It’s happened: gold went over $500 per troy ounce for the first time since Feb. 18, 1983, and stayed over.
The New York market price closed over the $500 per ounce mark on Dec. 1, ending that day at $502.50. In following days it moved higher, closing at $510.20 on Dec. 6. As this was written Dec. 7, the intraday price was dancing over $514.
Some major sellers of gold coins and bullion items say sales of gold coins are going strong, and add that the entire coin market is healthy as well.
“It’s been nuts. The market has exploded. They’re buying everything,” said Ken Pines, of Coast to Coast Coins, Columbia, Md.“The whole coin business right now is very hot. ... The last six years we’ve seen a very strong market,” he said, referencing the start of the 50-state quarters program in 1999.
“Gold going over that psychological barrier is really helpful” as regards popular interest in gold, Pines said. “Certainly the bullion-related coins, the more common $20s and so on, are selling, but also the rarer gold collector coins.”
Ian Laing, of Gatewest Coin, Winnepeg, Manitoba, Canada, also noted the popularizing effect that surpasssing the $500 level has brought to gold at the moment.
“There are people who have not been in gold for a long time getting into it now,” Laing said. “How much ‘legs’ this has depends on the American economy and your willingness to keep buying Chinese products at a high level.”
Laing said the rising gold price is being fueled by commodity inflation, such as the prices of oil and metals used in manufacturing and construction. He said the gold price could soar “if real inflation shows up in the American economy and there are no signs of a recession.”
As for what gold items are selling currently: “Most people buying now are buying as close to bullion gold as they can get,” American Eagles and Canadian Maple Leaves, among others.
Numismatists “don’t tend to be gold buffs” and will stop buying gold collector coins when gold’s market price moves upward, Laing said, noting that numismatic premiums on collector coins tend to move independently of the world gold market.
Paul Sims of Paul Sims, Inc., Richmond, Va., said that while demand is strong, people are considering the new price levels when making purchases.
“While a lot of people are buying gold now because the price has been rising, just as many people are not buying because the price is too high,” Sims said.
“Gold is at an all-new level; it is likely to break sharply one way or another,” he said. “Of course, if it goes up, people who didn’t buy now will have even less inclination to buy because the price will be even higher.”
Sims said his customers tend to be more experienced than the national average and have seen gold move up and down in the past.
“At no time does the climbing price of gold precipitate demand. A declining price tends to. ... If the average age of our customers was more like the average age of American populace, in the 30s, we’d probably be seeing more buying of gold,” he said, suggesting that younger people tend to buy when the price is advancing and older people with greater perspective tend to buy when the price is in down periods.
Gold’s current price rise is “increasing our sales, but only as a funtion of higher cost,” he said, explaining that “orders for three of this or four of that would previously have been orders for 10” when gold was around 40-50 percent lower, just a few years ago.
The market price of gold dipped to its lowest point in recent years, the low $250s, in 1999 and 2001. It hasn’t been over $500 since 1983, and its highest point was $850 in January of 1980.