Difference in Pre-1933, Post-1986 Certified Coin Premiums Widening Posted by Brian Ford on July 22, 2013
The gold spot price is not the only gold investment-related number that has been fluctuating wildly as of late. The certified coin corner of the market has experienced some unexpected changes as of late, and gold market analysts are now attempting to pinpoint the reason(s) behind the evolution of certified gold coin premiums.
In short, older coins are becoming more expensive while newer certified coins are losing relative value. With gold up over $30 just today, newer certified coins aren’t exactly losing true value. However, a recent poll of gold dealers found that while a one-ounce American Eagle coin that was minted after 1986 sold for about 15 percent above the spot price, the buy-back price of the same coin was barely above the spot price of $1330.
Meanwhile, a one-ounce U.S. gold coin that was minted prior to 1933 in the MS62 grade is selling for $1750 but the buyback value is an impressive $1565, more than $200 over the gold spot price. While some gold dealers promote newer coins that are in MS70 (absolutely perfect) condition, critics of such coins say that the high premiums are highway robbery, because a brand new coin should be in perfect condition. Some analysts believe that premiums for older coins will continue to grow since quantities are extremely limited, especially since the theory that post-1986 coins are non-confiscatable is now under heavy scrutiny.
The official Certified Gold Exchange recommends post-1986 gold coins be purchased in tubes of 10 or 20 and not in air-tight slabs, because the premium paid won’t be available when the investor is ready to sell. Investors who want encapsulated coins should target pre-1933 U.S. gold for their historic profitability over bullion, as well as their possible non-confiscatable status as collectibles.