U.S. Gold/$20 libs premiums dropping harder than spot?

MrOrganic

rarcoa sent me some interesting info


12/3/09 Gold $1217.00 1/13/10 Gold $1135.00 -$82.00 (-6.73%)

$20 Lib
MS61 $1725 $1420 -$305 (-17.68%)
MS62 $1900 $1575 -$325 (-17.10%)
MS63 $2690 $2310 -$380 (-14.12%)
MS64 $3530 $3100 -$430 (-12.18%)

$20 SG
MS61 $1690 $1430 -$260 (-15.38%)
MS62 $1755 $1490 -$265 (-15.09%)
MS63 $1915 $1635 -$280 (-14.62%)
MS64 $2170 $1835 -$335 (-15.43%)
MS65 $2685 $2275 -$410 (-15.27%)


any explanations on the hard correction?

1. less buyers since many dealers are putting most capitol into bullion, since thats whats hot
2. more newbie buyers & more bullion to choose from since PT & Pd are hot?

blu62vette

Interesting numbers.

It seems that when gold gets real hot the premium just goes crazy...when it slows down the premium disappears.

RYK

My explanantion would be that the premiums had advanced too much, relative to spot, due to speculative demand, and now, they are normalizing to a more historically typical spread. $1900 for a common MS-63 Saint is too high, even for gold at $1200, IMO.

CarlWohlforth

Why wouldn't common date double eagles in 61 be even closer to melt?

WTCG

Though spot price is arguably the largest influence on the price of slabbed gold, it is not the only influence as demand and supply are also very important factors. The increase in spot price has resulted in more coins being "shaken out" into availability and a lot of coins are turning up in Europe, more so in recent times than in times past. Although spot price is still strong, there is currently enough supply to more than satisfy current demand.

Stuart

MrOrganic: Thanks for posting the very useful current Gold Pricing Info.

WTCG: Thanks for providing your insightful comments. As always, you make some good points regarding gold spot price, and supply & demand of available coins.

jmski52

$1900 for a common MS-63 Saint is too high, even for gold at $1200, IMO.



I agree with RYK, especially in light of the much lower premiums that are available in alternative gold investments.

A higher premium on graded Saints implies the involvement of collectors, more so than investors. At some point, if collectors are not involved then the higher premium is based on dealer speculation, imo.

coinguy1

<< <i>$1900 for a common MS-63 Saint is too high, even for gold at $1200, IMO.



I agree with RYK, especially in light of the much lower premiums that are available in alternative gold investments.

A higher premium on graded Saints implies the involvement of collectors, more so than investors. At some point, if collectors are not involved then the higher premium is based on dealer speculation, imo. >>

I don't see higher premiums being due to collector buying, rather than investor buying. In fact, I think it's more likely due to investor demand.

MrOrganic

<< <i>

<< <i>$1900 for a common MS-63 Saint is too high, even for gold at $1200, IMO.



I agree with RYK, especially in light of the much lower premiums that are available in alternative gold investments.

A higher premium on graded Saints implies the involvement of collectors, more so than investors. At some point, if collectors are not involved then the higher premium is based on dealer speculation, imo. >>

I don't see higher premiums being due to collector buying, rather than investor buying. In fact, I think it's more likely due to investor demand. >>



your welcome stuart
...............

"Investor demand" = big marketers???

In this thread when LEAR CAPITOL called me it seemed they want to sell the LIBS.
http://forums.collectors.com/messageview.cfm?catid=42&threadid=757494

there prices were $150 or so over GS ask, ms61+

"things that make you go hhhmmmmm"

roadrunner

The generic gold coins often act with leverage to the price of gold just as gold stocks do vs. bullion. Gold stocks often move 2-3X the price of gold (in both directions) so it's no surprise that numismatic generic gold acts much the same way to bullion. It's been doing this since the gold market first started percolationg in 2003-2004. Mind you it always doesn't move 2-3X the price of gold but in many instances it has. In this case following a very hard and swift correction after basically a 7-8 month run, seeing numismatic gold correct that much seems warranted. When gold gets moving again it will also start to reclaim those premium losses, though it may take another new all time high around $1350-$1500 to take the premiums back to their December highs.

