The Case For $3,000 Gold 1 1

[Henri Charriere]

Based on a recent front- page WSJ article, I'd say something appears to be afoot.  I was stunned to learn Gold Rooster melt had risen to $382.89.  The lowest price I ever paid for one raw was roughly $275 (converted from euros) and turned out to be, and still is, one of my Top Pops.  Gold then was at its lowest point in the past five years since becoming a member (2019) and was r-i-s-i-n-g imperceptively. The lower auctions prices I'd seen I attributed to setting my sights higher with continual upgrading. A glossy 340-page catalog I received from cgb.fr this week had no original G20F GRs  listed at any grade and the restrikes all hitting that impenetrable wall at MS-66. If I can snag one more -67, it'll be unlikely anyone will be able to surpass me, and it will cost him dearly. If I can snag two more, their chances are highly improbable. And if I can land three, it will be virtually impossible to attain the # 1 rank I have held for three years.  However, as that WINS radio news announcer used to say, "a lot can happen in a little while."  I would imagine dealers and investors are pleased, but what effect will higher pricing have on the hobby in the long term?

[GoldFinger1969]

On 5/5/2023 at 5:08 PM, Henri Charriere said:

However, as that WINS radio news announcer used to say, "a lot can happen in a little while." 

I don't listen to them anymore.  They told me "You give us 22 minutes...we'll give you the world." 

Well, I listened to them for 22 minutes and they didn't give me the world.  They didn't even give me Australia, which Lex Luthor managed to con General Zod out of in SUPERMAN (1978).

I am now in discussions with some guy in a chat room called "Dr. Evil" who says he can deliver me the world for 1 quadrillion dollars.  Applying for a HELOC extension soon, will let you know how it turns out.

[Henri Charriere]

On 5/6/2023 at 12:58 AM, GoldFinger1969 said:

.... i am now in discussions with some guy in a chat room called "Dr. Evil" who says he can deliver me the world for 1 quadrillion dollars. 

$1 quadrillion?  I am not big on pageantry and a coronation costing $125 miilion is a bit much... maybe he can do us all a favor and foot the bill for King Charles' planned festivities.  It would be a good move as it is generally acknowledged the Royal Family is the world' largest welfare recipients.  🤣

[GoldFinger1969]

Gold took a steep, quick plunge to the low-$1,800's and then rebounded on the Middle East problems back to just under $2,000 an ounce.

[GoldFinger1969]

We hit $2,000 intraday once again.

I continue to think we are in a basing mode about $2,000 give or take 5% or so on the upside and downside (maybe a bit more for the latter).  If rates/inflation go higher, that could make gold go much higher.

Keep an eye on this AI...saw a report from Capital Economics which said AI winners like the U.S. could see 1.5% added to GDP growth but loser countries could lag for decades.

Edited October 21, 2023 by GoldFinger1969

[zadok]

On 10/20/2023 at 8:56 PM, GoldFinger1969 said:

We hit $2,000 intraday once again.

I continue to think we are in a basing mode about $2,000 give or take 5% or so on the upside and downside (maybe a bit more for the latter).  If rates/inflation go higher, that could make gold go much higher.

Keep an eye on this AI...saw a report from Capital Economics which said AI winners like the U.S. could see 1.5% added to GDP growth but loser countries could lag for decades.

 

 

On 10/20/2023 at 8:56 PM, GoldFinger1969 said:

We hit $2,000 intraday once again.

I continue to think we are in a basing mode about $2,000 give or take 5% or so on the upside and downside (maybe a bit more for the latter).  If rates/inflation go higher, that could make gold go much higher.

Keep an eye on this AI...saw a report from Capital Economics which said AI winners like the U.S. could see 1.5% added to GDP growth but loser countries could lag for decades.

...i kept an eye on ur charts n especially if i scroll up n down real fast i can make myself dizzy , is that an AI indicator?....

Edited October 22, 2023 by zadok

[numisport]

I see that Costco Gold Bars sold out in a frenzy. But I'm not a member so NO it wasn't me. And if I do buy gold it won't be Costco gold Ha !

