American Eagle golden opportunities
The spot price of gold has risen substantially since mid-December, reaching as high as $1,363 during the last week of January, the highest level since August 2016.
The run-up in gold has been primarily driven by the decline in the value of the dollar, which hit a three-year low recently.
Treasury Secretary Steven Mnunchin said on January 24 that a lower dollar is good for exports, which is true, but that overlooks the fact that it also makes imports more expensive, which ends up driving inflation higher. This is important considering that consumers are the main drivers of our economy.
The following day President Trump talked up the dollar, sending gold slightly lower.
One of the silver linings of the current, more expensive gold market is that it is possible to get some good deals. For example, I’ve noticed several dealers offering random date American Eagle gold bullion coins and Canadian Maple Leaf gold bullion coins at retail prices about $20 over spot, which is about the typical wholesale premium much of the time.
An even better deal are the random date Proof American Eagle coins in their original government packaging, being offered at very close to the same price as bullion examples of the same coins.
For example, at the time of this writing, with gold at $1,352, the wholesale trading value of a Proof American Eagle gold $50 coin, according to www.coininfo.com, is $1,380, while the bullion version is listed at $1,366.20. Wholesale trading prices are the prices dealers pay when buying from customers or other dealers.
In terms of retail prices, APMEX currently offers the Proof American Eagle 1-ounce gold coins, random dates in original government packaging (OGP), for $1,419.49 with check payment, while random bullion coins are $1,414, a $5 difference. Similar deals are available from other major dealers.
In addition, some offer the same coins with only their original capsules and no boxes and papers, which is fine in some cases, but I would recommend getting the coins in OGP, especially if the price is right. It is much easier to sell these coins when they are as issued by the U.S. Mint.
Consider that to purchase the 2017 $50 Proof coin from the Mint, the current price is $1,677.50 with gold between $1,300 and $1,350.
Also keep in mind that almost all coins in the series trade at the same price on the wholesale market irrespective of mintage.
I don’t expect the Proof gold coins to be available on the retail market at these levels for much longer.
Barry McCarthy of ModernCoinMart offered these comments about why the premiums on these coins are down: “Proof gold eagles are following the rest of the physical gold market, just way too many coins out there and not enough demand. With the spot metals prices going up, many investors/collectors are cashing in their metals, gold especially, and dealers are selling it as fast as they get it so they can lock in the small premium they can get right now before the premium goes down even further. It is in a down cycle right now but I am optimistic that this downward spiral of premiums will end. With the incredible volatility of the cryptocurrency market, and the stock market at all-time highs daily, many investors will start to seek a safe haven to put their money. The metals markets will provide that safe haven. Only time will tell but I am bullish about the precious metals market and the coin market in general.”