Coin dealer and precious metal commentator Patrick Heller discusses his take on bullion coins via CoinWeek.com:
“When serving customers, it is important for the dealer to understand what their customers are trying to accomplish by purchasing bullion-priced gold and silver coins or ingots. This knowledge can help identify the most suitable items.
In my conversations with thousands of customers over the decades, the most common goal of those buying bullion-priced precious metals was for long term protection (insurance) against the risk of a falling US dollar. It seems like over half the customers state their intention to never sell their purchases, with their heirs receiving their holdings.
Almost always the long-term trend is for bullion premiums to decline. Over the past several decades, we have seen this occur multiple times. When enough of a particular bullion-priced coin has been sold to investors, there develops a secondary supply coming from investors who are liquidating. If enough of these are being sold on a regular basis, coin dealers and wholesalers drop their bids (and selling prices) relative to metal value. That is why investors looking to get the most gold for their money seek gold issues available at lower premiums. Examples of such pieces are the Austria 100 Coronas, Mexico 50 Pesos, and the US American Arts Medallions.
In the long run, I expect that most of today’s widely traded bullion-priced products will be bought back by dealers and wholesalers for about the same price relative to spot.”
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