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September Coin Market Report

By Vic Bozarth – Bozarth Numismatics
Vic is our Newest CoinLink Content Partner. He will be providing Regular Market Reports and articles

As I write this on Labor Day 2010, I can’t help but reflect on the trends I have seen in the coin business over the last 25 years. Generally speaking the coin business during the Summer months, June through August, is flat. Of course, the ANA Show highlights the Summer show schedule, but other than the marathon it has become, the other shows are somewhat sparsely attended and well ‘flat’. With only a couple of exceptions, the Summer doldrums have lived up to their name. People are on vacation, taking time off, and hopefully spending some time with family and friends. Thank goodness Summer is over. Let’s do some business.

Business picks up during the Fall and early Winter months. Folks are done with their vacations, the weather is forcing them inside, and the coin market recognizes this most years and gets more active. We are already starting to see this trend in the bullion markets.

The two big questions you should focus on are: Where is the business going this Fall? How can you best take advantage of the market as it stands right now?

Gold and Silver bullion prices are moving up. While we specialize in rare high grade U.S. coins, we recognize and believe that bullion prices will continue to rise. How can you take advantage of this trend. U.S. gold coins are a great way to both hold and invest in bullion and take advantage of the low premiums that they currently carry in relation to their historic price levels. Let me illustrate this with an example.

During the last couple of months of 2009, gold bullion price levels bounced around $1200 per ounce. The ‘blue’ chip U.S. gold type coins that are most bullion sensitive, $10 and $20 gold coins, were extremely active.

The market peaked in late 2009 and to illustrate this I have listed wholesale price levels for actively traded gold coins then vs. now. Note the difference in the price of gold itself.

2009 Spot Gold $1195/ounce ……… 2010 Spot Gold $1250/ounce

Coin Type & Grade 2009 2010
$10 Liberty Gold MS63: $1500 $1000
$10 Liberty Gold MS64: $2400 $1600
$10 Indian Gold MS63: $1600 $1040
$10 Indian Gold MS64: $2400 $1650
$20 Liberty Gold MS63: $2600 $1800
$20 Liberty Gold MS64: $3300 $2250
$20 Saint Gold MS64: $1900 $1650
$20 Saint Gold MS65: $2600 $2010

What I am trying to illustrate is how ‘demand’ can really affect the wholesale price levels of coins, especially gold. During late 2009 there were some major institutional orders for these type of coins. This pushed demand/prices up and we sold into this peak of the market. Currently U.S. type gold coins are trading for significantly less yet the price for gold bullion is nearly $1250 per ounce. Do you see the disparity?

How do you take advantage of this disparity? What do I recommend?

I recommend you buy high grade U.S. gold coins, because U.S. Gold coins are a great way to both invest in gold bullion and rare coins. How can you take advantage of this great double play?

Not only have the ‘blue’ chip U.S. type gold coins come down in price, but many better date gold coins have also dropped in price. Prices for all denominations of U.S. gold coins have dropped in relation to their late 2009 price levels.

You can take advantage of this drop in price. Dealers have seen this price disparity many times. What do dealers do? They buy SELECTED high quality common date U.S. type gold coins and ESPECIALLY better date U.S. gold coins that don’t carry a HUGE premium over the more common date type gold coins.

Personally I put back quite a few better date $20 Liberty and Saint Gaudens Gold coins because they were TOO CHEAP in relation to the bullion levels. I also ‘put back’ both $10 Liberty and Indian gold coins in MS63 because the premiums over their melt price (the value of just the gold metal they contain) fell to one of the smallest percentages I have ever seen in the coin business. You can take advantage of this trend also.

This trend won’t last. In just the last three weeks, since the ANA, wholesale price levels as listed in the Coin Dealer Newsletter, have risen, but many better date coins have not moved at all. I have a couple of customers that have quietly been buying selected better date $10 Liberty and $20 Liberty gold coins. They see what is happening and over the years they have profited handsomely. Please check out our website or contact us for more information.

What else is going on in the U.S. coin market?

Dated collector coins from the 19th century are extremely active. Coin Dealer Newsletter prices are not accurate. I often pay well over ‘CDN’ bid for Bust, Seated, and Barber coinage in especially higher circulated grades (VF-AU). Although the Uncirculated ‘bid’ price levels are more accurate, many scarce items trade ‘way over’ bid levels among dealers. PCGS graded coins are extremely active, but don’t’ discriminate against NGC coins. CAC coins sell for a premium as they should. Eye appeal is everything when determining price. The price ‘sheets’ don’t accurately assess how NICE (or ugly) a coin in a graded holder may be. AS ALWAYS-BUY THE COIN NOT THE HOLDER!

Last but not least, consider putting together a meaningful set of U.S. coins. Building a set of U.S. coins is both rewarding and fun. Often times a collector of a particular type of U.S. coin will ‘teach me something’ about that series or type of coin. Specializing allows them to focus on that series and develop the expertise that a dealer may not have in that series or type of coin. I would also suggest building a second set of coins. Often times when a collector has gotten pretty far along on a set, they will lose interest because the last few coins in a set can be extremely difficult to locate. If you can’t find anything for your first ‘set’ you might get lucky with something for your second set. Most of the fun is in the ‘hunt’. After all, collecting coins is about having fun and potentially making some money too.

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