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March 2012

Classic Gold Commems at Bargain Levels?

     Gold Commemorative coins were minted between 1903 and 1926 to celebrate specific events in the development of the United States. Today, we still mint Gold Commemoratives to acknowledge historical moments in our history. Although, there is one prime difference in today’s Gold Commems and those of yesteryear: mintages. The Classic Gold Commems had extremely low mintages. The highest minted coin was the 1926 Sesquicentennial $2 ˝ Gold. There were 46,019 minted with 18,286 certified by NGC and PCGS in all grades. The highest certified is MS67 at NGC. A set of Gold Commems is made up of 11 coins and the current FMV is $41,670 in MS65. This excludes the two Pan Pacific $50 Gold slugs due to their extreme rarity and values. These also have the lowest mintages with 483 for the $50 Round and 645 for the $50 Octagonal.

     With the exceptions of the Round and Octagonal $50 Pan- Pacs, these older Gold Commemoratives have fallen from favor over the last several years. From the 1970’s to the early 2000’s, this series had typical cycles like many other series of U.S. coins. Dealers and collectors would buy into this market and prices would rise. Once they hit a certain level, the buying would slow and the coins remaining on the market would create lower prices and the market would decrease. However, since January 2007, the 11 coin set has fallen dramatically in most grades. The following charts list the FMV for the coins individually in MS65 and MS66 compared to March 2012.

DateMS65-Jan 2007MS65-Mar 2012
1903 LA Pur/Jeff $1$4,150$1,760
1903 LA Pur/ McKin $1$3,950$1,790
1904 L & C Expo $1$13,300$6,310
1905 L & C Expo $1$20,180$10,820
1915 S Pan-Pac $1$3,170$1,460
1915 S Pan-Pac $2 ˝ $8,710$7,590
1916 McKinley $1$3,270$1,430
1917 McKinley $1$4,730$1,950
1922 Grant $1$5,670$2,960
1922 Grant W/Star $1$5,470$2,800
1926 Sesquicentennial $2 ˝ $6,550$2,800

DateMS66-Jan 2007MS66-Mar 2012
1903 LA Pur/Jeff $1$5,540$2,440
1903 LA Pur/ McKin $1$5,330$2,410
1904 L & C Expo $1$19,910$10,430
1905 L & C Expo $1$38,480$17,210
1915 S Pan-Pac $1$5,700$2,410
1915 S Pan-Pac $2 ˝ $11,380$8,220
1916 McKinley $1$5,160$1,980
1917 McKinley $1$6,450$3,450
1922 Grant $1$6,620$3,250
1922 Grant W/Star $1$6,280$3,190
1926 Sesquicentennial $2 ˝ $24,640$11,930

     As you can see, the FMV has declined drastically in these high grades. Granted, there have been more coins certified and placed into the market but these prices indicate that there is a shortage of collectors for this truly rare set. Most of these have dropped 50% in five years and some much more. What it will take to attract buyers into this market again is not certain, but hundreds of these coins have been trading among dealers and major auctions for the last year or so. The current FMV prices are attractive enough for someone to be putting these coins away for the next run.

     There are two crucial reasons why the FMV for some coin prices may be descending slightly in today’s market. One reason is the majority of today’s buyers are looking for modern bullion related products because they prefer instant gratification in the form of quick profits. In addition, they want coins that can be quickly exchanged for cash and many are sold on the fact that the metals will continue to rise because of the unsettling economy. The wholesale trading networks bear out this fact. Over the last several weeks, the majority of trading has been bullion-related material, whether they are Gold and Silver Eagles, Platinum, 90% silver bags, or Silver Dollars, among others.

     The second reason prices have slipped lately is there are too many collectors chasing the same coins or kinds of coins. Demand is strong for rare dates, especially those that have very low original mintages and populations. The classic rarities command heavy-duty attention when available. But there is only so much money out there to buy these very few coins. For instance, if advanced collectors have $20 million available to spend on these rarities, there may only be an inventory of $5 million of coins for sale. Competition will be very strong for these coins. However, once they sell, there is still $15 million left to purchase the next tier of available rare coins. These may not be as attractive to serious buyers at current FMV prices as their first choices, so the demand is not quite as bold and prices are a little less competitive.

     The current market is all about choices. Buyers are always looking for that next coin they want to acquire. But there are many coins they want but are not willing to go the extra dollar to purchase. Understand, the majority of buyers in today’s market are having a difficult time locating their most desired coins to add to their collections. However, they may come across coins that are way down on their list, but these coins may need discounting to further entice buyers. This is why many prices in today’s market have fallen slightly over the last few months. Conversely, the good news is many buyers are taking advantage, knowing that the market will solidify at some point, and the coins they obtain now at reasonable levels will rise in the future.

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