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Price swings buffet dealer inventories

This article was originally printed in the latest issue of Numismatic News.
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It has certainly been a roller-coaster ride for precious metals lately with both gold and silver achieving dramatic new highs. Silver was the big news, slicing through $30 a troy ounce like a knife through butter.

It hung there for nearly two full days. Then came the Irish budget and banking bailout fix and rumors of another Chinese interest rate hike.

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Let’s face it, after such a rise in precious metals you had to guess that something would dampen it. Gold, of course, made a new high as well, but only by about 0.5 percent and then fell as well. Platinum tagged along for the ride. It is still mostly influenced by the oil market, which incidentally really should have been stronger, but threats of a double dip recession in Europe on monetary woes tempered that market.

A good friend of mine set up at an East Coast show last weekend. He is known as a strong gold coin buyer. He bought about $100,000 in U.S. gold type coins on Saturday. His comment, “Harry when I got into the office Monday, gold was up and the premiums were down. My 3 percent margin went in half.” That says it all about the present market conditions.

U.S. type coins have been quiet at the higher grade levels with little price change activity. However, lower grade silver issues have been just the opposite for the obvious reason. You can use this to your advantage at coin shows as you will often be able to find coins at or below melt because the dealer forgot, did not realize it, or was just plain too lazy to change his price.

E-mail harrymkrause@optonline.net.

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