Generic gold, low premiums
- Published: Jun 30, 2011, 8 PM
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 Saint-Gaudens coins.
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. ¦