In the recent correction gold corrected about 12% by December 22nd while gold stocks on average fell about 20% though there were numerous ones that fell into the -25 to -30% range.

roadrunner

CaptHenway

<< <i>rarcoa sent me some interesting info


12/3/09 Gold $1217.00 1/13/10 Gold $1135.00 -$82.00 (-6.73%)

$20 Lib
MS61 $1725 $1420 -$305 (-17.68%)
MS62 $1900 $1575 -$325 (-17.10%)
MS63 $2690 $2310 -$380 (-14.12%)
MS64 $3530 $3100 -$430 (-12.18%)

$20 SG
MS61 $1690 $1430 -$260 (-15.38%)
MS62 $1755 $1490 -$265 (-15.09%)
MS63 $1915 $1635 -$280 (-14.62%)
MS64 $2170 $1835 -$335 (-15.43%)
MS65 $2685 $2275 -$410 (-15.27%)


any explanations on the hard correction?

>>



That chart was sent out by Heritage, and the numbers were their numbers. Rarcoa may have copied it to you.

I think that the telemarketers were really pushing the "pre-1933 gold that cannot be confisgated" line last year, and that drove up the $20's. I guess that the promotion is over, for now.

TD

MrOrganic

it was heritage ...you are correct

coinkat

I find it very hard to believe that 63 Libs were at nearly 2700 in early December- 2300 yes

RedHerring

<< <i>I find it very hard to believe that 63 Libs were at nearly 2700 in early December- 2300 yes >>



-----------------------------------------

They were over $2500. Not quite $2700 but in the $2600 area.

CaptHenway

<< <i>I find it very hard to believe that 63 Libs were at nearly 2700 in early December- 2300 yes >>



Heritage is the market maker. Those numbers were correct, for a little while.
TD

WTCG

<< <i>I find it very hard to believe that 63 Libs were at nearly 2700 in early December- 2300 yes >>



Believe it or not they were selling for that just a few months ago. At that time even with the high prices it was extremely difficult to find coins available to buy. At the last Baltimore show in November I recall an occasion on Thursday afternoon when I ran across the street to the Bank of America branch to withdraw $16000 because there was one dealer who was selling $20 Libs in MS63 at $200 below market value per coin but insisted on a cash payment. People who know me know that paying with large amounts of green cash is something I seldomly do.

I still remember at one time in my career those same MS63's were hard to sell at $340 a coin.

jmski52

I don't see higher premiums being due to collector buying, rather than investor buying. In fact, I think it's more likely due to investor demand.

If they are paying $1,900 for an MS-63 coin that contains .9675 oz. of gold (around $1,112 melt), then they are transitioning out of the investment arena and venturing into the collector field.

In paying a 41% premium when there are alternatives that cost no more than a 10% premium over melt, the buyers of MS-63 Double Eagles are playing a speculative game over the premium.

It may be that the buyers are investors, but they are investors who are banking on these coins being perceived by the masses as collectible coins. So, collectors may not be buying them, but the ultimate intent is to sell them to "collectors" even though that is probably not going to happen.

People familiar with the market will do just fine, and the newcomers will get fleeced. JMHO.

joebb21

I still feel the premiums are insane.
The supply of them is just tremendous- it just looks like this second the demand is as well.

jmski52

Unless I have it completely wrong, Mr. Hall's original intent was to provide some liquidity and integrity to the rare coin market by making it possible for non-professionals (and professionals) to trade "sight-unseen" in "standardized products", in terms of grade.

The overall result was successful, as the rare coin market has increased in size and value by removing at least some elements of uncertainty. This doesn't eliminate the possibilities of speculation or frothy markets due to a run-up in the price of gold.

People speculate in many different things, not just MS-63 Double Eagles. The fact that there's an influx of buyers right now for slabbed coins tells me that a move in the direction of hard assets and away from paper stocks and bonds.

maibockaddict

Those values are off of Greysheet. The peak was when gold crossed 1200. I think investors get OCDeed into collecting gold and it steamrolls. You may not like the premium, and think that these are very common coins, but there are more people in general now, in addition to there being more coin collectors and investors, but the number of coins stays the same.

