This article was originally printed in Numismatic News.
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Gold and silver did well so I looked smart for a few days after writing the last column. Not any more!
Actually what happened was reasonably predictable. December was a very strong month. There was much positive news especially concerning silver. So why the big drop in the first two trading days of the year that was followed up by some reasonable buying of physical metals?
It is profit-taking. An objective investor or speculator sets goals based on many factors and one is tax consequences. Now it did not take a rocket scientist to see the strength in December, so holding was a good idea. Come January with 20-40 percent gains in 2010, it might be a good idea to cash in and not have to worry about the taxes due on those profits for a full year. I believe that is what is going on currently and until the next economic hiccup precious metals will be under pressure.
Gold type coins are very active with smaller denominations especially strong and the big boys getting “cheaper by the dozen.” Actually Saint-Gaudens double eagles have the narrowest of spreads, with less than a 4 percent spread between MS-60 and MS-63. A year ago it was about 15 percent.
Small gold type especially of the Indian Head varieties continues very much in demand with the quarter eagle getting close to parity with the scarcer Liberty Head type in lower to mid grades.
Copper and silver type coins are relatively quiet with some action in Mint State early copper and a few sellers of Mint State half dimes.