Right now, due to the fact that the gold price has been fairly stagnant for the last several years, certain collectible [gold coins] are selling for incredibly cheap premiums, as low as $50 over spot price of gold.
This is a big deal: You’re essentially paying bullion prices for a collectible.
Think about that: you can buy a rare coin which has TRUE scarcity for nearly the same price as brand-new coins that are churned out year after year. And you’ve essentially got a free call option on the market realizing its rarity value…
Bullion coins are usually manufactured annually by the government’s mint. So they’re not considered rare. But they’re the cheapest and most-liquid way to invest in physical gold.
Then you have numismatic coins — also known as rare or collectible coins. Examples include:
• Pre-1933 $20 or $10 Eagle/Liberty coins
• Peace Silver Dollars
• British Sovereigns
Like bullion, numismatics also have value because of their metal content. But the biggest determining factor in their price is their rarity. Unlike with bullion coins, government mints aren’t churning out any more 1933 Indian Head Buffalo (Bison) “Hobo” nickels.
In addition to rarity, collectible coins are also valued based on their condition, and whether or not they were circulated. Some of the most sought after coins sell for millions of dollars apiece.
Renowned coin expert Van Simmons of David Hall Rare Coins says MS 64 $20 St. Gaudens gold pieces are one of the best deals on the market today, selling at historically low premiums over spot. The MS in the description means “Mint State,” and corresponds to the numerical grades MS60 through MS-70.
These are the highest-quality numismatics, ones that have never been in circulation. A Mint State coin can range from one that is covered with marks (MS-60) to a flawless example (MS-70).
You can get these coins for about $1,450 today, with gold trading just above $1,300 an ounce.
But consider this… When gold was $275 an ounce in the late 80’s, these coins sold for $2,000 apiece.
In 2011, when the price of gold was around $1800, these coins were selling for about $2,460.
So the premium was as high as $1,700 per coin (not including broker fees). Today, that premium is around $100 a coin.
If gold prices heat up again and demand increases, the premium for this coin could easily increase back to $300 to $500 above spot. In other words, you’d make money TWO ways – due to the increase in gold prices and due to the increase in premium.
Here's Blanchard's Math
We found additional support for this opportunity from a leading precious metals firm. Here's what Blanchard had to say…
When ratios get out of whack in the marketplace, it offers investors a unique opportunity to purchase nearly the same amount of gold, with a rarity factor. That means once the price of gold begins to climb significantly, the price of the Saint Gaudens will rise even faster.
Let's look back for some examples.
Since 2003, the Double Eagle premium has fluctuated from a low of 1.10 above gold to a high of 2.41. In 2003, it took 1.28 Gold American Eagles (1 oz.) to purchase one St. Gaudens Double Eagle.
In 2009 – Gold Spot Price Average $972.35 Then, in 2009, you could trade that one St. Gaudens Double Eagle in for 2.41 Gold American Eagles (1 oz.)
2018 – Current Gold Spot Price $1,300.00 – Buying Opportunity
Right now, we are on the front end of that cycle again, and the ratio is even better than last time!
Based on the past eight years, there is a tremendous buying opportunity based on the premiums of the Double Eagle vs. gold. As the price of gold rises, the premiums will also rise, which creates a better profit potential than gold moving forward.