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September 2017

Premiums Tighten on Pre-1933 U.S. Gold

     Comparing Gold prices from seven years ago to prices today, premiums are at record lows and it may be the right time to jump into the market and buy U.S. Gold. Dealers and collectors believe in the value of rarity, especially when it comes to Gold coins minted prior to 1933. But with the minuscule premiums that are available in today’s U.S. Gold market, buyers have an opportunity to purchase coins in higher grades for just a few dollars more.

     The price difference between a $20 Gold Saint Gaudens in Extra Fine and MS63 is a good case in point; the current FMV for Extra Fine is $1,510 and for MS63 is only $1,590. With a difference of only $80 most buyers would be quite satisfied purchasing a nice MS63 instead of the Extra Fine.

     At the beginning of 2010, Gold was at $1,121.50. The FMV for the $20 Gold Saint Gaudens in Extra Fine was the very same $1,510, yet Gold was about $180 less than today’s price. The MS63 Saint had an FMV of $2,010 against the current FMV of $1,590; that is a $420 decline over the seven years. During that time, as the price of Gold went up, buyers began looking at Modern Gold Eagles and other minted coins which became the choice for many investors, not paying for the rarity of the coin but simply for the value of the Gold. The market premiums for the less rare U.S. Gold coins began to fall and continued to fall to extremely favorable levels for buyers.

     While Gold has fluctuated up and down this year, it has made a strong run since early July. Gold was $1,151 at the beginning of this year, and the most recent high was over $1,320 after breaking through $1,300 towards the end of August. This all bodes well for U.S. Gold coins, right? The common date Saint in MS65 was $1,920 in January of this year and has declined to the current FMV of $1,850. Now consider that Gold has advanced around $150 in this timeframe. The graph below shows how the investment grade $20 Gold Saint Gaudens has performed since 2010.

Graph $20 Saint Gaudens Type MS64 MS65 MS66

     Back in January 2010, when the MS65 Saint had an FMV of $2,850, Gold was only at $1,121.50. Since then we have seen Gold close as high as $1,895 in September of 2011 and gradually retreat to today’s current level of around $1,300 an ounce. The MS65 Saint has lost $1,000 from the 2010 FMV and is currently only $260 more than the MS63 grade. The difference in the two grades in 2010 was a lofty $840. The loss in premiums is directly proportionate to the amount of modern mint products on the market today. But with premiums this low on early U.S. Gold coins it might be the right time to start looking for rarity in conjunction with bullion value.

     The extremely low premiums are not limited to the $20 Saint; these tight spreads are occurring throughout early U.S. Gold. The common date $20 Gold Liberty TIII has dropped considerably since 2010. The MS63 had an FMV of $3,030 in 2010 and today it is only $1,670. That is down $1,360 and puts it just $80 above the MS63 Saint. A comparison of the MS65 $20 Liberty reveals an even larger fall in the FMV. In 2010 the MS65 was recorded at $6,950 and today it is $3,040, down well over 50%. For those advanced collectors and investors who chart prices over a period of time and believe in cycles, this looks like a wonderful opportunity to catch some of these coins on a bounce.

     The smaller denominations have followed the same trend these last seven years. The $10 Indian in MS63 has dropped from $1,890 FMV in 2010 to the current $930; in MS65 the FMV is down from $6,380 to today’s value of $2,860, a loss of $3,520.

     The $10 Liberty with Motto is lower at $840 in MS63 versus the high in 2010 of $1,970; the MS65 in 2010 was $6,560 while today the FMV is just $2,780. This drop is an amazing $3,780.

     The $5 Indian had an FMV of $2,280 in MS63 at the beginning of 2010 and now is lower at $960; the MS65 was $20,590 and has fallen to a dismal $8,000. The 1909 D is the most common date in this series, so if any of the other dates can be purchased near this level, they should be a good value for the future.

     The $5 Liberty with Motto in MS63 had an FMV of $1,250 in 2010 and today it sits at just $543; the MS65 was $4,560 and now it is down to $1,910.

     Remember, all of these prices in 2010 were based on Gold at $1,121.50. Therefore, while the bullion value has increased, the collector value has decreased. If early U.S. Gold coins reverse the current trend, today’s buyers could recognize a sizable profit in the near future.

     With Gold bullion at $1,308, the $20 Gold melts at $1,266, $10 Gold melts at $633, and $5 Gold melts at $316.50.









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