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The Gold to Silver Ratio

Image courtesy of the U.S. Mint.

Image courtesy of the U.S. Mint.

Gold received a healthy bounce recently, primarily based on economic fears involving China’s trade relations with the United States. This in turn brought a modest upturn to many collectible US gold coins whose value is still primarily supported by the spot price of the metal rather than by some significant increase in demand. Gold American Eagle coins, as expected, also felt the upward swing.

Silver as a commodity, however, was disappointing. The spot price of this metal did increase, but while gold flirted with $1,350 an ounce, silver never made it to its next resistance level of $15. The gold to silver ratio has continued to rise throughout the past three years, now being at about 90 to one. There is a significant demand for silver coins at current levels, but the demand for all but the best of gold coins continues to languish.

Many average gold coins have been offered either at their intrinsic value or at a modest percentage above that value as has been observed at several recent coin shows. This is not so with silver coins with the exception of what is generally called junk silver. Most collectible and bullion silver coins are being offered at a stronger percentage above spot.

Overall, scarce to rare coins appear to remain in another universe, relatively free of precious metal or stock market prices, but not setting many record prices either. The demand for these coins is there, but this is a well-focused demand for specific coins at current rather than at speculative prices.