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Gold’s astounding ride

By Steve Roach – Rare Coin Market Report Blog
First published in the Oct. 18, 2010, issue of Coin World

Gold continues to astound as it broke the $1,300 ounce level for the first time on Sept. 28, closing in New York at $1,306.60 an ounce.

The next day, gold hit a high of $1,313.20 before closing at $1,308.50.

In a nice contrast to the previous week’s House Subcommittee hearings focused on fighting fraud in the sale of gold coins, the Sept. 29 Wall Street Journal featured a front-page story that was overwhelmingly positive about gold’s potential to top $1,500 next year.

It focused on investors’ growing desire to hold actual gold in the form of coins and bars.

Reports by numerous analysts and banks seem to share a bullish view for gold, evidenced by a Sept. 28 report by Deutsche Bank that stated that $1,600 an ounce gold would not be surprising for 2012 and that gold would not be in a “bubble” until hitting $2,000.

The recent bull run-up in gold prices has been attributed to many things: continued uncertainty in the real estate market; concern about the value of currencies, especially China’s; low consumer confidence in the United States; and general concern about large central banks’ ability to control the money supply adequately.

But to collectors, one thing is clear: gold coins are much more expensive than they were in 2000, in large part due to the price of gold rising 353 percent over that time.

The increased threat of intrusive federal regulations in the coin industry, such as the recently introduced Coin and Precious Metal Disclosure Act (H.R. 6149) have done little to dampen the public’s appetite for gold coins.

But dealers have responded vocally to fight multiple pieces of legislation that could affect the coin market, forming political action committees aimed at fostering better communication between the coin community and legislators.

Many dealers reported that gold was the lone bright spot in the market at the recently completed Long Beach Coin, Stamp & Collectables Expo, where several market-makers elected to stay home, instead budgeting to attend the Whitman Coin and Collectibles Philadelphia Expo, another major show, scheduled for the following weekend.

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