US Coins

As gold slumps, so do prices for some gold coins

The market for high-grade generic coins, like this NGC MS-65 1932 Indian Head $10 eagle and this MS-65 1927 Saint-Gaudens double eagle, continues to slide as populations increase and demand from investors weakens.

Original images courtesy of GreatCollections.

Gold continues to be in a bit of a slump and market makers don’t see a recovery in fast sight. The metal is hovering at the $1,200 an ounce level as of Aug. 13, a 17-month low that hasn’t been seen since March 2017. 

Investors typically look to gold during times of economic and political uncertainty to preserve the value of their assets. As the Wall Street Journal explained in a July 24 article, “Gold is often associated with fearful investors whose distrust for the financial systems leads them to store value in physical assets like the metal.” The steady performance of the U.S. stock market and a continued rise in the value of the U.S. dollar compared to other currencies has made it more expensive for overseas investors to buy gold, which is usually priced in U.S. dollars. 

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Interest rates are creeping up, making interest-bearing assets an attractive alternative to non-income producing gold. Demand for American Eagle gold bullion coins from authorized purchasers is relatively weak and hedge fund managers have been removing gold exchange traded funds (ETFs) from their portfolios in recent months. 

“Generic” U.S. gold coins have also been trading at low prices, especially the bellwether Coronet and Indian Head $10 eagles and Coronet and Saint-Gaudens $20 double eagles. Vast quantities of these coins were hoarded overseas after the United States went off the gold standard in 1933 and they have been trickling back into the country in the decades since, causing populations at grading services to continue to rise. 

Back in 2012, when gold was at the $1,700 an ounce level, common Mint State 65 Indian Head eagles sold for $3,200 to $3,500 and MS-65 Saint-Gaudens double eagles traded at the $2,100 to $2,200 level. 

However, a Numismatic Guaranty Corp. MS-65 1932 $10 eagle realized $2,234.25 at an Aug. 12 GreatCollections auction and a handsome Professional Coin Grading Service MS-65 1927 Saint-Gaudens double eagle sold for $1,652.44 there several weeks earlier. Recent auctions have seen attractive MS-65 Saint-Gaudens double eagles fall below the $1,500 level. 

The rising population is partly to blame — back in 2012 PCGS had graded 24,333 1927 double eagles in MS-65 with 5,360 finer. Today, the population is 28,718 with 6,252 finer. The 1932 $10 eagle is much less common, with PCGS and NGC combined grading 4,026 in MS-65, where six years ago that total was just 3,413. 

Retailers are having increasing issues getting collectors and investors to pay substantial premiums for high-end generic coins when the populations move up over time, whether from an increased supply of fresh coins from Europe or a perceived loosening of grading standards.   

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