This is true, but just the same this "superstition" can have an impact on producing a "floor" or a "ceiling" on valuation for a long time. Whether it's $1000 for gold or 10,000 on the Dow, just seeing that extra digit can trigger a wave selling and knocking the price down again. Eventually fundamentals will cause those "round numbers" to go away and for good because those "round numbers" make the asset way too overvalued or undervalued to be sustained, until it's time for the next "round number" years into the future.
What if this really happened. I like many of you I have been purchasing gold and silver for a number of years now. What if this really happened? First of all, who could afford to purchase this gold and silver from us?
If gold hit $5000 an ounce, a lot of collectible coins would have little, if any, premium over melt. For collector coins made of precious metal, there is an intrinsic, bullion-based value, and a numismatic value.
Most times, the numismatic value far exceeds the bullion value. If gold spiked to $5000 an ounce, numismatic premium on many coins would largely evaporate. Rare coins would probably still command a premium, but it would be a much smaller percentage over melt than before the spike.
If a 1908 NM $20 gold coin in MS65 is worth $2000 today with $1000 gold, what would this be worth if gold hits $5000. I do not see it going to $10,000. It might not even be worth $6000. exactly right.
It would be extremely disruptive to the collector market. Some common coins could end up as surviving populations, and market values would go through a period of uncertainty. Assuming the bullion value receded after the spike (as we saw with the spike in platinum to $2300 a year ago), there is a reluctance to sell for less than a recent high-- similar to what happens after other bubbles, like the housing bubble. There'a a transition period. Those who can afford to will hold on, hoping that values will return to former highs, which might not come for decades. Those who can't afford to hold on will take their losses.
Those with quantities of common date gold bullion coins fare best during a bubble, little numismatic value to erode, and there is little reason to hang on until it's too late.
>>Most times, the numismatic value far exceeds the bullion value. If gold spiked to $5000 an ounce, numismatic premium on many coins would largely evaporate. Rare coins would probably still command a premium, but it would be a much smaller percentage over melt than before the spike.<<
It depends on how much the dollar is worth when (if) gold spikes to $5,000. A common $20 Liberty currently carries a premium of more than $200 in *circulated* condition. In the 1980 spike in the price of gold to $850, a common $20 Liberty in circulated condition was worth only melt. Gold is noticeably higher than $850 now, yet the premium has returned and grown. The same could occur at $5,000 gold or higher, if the dollar continues its decline.
<< <i>It depends on how much the dollar is worth when (if) gold spikes to $5,000. A common $20 Liberty currently carries a premium of more than $200 in *circulated* condition. In the 1980 spike in the price of gold to $850, a common $20 Liberty in circulated condition was worth only melt. Gold is noticeably higher than $850 now, yet the premium has returned and grown. The same could occur at $5,000 gold or higher, if the dollar continues its decline. >>
Another thing that remains to be seen is the premium the market continues to put on physical possession of the metal over "paper" metal. A few months ago there was a very large premium; it's come down some but is still higher than usual (perhaps signaling an ongoing distrust of paper assets). I would think if some economic shock like this occurred, even if "spot" was $5,000 an ounce it would cost a fair bit above that to buy an ounce of physical metal in your possession than some paper assets representing gold -- since a scenario like that would probably create a "doomsday premium" for the physical possession of the metal.
In such a case, a common date AU $20 Lib may not have much of a premium per ounce over, say, generic modern gold NCLT, but both would likely cost quite a bit more than the spot price of the metal (a price at which only "paper" gold would trade).
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<< <i>Round numbers are based in superstition. >>
This is true, but just the same this "superstition" can have an impact on producing a "floor" or a "ceiling" on valuation for a long time. Whether it's $1000 for gold or 10,000 on the Dow, just seeing that extra digit can trigger a wave selling and knocking the price down again. Eventually fundamentals will cause those "round numbers" to go away and for good because those "round numbers" make the asset way too overvalued or undervalued to be sustained, until it's time for the next "round number" years into the future.
If gold hit $5000 an ounce, a lot of collectible coins would have little, if any, premium over melt. For collector coins made of precious metal, there is an intrinsic, bullion-based value, and a numismatic value.
Most times, the numismatic value far exceeds the bullion value. If gold spiked to $5000 an ounce, numismatic premium on many coins would largely evaporate. Rare coins would probably still command a premium, but it would be a much smaller percentage over melt than before the spike.
If a 1908 NM $20 gold coin in MS65 is worth $2000 today with $1000 gold, what would this be worth if gold hits $5000. I do not see it going to $10,000. It might not even be worth $6000. exactly right.
It would be extremely disruptive to the collector market. Some common coins could end up as surviving populations, and market values would go through a period of uncertainty. Assuming the bullion value receded after the spike (as we saw with the spike in platinum to $2300 a year ago), there is a reluctance to sell for less than a recent high-- similar to what happens after other bubbles, like the housing bubble. There'a a transition period. Those who can afford to will hold on, hoping that values will return to former highs, which might not come for decades. Those who can't afford to hold on will take their losses.
Those with quantities of common date gold bullion coins fare best during a bubble, little numismatic value to erode, and there is little reason to hang on until it's too late.
It depends on how much the dollar is worth when (if) gold spikes to $5,000. A common $20 Liberty currently carries a premium of more than $200 in *circulated* condition. In the 1980 spike in the price of gold to $850, a common $20 Liberty in circulated condition was worth only melt. Gold is noticeably higher than $850 now, yet the premium has returned and grown. The same could occur at $5,000 gold or higher, if the dollar continues its decline.
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<< <i>It depends on how much the dollar is worth when (if) gold spikes to $5,000. A common $20 Liberty currently carries a premium of more than $200 in *circulated* condition. In the 1980 spike in the price of gold to $850, a common $20 Liberty in circulated condition was worth only melt. Gold is noticeably higher than $850 now, yet the premium has returned and grown. The same could occur at $5,000 gold or higher, if the dollar continues its decline. >>
Another thing that remains to be seen is the premium the market continues to put on physical possession of the metal over "paper" metal. A few months ago there was a very large premium; it's come down some but is still higher than usual (perhaps signaling an ongoing distrust of paper assets). I would think if some economic shock like this occurred, even if "spot" was $5,000 an ounce it would cost a fair bit above that to buy an ounce of physical metal in your possession than some paper assets representing gold -- since a scenario like that would probably create a "doomsday premium" for the physical possession of the metal.
In such a case, a common date AU $20 Lib may not have much of a premium per ounce over, say, generic modern gold NCLT, but both would likely cost quite a bit more than the spot price of the metal (a price at which only "paper" gold would trade).