[Henri Charriere]

One report sees gold going up as high as $10,000/oz. -- by the end of this decade.  That prognostication to me means two things.  One, a lot of coins will be freed up by profit-taking, it's-now-or-never types, and Two, a concerted effort will be made by legions of ordinary folks as well as numismatists to offer to the public, raw or certified, to the select few collectors who, unable to afford them at today's $2,000/oz., will effectively be precluded from acquiring them as they become available in years to come. And what if the demand is no longer there?  I have my alibi.  If anyone asks whatever happened to the Rooster guy, my bosom buddies on the Forum will smile and lie:  "You mean Q.A.?  I heard he left to spend more time with his family."  Sounds a whole lot better than, "Oh him!  He was priced out."  

[GoldFinger1969]

On 10/22/2023 at 8:33 PM, Henri Charriere said:

One report sees gold going up as high as $10,000/oz. -- by the end of this decade. 

I hate predictions like that, because they simply don't take into account supply and demand, the fact that it's a huge move, the increase in market capitalization of the gold stock a 5-fold increase would imply, competing investments (i.e., Treasuries or Bitcoin) if the underlying rationale for such a move were inflation/geopolitical/whatever....etc.

Click-bait, I'm afriad.

I think gold's move in the 1970's was a once-in-a-lifetime move caused by unique circumstances that are not likely to be repeated: a controlled price of gold finally ended, inflation, end of fixed exchange rates, gasoline lines, stagflation, etc.

I think a move to $3,000 in a few years is plausible.  $5,000 is possible if certain conditions are met.  $10,000 would imply some economic, financial, or geopolitical upheavals that I don't want to speculate on.

[GoldFinger1969]

Back Over $2,000 an ounce..... anybody trying to claim gold is moving up (or down) in regards to stocks, rates, or geopolitical pressures can find the relationship reverse in a blink. 

But on a LONGER term basis....gold continues to hang around $2,000...it may lay here for a few more months....or years....but I continue to look back and think that folks will be talkiung about $2,000 common Saints/Liberty's and $2,500 MS-65's as the Good Old Days when gold is closer to $2,500 or even $3,000 and those prices for the coins are up 50% or more.

Premiums are "historically" low so those could expand too for investment-grade coins.

[World Colonial]

On 10/28/2023 at 12:38 AM, GoldFinger1969 said:

Premiums are "historically" low so those could expand too for investment-grade coins.

What is the current premium and how does it compare to somewhat recent history?  (Last 20 years or near it.)  I don't track it, since I'm not looking to buy it.

What you are describing are bullion substitute widgets, though US collectors and "investors" have convinced themselves it differs from any number of actually somewhat less common "world" gold.

As "investment", I'd rather own AGE or similar substitutes.

[GoldFinger1969]

On 10/28/2023 at 9:08 AM, World Colonial said:

What is the current premium and how does it compare to somewhat recent history?  (Last 20 years or near it.)  I don't track it, since I'm not looking to buy it.

I was referring to premiums on investment grade coins, not bullion coins, like MS Saints.  Here's a few charts that show you the premiums:

Edited October 28, 2023 by GoldFinger1969

[GoldFinger1969]

You can see that the premium over gold content was HUGE when the absolute price of gold was lower and beginning to make its move.  Of course, if the move in gold peters out, then you end up buying very overpriced gold coins, like paying $3,500 for an MS-65 Saint in the 1990's with a premium of close to 1,000%. 

On 10/28/2023 at 9:08 AM, World Colonial said:

What you are describing are bullion substitute widgets, though US collectors and "investors" have convinced themselves it differs from any number of actually somewhat less common "world" gold. As "investment", I'd rather own AGE or similar substitutes.

The charts -- and my post -- were refencing Saints or similar coins with maybe 20-30% numismatic value:  not pure gold, but not a multiple of gold, either.  I think the charts for MS-65 and MS-62 capture it well (62 is just above or at the level of a bullion coin).

Edited October 28, 2023 by GoldFinger1969

[World Colonial]

On 10/28/2023 at 1:11 PM, GoldFinger1969 said:

The charts -- and my post -- were refencing Saints or similar coins with maybe 20-30% numismatic value:  not pure gold, but not a multiple of gold, either.  I think the charts for MS-65 and MS-62 capture it well (62 is just above or at the level of a bullion coin).

