GOLD AND RARE COINS IN STRONG DEMAND
Kennedy Half Dollars Attract New Collectors
It’s time to make your “wish list” available to your dealer so when one of your desired rarities becomes available you’ll be able to capture it for your portfolio or collection. Many rare coins are taking off in price. When popular top-quality rare coins with low population reports are offered, they tend to go fast; so remember a lesson my mentor once taught me about capturing the best bargains: On the road and in the wild, there are “fast rabbits” and “dead rabbits.” So it’s best to act fast when the finest rare coins come on the market. Be a fast rabbit.
As reported elsewhere in the feature story of this issue, Collectors Universe, the parent company of the Professional Coin Grading Service (PCGS), was acquired for about $700 million by a group of private investors led by Nat Turner. I remember very clearly the founding of the Professional Coin Grading Service in 1985. PCGS was a way to provide an independent and reliable means for coin buyers to know the grades and presumed values of their investments.
The other major, and very popular, grading service, Numismatic Guaranty Corp (NGC), was founded two years later, in 1987. Taken together, these services have given great credibility to the buying and selling of rare coins in the 35 years since they were founded.
More recently, the Certified Collectibles Group (CCG), the parent company of NGC, has sold a majority stake in its firm to a major investment firm, Blackstone Group, whose assets under management in 2020 totaled $619 billion. CCG is a recognized authority in all forms of collectibles, including stamps, coins, comic books, sports memorabilia and paper money.
The sale of CCG and Collectors Universe over the past year has underscored the fact that certified collectibles are now more desirable to mainstream investors – so desirable that private equity will pay full value to take a sizeable stake in the market. This means more millionaires and billionaires will be entering the rare coin market that NGC and PCGS serve. There will rarely be an increase in rare coin supply. Some are lost. Most are a part of permanent collections, with only a relatively few in the surviving population coming onto market in any one year.
GOLD MINING SUPPLY DECLINES FOR THE SECOND YEAR IN A ROW
Most markets are based on supply and demand. The supply of new gold is extremely limited, and finding new gold is getting harder each year.
Nearly all of the easy or visible gold on the earth’s surface has been found. Now, gold miners are digging deeper to find fewer parts per million of gold at greater and greater expense. Just think of the TV show, Gold Rush.
According to the latest data released by the Word Gold Council (WGC), global gold mine production peaked in 2018 at 3,652.8 metric tons. Production declined 1.5% to 3,597.2 tons in 2019 and then fell another 3.3% to 3,478.1 tons in 2020 for a total decline of 5% in newly mined gold in the past two years.
Another major change comes in the source of that gold. South Africa was the leading source of gold in the 20th Century but it is no longer in the Top 10 among producers. The top five gold producing nations are Russia, China, Australia, United States and Canada in that order.
GOLD HIGHER MID-SUMMER
Gold Rose Over $60 in July 2021 (+3.5%) from $1,763 to over $1,825. The other precious metals have not followed since this is mainly a play on inflation, safe havens, fear and a recent drop in the dollar. All are engines of gold’s growth rather than fuels for industrial demand, which tend to lift silver and platinum group metals. Gold is also rising since inflation has remained more stubborn than the Federal Reserve expected, which Fed Chairman Jerome Powell has finally admitted. Also, the Fed’s favorite inflation indicator recently rose 3.5%, its highest jump since 1992 and double the Fed’s anticipated rate as of the start of 2021, when it predicted inflation would be 1.8% for all of 2021.
During July, the major stock market indexes rose by 1% to 2%, although the Russell 2000 small stock index continued to decline. However, gold beat all the major stock market indexes by rising 3.55%, even though the other three precious metals declined slightly.
GOLD BULLION SALES AT THE U.S. MINT ROSE 32% IN THE FIRST HALF OF 2021
During June 2021, sales of the Gold American Eagles slowed down to only 4,000 ounces due mostly to a cessation of U.S. Mint sales in anticipation of the debut of the new reverse design in July. However, the American Gold Buffalo coins were quite popular, selling 27,500 one-ounce gold coins in June 2021, a gain of 267% over the 6,500 ounces sold in June 2020 during the height of the pandemic. Sales of both types of U.S. gold bullion coins were up 32.4% in the first half of 2021 versus the same six months in 2020.
Now, investors are looking forward to the design change on the Eagle reverse, the first design change since the Eagle series debuted 35 years ago in 1986. There will also be a significant debut of a series of Morgan and Peace Silver Dollars to honor the centennial of the year in which the two series made their transition in 1921 – the final Morgan Dollar mint year and the first Peace Dollar mint year. These series will also be distributed this fall, making 2021 a major Year of Transition in COINage.
We continue to see steep premiums on American Eagles due to delays in deliveries and high demand.
NEW KENNEDY HALF DOLLARS SOON AVAILABLE IN SOME BANKS
They don’t contain any silver, but if you want to impress friends with some of your pocket change, give them a classic coin with the face of the 35th U.S. President, John F. Kennedy. The Federal Reserve has been quietly ordering circulation-quality (“business strike”) Kennedy half dollars for distribution into general circulation.
It was widely believed that none of the Kennedy half dollars struck as business strikes had not been routed for circulation release since 2002, and the output from the Denver and Philadelphia Mints was all reserved for numismatic sales in bags and rolls and offered at premiums above face value. However, U.S. Mint spokesman Michael White said the Federal Reserve has been placing orders for 2021 circulating Kennedy halves. We can’t promise they’re available at your bank but you can make inquiries.
See the feature story about Franklin and Kennedy half dollars in this issue.