How the prices of Gold and Silver Coins are Affected by the Rising Trend in Precious Metal Prices
Perhaps there was a time when a collector of numismatic coins could pursue their interest without giving much consideration to what was happening in the wider world, but if such a period ever existed, it is long past. The experience of recent years shows that the contemporary coin collector needs to pay keen attention to wider developments in the global economy to understand what is happening to the prices of gold and silver coins, or any other type of numismatic coins they are interested in buying or selling. Looking back over 2011 it is possible to see how the collector coins market has been affected by several key issues related to the state of the world economy.
Good news for gold coin dealers
There is no doubt that the top coin news of 2011 is how the international public and private debt crisis has had a powerful impact on confidence in the world economy. Many of those who would formerly invest funds in companies or banks now see gold and silver coins as the natural choice for preserving and hopefully enhancing the value of their assets. From the start of trading on the London Exchange when gold had a closing price of $1,388 on January 4, 2011, the price of gold rose to of $1,531 on December 29 2011. It should be pointed out that this closing price was certainly not the highest price gold reached in 2011—early in September the gold price actually almost reached $1,900.
The search for a safe and traditional investment has also benefited silver coin dealers during the course of the year, but silver prices have not increased by the same percentage as gold prices. Although silver prices rose from $30.67 on January 4 to a high of $48.70 on April 28 there have been many rises and falls; by the end of trading on December 30th2011 the price of silver had actually fell below its January value to close at $28.18.
While the changes in gold and silver commodity prices and their impact on coin value in 2011 are of interest to the coin collector, the long-term trend is much more significant. The figures show that both gold and silver prices have been on an upward curve over the last decade, even though the prices of silver have varied much more than gold prices. Consequently, if you buy gold coins or consider purchasing silver coins for sale as short-term investments you stand a fair chance of making a profit, but you cannot rule out losing money on these investments. However, based on the long-term market trend over the last decade buying gold and silver coins still appears to be one of the soundest investments you could make.
Good news for coin collectors?
While both gold coin dealers and silver coin dealers have gained from the upward spiraling prices for these two precious metals, this trend has brought mixed blessings for coin collectors. For example, coin collectors who focus on collecting US gold coins with the largest mintages and most common years have found that the prices of these coins is regularly pushed up by the rising gold price. This has made it more expensive for them to extend their collections.
Coin collectors with gold coins for sale or silver coins for sale have certainly benefited from these increasing prices. In particular, owners of rare gold and silver coins have gained a great deal by vigorous trading in this segment of the coin collector market. Some collectors have seized this opportunity to sell relatively common gold and silver coins and use the funds gained to buy rare collector coins that were previously beyond their means to purchase.
However, many coin collectors have personally suffered from the general economic malaise. People who have unfortunately lost jobs and homes have been forced to withdraw from coin collecting and sell their collections to raise funds for family expenses rather than expanding their coin collections. The resulting fall in demand for the more popular coins favoured by collectors of limited means has counteracted upward pressure on prices from the gold and silver markets. This situation has been a source of gain for those collectors fortunate enough to be in stable jobs and good financial situations.
Owners of Rare US Coins are the Real Winners
While gold coin dealers have certainly gained through rising precious metal prices more than compensating them for the decline in custom from collectors of average means, the real winners appear to be that small group of coin collectors who own rare US coins and other types of rare currency. You do not have to be a coin collector to have heard about the sale of the rare 1787 Efraim Brasher Doubloon (with the “EB” punch on the eagle’s breast) for almost $7.5 million dollars at the end of 2011. When this famous coin was previously auctioned in January 2005 the price fell short of $3 million.
The price attained by this Brasher coin is only the latest example of a series of high profile rare US coin sales that provide undisputable evidence of the vibrant state of the top end of the collector coin market. Additional examples include the sale of what is considered America’s first ever silver dollar (1794) for almost $8 million in 2010, and the 2002 sale of a 1933 Saint Gaudens gold double eagle for over $7.5. The latter sale also drew public interest because of the coin’s association with the last Egyptian King Farouk, and the dispute in the US courts over the legality of holding this particular coin in private hands. What all this amounts to is that the top rarities corner of the numismatic coins market has now become similar to the fine art market in certain respects. The same factors that lead wealthy people to invest in famous works of art are now encouraging them to invest in rare US coins. These impressive rises in prices for rare examples of the coin engraver’s art are therefore likely to continue.