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Gold finally breaks through resistance level

Gold coins suddenly have more luster than they’ve had in years. Gold has now followed silver’s example, gold having broken through its resistance level. In the case of gold, that level is $1,300 an ounce. Silver didn’t stop at its $15 an ounce resistance level and has since gone to more than $16, although it has also retreated modestly as it defined a new trading range.

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Bullion and bullion-related coins have responded accordingly. The reason? A recent chart of SPDR Gold Shares (SPDR is a physically backed gold exchange trading fund) suggests the 50-day moving average crossed beyond the 200-day moving average twice during the past year. The crossover between the two moving averages is a commonly accepted buy sign used to mark the beginning of a major trend.

Recent gains have triggered a bullish crossover, suggesting we may be in at the beginning of a long-term uptrend. This trend is needed in coins, be they bullion or collectible. A recent American Numismatic Association study confirmed there is a shrinking numismatic investment market. Without some value appreciation, this trend will continue.

Since most coin buyers begin with common material, which is impacted primarily by the spot price of precious metals, what is now happening may encourage this type of buying. Should values continue to climb, some of these buyers may be emboldened to “graduate” to seeking collectible coins as well.

Yes, we need more true collectors. But investors are an important part of the equation as well. Without them, available inventory will continue to outpace demand, as has been the situation for several years.

This article was originally printed in Numismatic News. >> Subscribe today.

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