If the price of gold takes off, I'd rather buy AGE or similar type than any bullion type US classic gold which includes the common Saint dates in MS-65.

The problem with a coin like this one is that the coins are too common and not interesting enough to maintain higher premiums at much higher gold spot.  A label on a holder doesn't change that, especially as I anticipate that financial assets will perform poorly with it, reducing the fake "wealth" available to inflate prices.

That's why it's a widget.

[zadok]

On 10/28/2023 at 9:08 AM, World Colonial said:

What is the current premium and how does it compare to somewhat recent history?  (Last 20 years or near it.)  I don't track it, since I'm not looking to buy it.

What you are describing are bullion substitute widgets, though US collectors and "investors" have convinced themselves it differs from any number of actually somewhat less common "world" gold.

As "investment", I'd rather own AGE or similar substitutes.

...i guess if u r going to "invest" some of ur net worth into hedge properties u first would need to make a distinction of gold or silver?...u could do both, but the two dont always move in tandem nor do their premiums....

[zadok]

On 10/28/2023 at 1:41 PM, World Colonial said:

If the price of gold takes off, I'd rather buy AGE or similar type than any bullion type US classic gold which includes the common Saint dates in MS-65.

The problem with a coin like this one is that the coins are too common and not interesting enough to maintain higher premiums at much higher gold spot.  A label on a holder doesn't change that, especially as I anticipate that financial assets will perform poorly with it, reducing the fake "wealth" available to inflate prices.

That's why it's a widget.

...im not sure they r widgets, many "investors" buy gold in its various forms not expecting those purchases to make money but to preserve money, the premium is just the cost of ownership....

[World Colonial]

On 10/28/2023 at 3:21 PM, zadok said:

...im not sure they r widgets, many "investors" buy gold in its various forms not expecting those purchases to make money but to preserve money, the premium is just the cost of ownership....

I wouldn't consider an MS-65 with the premiums it has (now or previously) to be a wealth preservation asset.  So, while I agree with you the buyer typically fits your profile, I consider it a less than optimal choice for this purpose. My assumption has always been that most buyers are buying it to capitalize on both higher spot prices and premiums, for speculation.

I call it a widget because the most common dates have tens of thousands even in this grade.  There certainly is no reason to believe there are anywhere near this many buyers buying it as a collectible.

I've thought about buying lower mintage AGE proofs for a similar reason but see the same drawback.  It's likely to underperform low premium bullion in an environment of much higher spot prices because no, the coin isn't that interesting as a collectible to maintain the current premium.

Example is the 2022 AGE proof 1/2oz which has a mintage of about 1700.  It's low for a US coin but only compared to circulating coinage or modern US proofs.  As a collectible, the number of survivors (presumably 100% now) is not actually low for any coin in this price range in any condition approaching this quality.  Similar idea for any number of modern US NCLT gold, palladium, or platinum.

[GoldFinger1969]

On 10/28/2023 at 1:41 PM, World Colonial said:

If the price of gold takes off, I'd rather buy AGE or similar type than any bullion type US classic gold which includes the common Saint dates in MS-65.

Ironically, you are correct. 

I went back and found that if you got the direction of the (upward) gold price correct the best move was to buy bullion coins, NOT quasi-numismatics which in THEORY have more leverage to a multi-year move in gold but in fact are OVERPRICED at the beginning of the move (huge premium to gold price) and then get hit from a LOWER PREMIUM once gold makes its move.  You have to LIKE THE COINS to make a case for buying quasi-numsimatics or pure numsimatic Saints or other gold coins, it appears.

Edited October 29, 2023 by GoldFinger1969

[J P M]

Many buy a classical minted coin thinking they can always sell it for bullion price. But then it is always worth a bit more than melt you say. Also you may fall in love with it and never sell it. If you buy a bullion coin that is it's intent. You may also fall in love with it but maybe not as much that you can't part with it .

