A Bull Market In US Gold Premiums, While Bullion Depreciates

Real money is priceless.

But, nonetheless, to the chagrin of bullion buyers, daily noise can lead to fluctuations in the price of their American Gold Eagles and Canadian Gold Maple Leafs, and sometimes to the downside.

These days we hear on mainstream media that the bull market in gold is over. Bullion buyers have felt this firsthand.

But the pundits in mainstream media are missing out on a large component of the gold market itself: rare coins. There has been a bull market in US gold premiums over the past two years, while bullion prices have depreciated.

In January of 2009, the melt price on a Saint Gaudens was $1,607. The premium on the Saint Gaudens (XF) was 9.45% over spot. That same coin today has a melt price of $1,339.99, a considerable drop off in gold value. BUT, the premium on that coin has more than doubled all the way to approximately 25%.

Bullion investors are rightfully frustrated that their gold and silver holdings, after ten years of considerable gains, have depreciated in value. Much of this pain could have been easily averted had the bullion buyers of gold and silver taken their love of real money one step further, and studied up a bit on history – and no, not just the US’s fine history of gold and silver coinage, but the premium history on rare coins.

In 2012, after gold had considerably increased in price, rare coin premiums did not catch up.  Nearly all rare coins – the Lib, the Indian Head, the Saint Gaudens, in all denominations – have seen premium increases in the past year and a half of either 2-3 times their 2012 levels.  For instance, the $5 Lib in VF-XF carried a premium of approximately 5%. Today, the premium is 25%.

For those in the know, rare coins offer a great opportunity to hedge bullion purchases. You can sleep better knowing that, even if the gold price declines, you’ve got a little added extra protection with US rare gold holdings.