With gold toying with the $1,000-a-troy ounce level, it is understandable when noncollectors confuse the gold market with the coin market.However, for collectors, the higher price of gold spells opportunity if you happen to believe that the price of bullion is unlikely to fall significantly below this milestone price level.
What am I talking about?
Just this: The quadrupling of the price of gold since the 2001 low point has done much to wipe out price distinctions made by collectors among various collector gold coin issues.
Many coins trade on the secondary market for essentially the price of bullion plus a markup just large enough to prevent the dealer from sending the coin to the melting pot.
It is time for long-term collectors to start taking a look at gold coin mintages and seeing just what kind of low mintages can be acquired for melt value.
Can you buy a coin with a mintage in the hundreds for melt value? It looks to me like you can. There are numerous small countries that have issued commemoratives with very low mintages that currently have no great collector demand behind them.
That could always be the case, but what would you care if the price of gold bullion provides you with a permanent floor?
I happen to follow the coins of Costa Rica for personal enjoyment. The country has some very nice commemoratives. However, the market for these is certainly not large and probably never will be.
Source: numismaster.com
This Central American nation is not the only country that has issued commemoratives over the years, or standard issue gold coins from the time when the gold standard was internationally in force.
This advice goes double for world coin collectors who want to own a little gold anyway as a hedge against inflation or other financial disasters.
Why buy the popular American Eagles or Canadian Maple Leaves that have mintages in the hundreds of thousands and millions when you can enjoy the beauty and variety that the world collector coin field offers?
There is only one reason: if you figure a day will come when you will have to sell a large number of gold coins rapidly, then the bullion coins have the advantage.
However, if you are hedging in the manner of long-term insurance and you figure you will have a little time to sell the gold coins when the time comes, well then these low-mintage collector coins seem to me to be a more appealing option.
If bullion stabilizes as it did for many years after the last major peak in 1980, the impact of mintages on prices will once again begin to be felt as other collectors and dealers go through the reasoning process of why two coins with the same bullion content but wildly different mintage figures should trade for the same price.
That means that the present time is a great time to be a collector and to take advantage of the lack of market price distinctions. Better yet, if you already have some gold bullion coins, start working them off in favor of the same quantity of precious metal with the lower mintages.
The hedge will be intact and you will have the satisfaction of owning a collection unique to you - and because of the low mintages - likely to stay that way.
Source: numismaster.com
