By Jeff Garrett for Numismatic Guaranty Company…
The steady rise in gold and silver prices in recent months has stunned nearly everyone. The price of gold has now topped the magic $4,000-per-ounce price that was once only a figure bandied about by hardcore gold bugs. No one really thought that $4,000 gold was possible. Now, even mainstream financial figures are touting the advantages of buying gold. This week, Kevin O’Leary (of Shark Tank fame) said that investors should have about 5% of their assets in gold. The bandwagon has certainly left the station.
Silver, which until very recently was lagging behind gold’s advances, is now catching up. The price of silver is nearing its all-time highs of about $50 per ounce. The ratio of gold versus silver was about 100 to 1 a few months ago. The ratio has dropped to about 80 to 1 and seems to be heading even lower. As gold continues its stratospheric rise, many are turning to silver as their hard asset of choice.
There is a slew of reasons for the rising prices of gold and silver, but the weakness of the US Dollar is one of the prime factors. Gold prices are not being driven by Wall Street speculators but by Central Bank purchases. There is fear the US Dollar will lose its appeal as a reserve currency. Political uncertainty and massive federal deficits are dissuading the rest of the world from buying US Dollars as they have in the past. Gold is proving its 3,000-year history of being considered real money on a global basis.
Hobby leaders and those who run rare coin operations of every size are now trying to figure out what $4,000 gold and $50 silver mean for the hobby. On the surface, you may think it is “happy days” and making money hand over fist. The reality is somewhat different. Most shops around the country are very busy, but they are not seeing the lines down the street that were experienced in the 1980s gold and silver booms. In those days, everyone rushed to sell. This was a great decision, as gold and silver crashed shortly after and stayed depressed for decades.
Today, a majority of the people who own gold and silver are reluctant to sell. This is mostly because of the financial fears mentioned above. They purchased precious metals less as an investment and more so for insurance against market chaos. In contrast to the 1980s, there are a lot of buyers of gold and silver at these elevated levels. This would also lend credence to the belief that we will not see a market crash like those of the past. Nothing goes up forever, but high gold and silver levels seem to be here for the near future at least.
One of the biggest impacts on the numismatic hobby is the rising price points for gold and silver coins. As gold and silver prices rise, collectors could be priced out of the market for many issues, and they may turn to more affordable series instead. The lack of demand has been manifesting for quite some time for common-date US gold coins. The premium above the coins’ melt value have all but disappeared for $5, $10 and $20 gold coins. I have not heard of many dealers sending US gold coins to the refinery, but I’m sure this has been happening for lower-grade coins.
The premium (or should I say lack of premium?) for US gold coins is at historic lows. Anyone thinking of collecting Double Eagles now faces minimum prices of about $4,000 per coin. This price point is too painful for nearly all but a small number of well-heeled buyers. I have been told that the number of “generic” US gold coins being sent to NGC for grading has dropped significantly. The added cost of having the coins graded is difficult to recoup with demand being depressed by high bullion prices.
Silver coins are not immune to the pain of increased price points. A very active online seller told me this week his sales of American Silver Eagles have dropped in the last couple of weeks, as silver closed in on $50 per ounce. The early dates from 1986 to 2001 that he had been buying for around $35 and selling for $45 are now costing closer to $55 and have been harder to sell at the current asking price of $65. The magic “price point” for his Silver Eagles was less than $50 per coin.
Price points have been a major factor for the many mass market companies that advertise widely. In the past, they could buy or have made interesting one-ounce silver coins for about $50 all-in, including striking fees, grading fees and other miscellaneous costs. They could sell the coins for $95 and still make money, even with expensive advertising expenses. With silver at current levels, they will have to price the coins closer to $125 each to make money. By breaking the $100 price point, sales will almost surely suffer.
The World Money Fair in Berlin is all about companies and world mints that make many of the coins mentioned above. The upcoming show in Berlin, which is slated for late January 2026, will be very interesting. My guess is that many of the mints will be offering lower bullion weight options that can help dealers battle the price point issue. Even the US Mint has reacted to the price point issue. Many of the popular issues, such as the DC Comics commemoratives, are being made in half ounce gold versions. Some of the recent issues have not sold out, and my guess is that elevated price points played a major role.
Over time, as rare coin consumers become accustomed to $50 silver and $4,000 gold prices, demand may stabilize. It will also take time for buyers to become convinced that these prices are here to stay, and that these levels are just the new normal. A lot of dealers are selling gold as fast as they buy it, for fear of becoming caught in serious market adjustment. The cost of doing business is also a burden for dealers that are not well capitalized. Ten Double Eagles now cost about $40,000 to buy and sell!
The rare coin market seems very healthy and the demand for most numismatic items is robust. Companies selling coins on social media have created a surge for rare coins in the lower price points. Circulated Type coins have never been hotter. The rare coin market is trying to adjust to higher gold and silver prices, and it will be very interesting to see how the next several months play out. Then next time you see something in a store priced at $9.99, you will have a better appreciation of the power of price points.
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