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Demand for Gold and Silver ‘Ballistic’

By Richard Giedroyc

First, all the over-the-counter sales stopped. Then all public participation in auctions was curbed. Local coin clubs cancelled meetings. It appeared the coronavirus had impacted the business of coins! Suddenly the internet became the place to buy coins. Now the market is going in the other direction – the demand for gold and silver composition coins has gone ballistic. Demand is outstripping supply.

According to an April 2 Bloomberg news release, “Some dealers are desperately contacting clients to see if anyone is willing to sell their gold bars and coins, and offering a rare premium over spot prices.”

As BullionStar (Singapore) analyst Ronan Manly recently put it, “We are seeing an unprecedented situation where huge customer demand and the disconnect between physical prices and spot prices is driving buy premiums high.”

The question active collectors need to consider is, how many of the current buyers are collectors or will become collectors? How many are investors and speculators looking for a short-term safe haven while equities continue to tank? What will happen if these buyers decide to re-sell once the stock market begins to rebound?

Precious metal coins are selling at a premium above their intrinsic value spot price regardless of the collectability of these coins. Truly rare coins are selling for surprisingly strong prices at auctions despite the decline in discretionary money and the consideration that all lot viewing and bidding must be done online. The times are changing for collectors just as much as they are for the general public. It’s a strong market, but be wary of speculation.

 

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