Edited October 29, 2023 by J P M

[zadok]

On 10/28/2023 at 3:46 PM, World Colonial said:

I wouldn't consider an MS-65 with the premiums it has (now or previously) to be a wealth preservation asset.  So, while I agree with you the buyer typically fits your profile, I consider it a less than optimal choice for this purpose. My assumption has always been that most buyers are buying it to capitalize on both higher spot prices and premiums, for speculation.

I call it a widget because the most common dates have tens of thousands even in this grade.  There certainly is no reason to believe there are anywhere near this many buyers buying it as a collectible.

I've thought about buying lower mintage AGE proofs for a similar reason but see the same drawback.  It's likely to underperform low premium bullion in an environment of much higher spot prices because no, the coin isn't that interesting as a collectible to maintain the current premium.

Example is the 2022 AGE proof 1/2oz which has a mintage of about 1700.  It's low for a US coin but only compared to circulating coinage or modern US proofs.  As a collectible, the number of survivors (presumably 100% now) is not actually low for any coin in this price range in any condition approaching this quality.  Similar idea for any number of modern US NCLT gold, palladium, or platinum.

...i did not say that i would or do buy these coins for my "portfolio" i said "many investors"...i would never buy saints for those purposes, in fact i only own one saint n its not for bullion...i agree most saint holders r not collectors...ur example of the 2022 AGE proof 1/2oz is an appropriate one, but i dont buy any US nclt coins for their bullion value, there r too many other better avenues for all of the precious metals....

[World Colonial]

On 10/29/2023 at 8:59 AM, zadok said:

...i did not say that i would or do buy these coins for my "portfolio" i said "many investors"...i would never buy saints for those purposes, in fact i only own one saint n its not for bullion...i agree most saint holders r not collectors...ur example of the 2022 AGE proof 1/2oz is an appropriate one, but i dont buy any US nclt coins for their bullion value, there r too many other better avenues for all of the precious metals....

I wasn't referring to you in my last post.

[World Colonial]

On 10/29/2023 at 1:51 AM, GoldFinger1969 said:

Ironically, you are correct. 

I went back and found that if you got the direction of the (upward) gold price correct the best move was to buy bullion coins, NOT quasi-numismatics which in THEORY have more leverage to a multi-year move in gold but in fact are OVERPRICED at the beginning of the move (huge premium to gold price) and then get hit from a LOWER PREMIUM once gold makes its move.  You have to LIKE THE COINS to make a case for buying quasi-numsimatics or pure numsimatic Saints or other gold coins, it appears.

Yes, this is my point and I attribute it entirely to the reason I gave. 

Quasi-numismatic gold coinage is usually too expensive, too common, and not interesting enough as a collectible to maintain "substantial" premiums to the metal value at "high" spot prices.  This predominantly leaves financially motivated "investors" as speculator buyers, which is why the TPG counts on common US classic gold are so high.

Concurrently, I'd also guess that a noticeable proportion of these buyers don't know it.  That's where I believe the majority of the demand comes from for (supposedly) low mintage modern US NCLT, somewhat excluding the ASE.  There are almost certainly more buyers buying it for the low mintage for "investment" versus a collectible. 

"Exhibit A" is the First Spouse but it's not the only one.  Sure, the mintage on some is below 2,000 (to my recollection), but there may be (a big maybe) at most a few hundred who actually want it as a collectible.  At current prices, the series has $40K each for UNC and proof in metal value when it's undistinguished numismatic mediocrity.

As another example, one book on the subject profiled the 1999 "unfinished" AGE in their top pick list.  One was purportedly valued at $14K as a "70" at publishing in 2012.  For 14K, someone could have bought any number of US or British classic gold proofs for the same or less, though obviously not in a "70" since none exist in this quality.  Equally obviously, this coin is hopelessly uncompetitive as a collectible anywhere near this price versus any classic gold alternative (from anywhere), except to financially motivated widget buyers who mostly if entirely know nothing about actual collecting.  unsurprisingly, if the book list price was correct, it's selling for noticeably less now but still is no bargain.

[GoldFinger1969]

On 10/29/2023 at 8:15 AM, J P M said:

Many buy a classical minted coin thinking they can always sell it for bullion price. But then it is always worth a bit more than melt you say. Also you may fall in love with it and never sell it. If you buy a bullion coin that is it's intent. You may also fall in love with it but maybe not as much that you can't part with it .

