s commodity markets took the precious metal convincingly through the $1,100 mark, changing hands at $1,115 a troy ounce Nov. 11.
“It’s created some new buyers that have never bought gold before,” said Greencastle, Ind., dealer Julian Jarvis. “There’s been a few sellers because it’s the highest they’ve been able to sell their gold for, and there are a lot of other people just waiting to see what’s going to happen.”
Supplies of the popular gold bullion coins are still adequate.
“They’re still pretty readily available,” Jarvis said. “I have had no problem getting quick delivery of anything.”
Silver is trading around $17.50 a troy ounce, nowhere near a record.
“I think silver supplies are extremely tight,” Jarvis said.
As evidence he cited dealer buying behavior with silver bars. They would not be paying as close to spot as they are for their purchases if supplies were plentiful.
He said at a coin show last week a dealer was paying full spot price and since then one buyer was paying 15 cents over spot for 100-ounce bars.
Dealer Pat Heller of Liberty Coins in Lansing, Mich., said gold coin supplies are still abundant enough that there is no waiting for delivery. Since he believes interest is increasing, he doesn’t know how long this will remain the case.
But, he said, “the easy money has been made,” referring to profits that have rolled in since gold bottomed around $250 in 2001.
He said he thinks gold could be $1,500 six months from now.
He acknowledged that American Eagle gold coins remain popular with gold investors and its Buffalo counterpart also had a strong three weeks after it first went on sale in the middle of October.
Interest in the Buffalo coin is waning a bit now. Buyers who favor it do so because it is made of .9999 fine gold, Heller said. This highly pure bullion is popular in the Far East, as well as among buyers who expect that the coins will be melted at some point, he explained.
For buyers of the .9167 fine American Eagles, the fact that there is copper and silver alloyed to the gold to make it harder helps it stand up much better to any handling it might receive.
At today’s prices, Heller said collectors might want to look at gold coins with somewhat lower premiums over gold value. He cited Austrian 100 coronas and Mexican 50 peso coins and even American Arts gold medallions.
The coins are less popular because they do not contain even troy weights of gold, so value calculations involve lots of decimal points. The low premium for the medallions have something to do with what might be called their strangeness.
Though they are not coins, they are official U.S. Mint products that were last sold in 1984. Heller said there are some in the business who do not know what they are. The medallions depict Americans from the arts like Mark Twain and Helen Hayes.
Heller said he is even more optimistic about silver’s future than gold’s, but presently silver owners tend to sell as soon as it nears the $18 mark. Heller said previous failures by silver to stay over the $18 mark have helped instill this caution.
He likes bags of 90 percent silver pre-1965 dimes, quarters and half dollars. There is still interest in 10-ounce and 100-ounce bullion bars, but this is less than in prior bullion upturns, he said. The 90 percent silver coins have the advantage of being able to be cashed in one coin at a time, where the silver in a bar has to be sold all at once.