GOLD PRICE SET TO DOUBLE
PRICES OF COIN RARITIES EXCEED PRE- SALE ESTIMATES
Acouple of years ago, a commodity and currency analyst bet my friend Gary Alexander that gold would fall below $1,000 per ounce, and Gary won that bet – two years in a row. Now, in the face of a global pandemic, that analyst has turned bullish and is predicting gold will double from here – to $3,300 per ounce by 2022 (“The Economic and Monetary Conditions are Perfect for Gold,” by Ivan Martchev, MarketWatch, March 30, 2020). Martchev shows a dramatic chart of gold bullion rising to an all-time high relative to the CRB Commodity Index. The chart shows gold rising from 1.15 (to the CRB Index) in 2001 to a record high 13.07 recently – a gain of over 1,000% in 19 years. He compares the current coronavirus emergency to the 2008-09 financial crisis, which propelled gold to an all-time high in 2011, saying, “We have a similar environment at the moment. Interest rates have been dropped to zero at the fed funds rate level, and the federal deficit will be larger than 10% of GDP (larger than after the 2008 crisis) due to the $2 trillion bailout. Record deficit spending and the Federal Reserve’s quantitative easing (QE) with no preset limits is the perfect environment for gold bullion. “With record deficit spending and interest rates at zero, we may be faced with an environment where the Fed will keep interest rates below the level of inflation for some time until the economy normalizes after the outbreak is controlled. This would be the perfect environment for gold bullion.” We don’t know if $3,300 gold is possible by 2022, but Gary and I would not bet against it.
LOW POPULATION RARE COINS COMING ON THE MARKET
Despite the volatility in many markets, a few remarkable rare coin collections are coming on the market now, with superb selections I haven’t seen in years. In March 2020, the D. Brent Pogue auction sale, held by Stack’s Bowers Galleries, had a historic 1804 Dollar PCGS Proof-55 sell for $1,440,000 and a finest-known 1854-S $5 PCGS/CAC AU58+ sell for $1,920,000, for a total of $3,360,000. Stack’s Bowers experts had estimated the two coins would sell for $2,700,000. The magic of the Pogue sale is chronicled by Greg Reynolds in this issue of COINage, beginning on page 56. On the more affordable numismatic level at that same auction, items such as a tied-for-finest-known 1925 Norse-American Centennial thick medal PCGS/CAC MS-67 sold for $12,600. That was over five times what experts estimated to be its value. This piece is often part of the popular classic commemorative half-dollar sets. When coins are offered that fit all the criteria for excellence – they are historic, finest known or tied for finest
known, or only have a few better – typically, they sell fast and for strong prices. This is true, especially if they have an extra wow factor, such as attractive original toning, cameo contrast, or intense luster. For instance, a rarely traded beautiful 1908-D $10 Indian Motto PCGS/CAC MS-68 tied for finest-known, sold for $204,000. If an important rare coin has not been seen on the market in over a year, that often intensifies the demand and raises the price for it. An experienced colleague of mine once wrote about his methods of buying rarities. He used an analogy about fast rabbits, and dead rabbits like you might encounter on the road. He bemoaned not initially buying a coin when offered a historical rarity. He said he would “think about it” and returned later that day to buy it, only to find that it had sold. Whenever you have the opportunity to buy a particular low population coin that is not often seen, consider the wise words of my friend. Make a decision beforehand to be a fast rabbit, not a dead rabbit.
SILVER DEMAND IS PUSHING PREMIUMS MUCH HIGHER, DELAYING DELIVERIES
At the end of March, silver prices rose by 20%, and the premiums on silver products were pushing costs much higher. Delays in deliveries from the U.S. Mint and private mints have pushed deliveries to customers beyond 30 days in some cases, while the premiums over spot prices in which the mint representatives charge dealers have increased. Dealers must pass those premiums along to customers. Some reputable dealers are now selling American Silver Eagles at double spot, and some private mints have raised prices and premiums on silver rounds. The U.S. Mint announced a hiatus on Thursday, March 12, on silver Eagle sales, after-sales jumped by 1.57 million pieces in one week, boosting their 12-day total to 2,320,000 ounces — the highest for March since 2016. That was four times as much as the total 650,000 ounces sold in the full month of February. It also amounted to nearly three times as much silver as they sold in March 2019 (850,000 ounces). The U.S. Mint has resumed allocated sales as of April 2, 2020.