Also notice that the premiums on MS 62 and 63 $10 Libs continue to be strong and hold. Currently the dealer bid for MS 62 Type 2's is $850, and MS 63 is $1550 (up from last week).

roadrunner

I still remember at one time in my career those same MS63's were hard to sell at $340 a coin.

You must be a lot older than me because even in the mid-1970's when I was about 20 I recall ch. BU Saints being priced at around $250-$275. I don't know if a choice BU $20 Lib was even available then for $340. They were dirt cheap in the very early 1970's but I wasn't paying much attention then.

The premiums on the $20 Libs may look insane considering how cheap they were just a year or two ago. But their supply is far from unlimited and their entire NGC/PCGS population could be bought up by a single well-heeled investor. Try that same game with bullion coins, bars, or paper certificates. Even at their December peak MS63 $20 Libs were selling for 2.3X melt value. Even a MS63 Morgan dollar is gonna cost you more vs. melt. $20's are a classic US gold coin with .9675 ounces of gold backing them. It's not like they are Saints where many bags of them still exist continually diluting the supply. To all those who have salted away common BU Lincoln rolls from the later 1950's or even the copper ones from 1959-1982, the $20 Lib is probably a cheaper investment vs. melt and certainly for more portable/convenient. Over the course of the next few years there will be a number of areas of numismatics that will get to levels where premiums are considered insane by the majority of collectors. What's the likelihood of hoards of US collectors doubling or tripling in the next few years and desiring those penny rolls? How about the likelihood of investors or speculators doubling or tripling (assuming a rising gold price) who are looking for quantities of choice BU $20's?

Collectors see no problem with paying $36 for a 1904 MS63 V-nickel, or $45 for a 1904 MS63RD Indian cent, or $120 for a 1904 MS63 Barber dime. The premiums on those is huge even if the supply is limited. Yet paying 2X melt for a choice BU 1904 $20 Lib is insane? How about 2.1X melt for an 1894? The supply of 1 oz. sovereign bullion coins is amazingly huge and basically unlimited as there are 5 BILLION ounces of gold out there to work with. The supply of early US $20's in choice mint state is quite finite....only the Chinese are still making them (lol). Other than Great Britain I don't think any other nation put out classic 1 ounce coins in quantity extent in the 1890-1930 period. BU sovereigns from that era are quite plentiful however. In a sense, these are the "world's" classic one ounce bullion coins. And if one wants to ensure a tad more value and protect their downside better, then for an extra $100 buy a better date $20 such as a 1907-s where the pops are 1/70th of a 1904. One can now buy a slew of much better dates for almost no premium to type. They can get a lot cheaper still as gold continues to consolidate in price. But don't expect them to fall off the map as they are still about 2X scarcer than MS63 Saints.

roadrunner

WTCG

<< <i>I still remember at one time in my career those same MS63's were hard to sell at $340 a coin.

You must be a lot older than me because even in the mid-1970's when I was about 20 I recall ch. BU Saints being priced at around $250-$275. I don't know if a choice BU $20 Lib was even available then for $340. They were dirt cheap in the very early 1970's but I wasn't paying much attention then.

>>



The period in time I'm referring to is around late 2000. I still recall buying a few NGC graded $20 Lib coins from Heritage for $360 each. At the time the bigger buyers had buy prices on those in the range of $340 per coin. I still recall one incident at a Long Beach show around that time when one of the buyers wouldn't honor their buy price of $335 per coin.

roadrunner

The period in time I'm referring to is around late 2000. I still recall buying a few NGC graded $20 Lib coins from Heritage for $360 each. At the time the bigger buyers had buy prices on those in the range of $340 per coin. I still recall one incident at a Long Beach show around that time when one of the buyers wouldn't honor their buy price of $335 per coin.

I missed that year and probably part of 2001 when it came to gold coins. Amazing that they could have been that cheap and apparently totally ignored by most everyone. When I bought my first group of MS62's sometime in September 2002 I paid around $400-$450 per coin. Thanks for the input.

roadrunner