Gold/Silver prices vs. coin market

Skipper53

So far this year, gold seems stuck at around $400 while silver
continues to rise ( nearly $7/oz. ).
Has anyone noticed what effect this is having on the coin market ?

Traditionally, supply-and-demand has been the biggest factor in coin
prices, but bullion prices have also gone into the equation.

Your thoughts ?

mrearlygold

I think it helps somewhat but is not a spark plug to any real degree unless we're talking about generic gold.

Rgrds
TP

MrEureka

Rising precious metal prices are a tremendous help to investor oriented retailers. They can point at the metals and argue that coins should logically be part of the same uptrend. They can also legitimately argue that rare coins typically outperform metals in a bull market, by a wide margin.

Keep in mind that Investor demand for rare coins is far less constant than collector demand. Therefore, investors play a disproportionately large role in moving the market. Up and down.

LALASD4

Coin dealers use the metal prices to advertise their products but realistically, I think they are two totally different markets.

GAT

When gold was below $300 per oz I was buying the 1984 Olympic 3 coin sets, with the $10 gold Eagle,
for $140-150. With gold over $400 the same sets are selling on sleezeBay at $210-260. That translates into the coin sets increasing in value slightly ahead of the percentage increase in gold bullion.

roadrunner

One would be hard pressed to call MS 65 $10 Libs and $20 LIbs as generic gold coins but these have doubled in price while gold went from $300 to $420 an ounce. Gold has a strong effect on all aspects of the coin market. It makes money for most coin dealers and allows them to put those profits back into regular coins.

Don't be fooled by the current breather in gold prices to the $390 level....and just Friday pushed back to $400 on a poor jobs report.
Gold is headed higher in the very near future. The highs recorded in January will be taken out again. This bodes well for rare coin prices too. As the TRILLION dollars of credit that has been pumped into our economy finally takes hold (inflation) expect commodities and tangibles to only perform better. When the Japanese decide to stop holding up our economy (they bought like $170+ billion of our bonds in the past year....$20 billion last month)...things will get even tougher. Interest rates would have to finally rise to correct the imbalances. The current $37 oil is a harbinger of the same thing as is $7 silver.

roadrunner

mrearlygold

Hey Roadrunner, I'm in agreement with you on that except its not the Japanese but the Chinese who are keeping this place afloat at this point.

But now that even the chinese are changing their constitution to allow "property ownership", I think it's safe to say that investments will grow even more than what it has in china and less in federal reserve paper which will not be good for the average guy in this country.

So it would certainly appear that the next few years will see a further erosion of the dollar and this is of course good news for "dis ting of ours".

Rgrds
TP

roadrunner

MrEarlyGold,

I would agree that both Japan and China are the key players in keeping our economy afloat. No doubt Bush has a direct line to the Banks of both nations. I see far more on the hard asset sites about congratulating the Japanese for buying our Treasury Bonds with such flair. While we increase our debt $2 BILL a day, the Japanese are there to buy all of it. I would guess that this is just pre-election posturings for the Bush team. If everyone thought that the $500 BILL deficit of last year was astounding, we are on pace for $700-750 BILL in 2004. Everyone likes to break records!
And nothing is too good for the election process!

Again, coins are going to boom in this process....gold and silver too.
The best buying opportunity for gold in 2004 is probably close to a close.

roadrunner

mrearlygold

Roadrunner, what's very interesting to note as well is the fact that China is about to make the rmb convertible on the world markets ( and is apparently getting support on this) Most economists predicted that the introduction of the Euro would add competition to the dollar and certainly that's certainly become a reality. Japan is getting eaten like dim sum in Asia. Even the Vietnamese are beating on them.