The problem is the starting premium to bullion for some investment-grade coins, JPM.  As an extreme example, MS-65 Saints were selling for $3,500 in 1989-90 when gold was under $400 ounce. 

As my chart shows above, when gold fell in the late-1990's as the Tech Bubble in stocks continued and gold fell under $300/oz....the premium for Saints was "sticky" and prices fell less and/or rose -- the premiums ROSE.  Maybe they were signalling that gold was about to rise and reverse higher....maybe they were saying that dealers wouldn't sell Saints at a loss and would wait it out....whatever....but the premiums were simply too high and ate into future returns relative to buying spot gold which went up 6-fold in the next 8 years whereas Saints and other gold coins for the most part didn't go up more than double or triple.

[World Colonial]

On 10/29/2023 at 11:54 AM, GoldFinger1969 said:

The problem is the starting premium to bullion for some investment-grade coins, JPM.  As an extreme example, MS-65 Saints were selling for $3,500 in 1989-90 when gold was under $400 ounce. 

I'd attribute the premium at the time (1989-1990) to the combination of the TPG bubble and an incorrect belief in the actual supply, with the two somewhat related.  It was an outlier.

I don't even know the price of most MS-65 Saints now, but whatever the price, still think the premium is too high for the most common dates.  1908 NM, 1924, and 1927 have 16K, 40K, and 22K just at NGC with many, many more (from these dates and others) in MS-64 where there is no practical difference.  That's a widget.

How many might be owned by collectors primarily for collecting purposes is a function of anyone's assumptions.  I know (as fact) only a very low minority (probably less than 5%, based upon my definition of "collector" and assumptions of the collector base) own coins in this price range, though many Saints were presumably bought at noticeably lower prices when spot was cheaper.

You're discussing Saints, but the concept is no different for common Liberty $10s and $20s, Indian Head Eagles, and all US modern gold, palladium, and platinum NCLT.

[GoldFinger1969]

On 10/29/2023 at 4:54 PM, World Colonial said:

I don't even know the price of most MS-65 Saints now,

Straight MS-65, no CAC....figure $2,400-$2,500 or a 20% premium.  I can update tonight after the GC auctions close.

[GoldFinger1969]

Analyst on CNBC said look for these things as a sign gold is going higher (much higher):

1. Stays above $2,000 an ounce, preferably a new ATH closer to $2,100  

2. A cover story in BARRON'S signifying increased retail interest in gold.  

3. 250,000 contracts traded on the gold contract at the CME.  

[World Colonial]

On 10/31/2023 at 4:02 PM, GoldFinger1969 said:

Analyst on CNBC said look for these things as a sign gold is going higher (much higher):

1. Stays above $2,000 an ounce, preferably a new ATH closer to $2,100  

2. A cover story in BARRON'S signifying increased retail interest in gold.  

3. 250,000 contracts traded on the gold contract at the CME.  

One: That would be a technical breakout, actual evidence.

Two: That's bearish, not bullish in my view.  I just read another article of central bank buying in Q2 and Q3.  I place less weight on this versus actual price performance but don't view this as bullish either.

Three:  Is there actual evidence that this is consistent with higher prices?  I've never seen the data.

[zadok]

On 10/31/2023 at 4:02 PM, GoldFinger1969 said:

Analyst on CNBC said look for these things as a sign gold is going higher (much higher):

1. Stays above $2,000 an ounce, preferably a new ATH closer to $2,100  

2. A cover story in BARRON'S signifying increased retail interest in gold.  

3. 250,000 contracts traded on the gold contract at the CME.  

...expand on the gold contracts...to buy or to sell?....

[Henri Charriere]

On 10/31/2023 at 7:05 PM, zadok said:

...expand on the gold contracts...to buy or to sell?....

A much more reliable leading economic indicator is a noticeable surge in the amount of orders placed for wooden pallets.  🤣

[World Colonial]

On 10/31/2023 at 7:05 PM, zadok said:

...expand on the gold contracts...to buy or to sell?....

"Traded" differs from "open interest" but it has to be both.