Generic Gold Premiums Collapsed

Posted on October 23, 2010 by

Generic gold coins, i.e. MS61 to MS64 examples of the most common dates of $2.5, $5 & $10 Liberties and Indians, and $20 Liberites & St. Gaudens, trade on the basis of the premium of their price over their bullion content. This premium can expand and conract due to various factors including buyer demand, dealer inventory levels, and, since a lot generic U.S. gold is imported from Europe each year, the value of the dollar versus gold and the Euro.

Recently, premiums have shrunk dramatically. They are as low as I’ve ever seen them, almost as low as they were in the 1969-1971 era just before the price of gold took off from $35 an ounce. Gold bullion prices have increased tremendously in the past few years. And when gold bullion runs up a lot, premiums tend to come down and generic gold coin prices tend to lag the moves in bullion and then “catch up” later. But premiums are really low now.

Smart generic gold buyers, both dealers and the public buyers, pay close attention to the generic gold coin premium. Obviously, the best time to buy is when premiums are low. And that’s the exact situation we have right now.

I’m not neccessarily recommending generic gold coins. Hey, I’m a rarity and quality guy. I’m a MS65 or better Gem quality chauvinist and have been my whole career. But premiums are so low now that if you like these coins for your gold portfolio, now is definitely the time to take a look. I’m even thinking about myself!

It will be interesting to see if premiums expand assuming gold bullion prices will stabilize and establish a trading range. Then again, gold looks pretty strong and could keep running for a while. If gold goes down, I would assume that premiums would go up a little. There are a lot of things that could happen and this is obviously something to watch.

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Comments (1)


  1. Rich Kavanagh says:

    Definitely true. Is there a sound reason for why rare gold coins go down in value when the price of gold doubles?

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