China has made it legal for it's citizens to own gold which happened I think last year. They have slashed taxes and regulations and are making some real sound moved in the direction of property ownership. Vietnam is doing the same thing and I can tell you from experience that the dollar is NOT an acceptable form of currency at this point in most parts of Asia ( I recently lived in Vietnam and Thailand full time)(came back after a couple years about a year ago to take advantage of what I saw as a growing opportunity in my coin business)( plus I got the crap beaten out of me in Asia hahahaha)

These factors will open up a viable stock market in China which talk about competition!

Meanwhile we're headed down the primrose path of every increasing government and debt while they are going the opposite direction.

This is really good for our business ( dis ting of ours), extremely bad for the rest of the economy. Can you hear a POP coming in real estate?

Coins, gold and metals are just starting.

Oops, hope discussing the economics is ok on this thread.

Rgrds
TP

roadrunner

Mrearlygold,

The "POP" in real estate is certainly coming. This is a crazed asset bubble just like the NASDAQ was. I just read where housing prices in southern California were up 29% last quarter (annualized rate). Even here in sleepy New England prices were up around 15% annualized. As long as the govt keeps printing easy money for the bankers, then this free money will end up in housing and stocks.
Hey, it worked in the 1990's so why not today??

The interesting thing to note is that housing prices are not part of the CPI equation even though housing makes up around 40% of the CPI weighting. The govt decided several years back to report all housing as a weighted "rental index." That is, even though your house may have gone up 50% in value, the equivalent rent might have only gone up 10%. I know, you don't rent your house out...but the govt doesn't care. IF you did rent it out then that's what's important!!! I find this a refreshing way of massaging the index and one of the main reasons why the CPI is an outdated tool. One benefit of massaged numbers is that the govt's/corporate's input to pensions, befefits, cola's, etc. all depend on the CPI...and what better way to keep the costs down than to under report the increases.

One of the other tricks of the CPI is to quantify improvements in quality as reductions in cost. An example: Health care costs may rise 10% in a year. But since the care that was given might be judged to be 7% better than the previous year due to improved technologies, then the net figure on the CPI is 3%. This is done routinely. Computers are also judged to increase in their capability from year to year to while their actual cost may decrease 10% one year, the actual reported number may be another 10% less because the computer memories and speeds increased. Whenever you get more perceived "value" for your $$, the number crunchers factor this in to their advantage. If your new car is 3% better than the previous year, then the next price dropped 3% according to the statisticians. This is 1990's accounting 101 and it is still with us.

Significant inflation is with us and this should play a role in how your
perceive your collectibles as they will be one of the things to save your keisters. Do not fall prey to the ridiculous published numbers
of CPI, PPI, GDP, Unemployment, etc.

The gold price on Friday would have recovered further but Goldman Sachs was in their selling away as the day ended to keep the lid on per the directions of the govt. The US Govt was also in their buying stocks via their PPT (plunge protection team) to ensure that stocks didn't get hammered when the NEGATIVE jobs report hit. What did that report say? 21,000 jobs added but another 100,000 workers stopped looking for work and were taken off the rolls. Hence, a net increase of 21,000. Note too that anyone who has previously filed unemployment is not eligible to be counted the 2nd time they lose their job. Only first timers count! Figure that one out!


roadrunner

MrEureka

Coin dealers use the metal prices to advertise their products but realistically, I think they are two totally different markets.

LALA - If the pitch works, they're not two totally different markets, are they?

fcloud

Last year when silver was a bit over $4 the dealer here were paying $3.35 for face dollar, today they are paying $3.50. Silver has gone up nearly $3.00, but there is no real increase in what the dealers pay. I'll bet their sell prices have gone up.

roadrunner

FCloud,

I'm not sure where you live but in my region dealers are paying 4.5X face for 90% silver. I was buying it last year for 3.2x to 3.4x face when silver was around $4.50 an ounce. So I'd say that the increase is proportional.

The dealer still buying at 3x face are just trying to rip off the public figuring that the 3.0 number has been so conditioned in us, that it has been readily accepted since the mid-1980's. Well, times change. I'd be happy to pay around 4.5X face (delivered) for your 90%.

roadrunner