Coin Market Fundamentals: Fairy Tales & Moon Beams

The most frequently asked question I encounter when speaking to both collectors and dealer acquaintances is, “How is the market?” The answer depends on who is asking.

Casual collectors or friends are often making conversation or being friendly when asking about the market. The question from serious collectors and dealer acquaintances is different. Many of the casual questions are related to the highly active gold and silver bullion markets, but they have very little actual interest in the numismatic side of our market.

Why are you asking? The answer to this question is different for almost everyone.

While we saw some small blips in the bullion markets through the holidays and into the new year, there was little deceleration in the overall volume of the bullion markets. Dealers are savvy to market trends and the majority of their attention continues to be bullion focused. Incredible interest was generated in the modern bullion market with the issuance of the 230th Anniversary Flowing Hair High Relief Gold Coins. The demand drove the price, but the bullion value of the item itself is the spot price of gold.

Regardless, everyone agrees this is a gorgeous coin design redux! Kudos to the U.S. Mint.

Many of the premiums for bullion items have stabilized. Among dealers, the premiums they must pay and/or charge in relation to the melt price of the item changes constantly depending on both the supply, and replacement cost. When supply is minimized for any reason, premiums increase. Demand continues to be strong, but most of the big swings in premiums have stabilized.

While many rare coin dealers have little or no bullion business, the underlying value of both gold and silver are always a factor in the market, if not the actual price of the item itself. Both gold and silver spot prices are readily available today. Most dealers already know how much gold and silver spot prices are before they finish their first cup of coffee
each morning.

Rare U.S. coins are strong, but the distinction between rare, scarce, and unusual is the biggest determinant of what is strong and what is soft. Condition census rare coins, much because of their finite supply, continue to garner top-shelf prices. On the opposite side of the spectrum, scarce coins and many of the “unusual” promotional items are softer.

Due to the rising gold bullion price levels, the premiums (versus their melt value) on many better-date gold pieces in the PCGS AU58 to MS64 range are less. This is true also for many PCGS high-grade classic U.S. type gold coins. Yes, they’re more expensive, but the current price levels represent some of the smallest premiums over their melt value in decades.

Proof U.S. gold coins especially continue to set record prices if they are available for sale. Records continue to be broken in both public auctions and private transactions. Most of these classic U.S. proof gold coins have exceptionally small mintages – often just 25 to 100 pieces. An appearance of any of these proof gold coins is a scarce opportunity to acquire a date that might not be available for several years.

U.S. gold coins are always strong because their lack of availability enhances their value. It takes real wherewithal to build some of the larger sets of U.S. gold coins; take, for example, any of the gold Liberty Head series. Building any of these sets by date is not only an expensive endeavor but also the timeframe for building those sets is measured in years, often decades.

I always learned to pay attention to overlooked areas of the U.S. rare coin market. In many cases over the decades, the prevailing winds of the bullion market created buying opportunities for a variety of U.S. coins that would otherwise be more expensive. In a hot bullion market, look at long-term demand items that represent good value but are soft because of lack of attention.

Currently I’m seeing good value in many areas of the U.S. silver dollar market. While rare dates and condition census Morgan and Peace Dollar dates are always in high demand, many of the scarce date and high-grade PCGS-encapsulated Morgan and Peace Dollars, as well as high-grade type examples, represent great value at these price levels.

Virtually every series of classic U.S. coins has “sleeper” dates. These are undervalued. In addition, virtually all series of U.S. coins have a sweet spot in terms of the grade most collectors focus on. The wealth of numismatic information PCGS provides for free allows you to identify both these sleeper dates and grade-range “sweet spots.” Ultimately, you can cherry-pick great dates in great grades by utilizing all of the PCGS information platforms, including the PCGS Population Report, PCGS Price Guide, and PCGS Auction Prices Realized.