Bullion Prices a Moving Target
Volatile bullion prices are complicating dealer margins, collector expectations, and short-term strategy.
The continual wide fluctuations in the spot price of precious metals are leaving both collectors and dealers increasingly frustrated. Potential buyers looking for intrinsically valued coins are complaining that some dealers are selling generic gold and silver coins at what they believe to be unrealistically high prices. Some dealers are buying gold coins at as little as 80 percent of the value of their metal. A 20 percent discount in silver might be understandable, but in gold, this is an enormous discount.
While these reports may be true, it is likely that a dealer who is selling probably added these coins to inventory when the spot price of gold and silver were at their record prices. These dealers are trying to avoid taking a loss on this inventory. The volatility in this market sector is the likely culprit. The challenge here is to publish a reasonable price for what I will call “a moving target.”
The price of gold bullion has finally settled into a trading range that has steadied much of the pricing of bullion and intrinsically valued gold coins. Silver has become more unpredictable, with dealers in some situations checking the spot price before quoting buy or sell prices to a client.
Auctions of scarce to rare coins have been unaffected by all this. Coins whose primary value is determined by their metal composition may be consigned; the consigner may be at the mercy of what the metals market dictates on the day of the sale. Anyone looking to make money in the short run in this volatile market needs to keep their finger on the trigger.
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