Certified Gold Coins Refuse To Lose Posted by Brian Ford on May 17, 2013
In recent weeks, the gold spot price has fluctuated from $1600 to just above $1300, back above $1400 and with today’s $25 drop it is back down to $1358. Finding such wide trading ranges has not been easy for gold over the last 12 years since the bull market first began. The interest of institutional investors in gold, however, has made surprisingly large swings in the gold spot price more common over the last couple of months.
One sector of the gold market that is an exception to this trend is the certified gold coin market. Yes, the PCGS and NGC price guides usually show a fluctuation of $15-$40, but these guides are only updated about once per week. Additionally, the numismatic value of such coins keeps them from being subjected to the measly changes of a dollar here or a dollar there in the gold spot price. It usually takes a substantial move of the gold spot price to motivate the rare coin market in any direction. Now that gold is moving drastically, why aren’t rare coin prices changing?
Many of the same investors who are causing the gold spot price to fall by liquidating bullion, ETFs, pool account holdings gold IRAs or other gold investing instruments are not moving back to cash, or even bonds or stocks. Instead, they are taking proceeds from the liquidation of their gold bullion or gold derivatives instruments and using them to buy rare gold coins.
They aren’t suddenly turning into coin collectors. But by buying investment-grade (relatively common) rare coins they are choosing an asset that could be safe if our government decides to confiscate gold bullion again, and they avoid the high premiums that accompany many rare coins, because investment-grade rare coins really aren’t that scarce. If this trend continues, we could see certified coin prices rising even if the gold spot price is flat or falling.