The gold market in June stayed relatively stable at the $1,530 to
$1,550 an ounce level before dropping to $1,498 on June 22 and
recovering to the $1,510 level at the end of the month.
With gold showing moderate stability, many collectors are wondering
if now is a good time to buy generic pre-1933 gold coins, as many
pieces are trading at very low premiums over their melt value not seen
in the last decade.
These low premiums result from several factors, including an
oversupply of coins coming to the United States from European central
banks, and fears that gold is currently overpriced and ready for a
price correction that will bring down the generic market.
Also, several certified ugly and copper spotted coins have traded
sight-unseen at relatively low prices, which can bring down the prices
of normal-quality coins, especially for thinly traded issues.
At gold prices of $1,500 to $1,550 an ounce, nearly all Coronet $5
half eagles, $10 eagles and $20 double eagles, Indian Head half eagles
and eagles, and Saint-Gaudens double eagles are trading at 5 to 10
percent premiums over their melt value. In early 2009 when spot was at
$850, these coins were trading at around 40 percent over melt.
It’s in the certified Mint State generic market that the drops in
premiums are most apparent, and double eagles are the most widely
traded generic coins. At current levels for MS-62 double eagles, the
premium is 10 percent under melt, whereas in early 2009 these were
trading at 50 percent premiums. In MS-63, the current premiums raise
to 20 percent over melt for Coronet types and just 15 percent for
MS-64 Saint-Gaudens double eagles trade at just a 5 percent premium
over MS-63 examples, where in the past five years this premium has
ranged between 20 and 50 percent.
In the higher grade generics (especially MS-64 and MS-65), Certified
Acceptance Corp. approved coins and Plus graded coins have had
substantial traction and market acceptance. There is a large jump in
both price and quality between MS-64 and MS-65 double eagles, and the
quality of certified MS-64 coins can vary greatly.
So is now a time to buy? It all depends on what you think the gold
market will do, and if you think you can select examples that are
accurately graded and attractive for the grade. ■