When mainstream industry insiders recommend gold and silver, it’s time to act. Ian Spreadbury, a bond fund manager for Fidelity, recently warned of the risk of a systematic event due to the lack of liquidity in the markets and recommended that individuals hedge against this risk by holding cash, gold and silver. While alternative economic and financial websites have been warning of a potential collapse in the financial markets for some time, it’s surprising that a mutual fund manager, who is compensated based on the assets under management, has recommended that individuals take steps to protect themselves. We have personally seen an influx of individuals interested in diversifying out of traditional investments and will share with you below the items that are in greatest demand at the moment.
Demand for gold coins tends to go in cycles, but lately we have seen increased interest in gold bullion coins. Gold bullion coins differ from collectible or numismatic gold coins in that they’re primarily bought and sold for their gold content. Examples of gold bullion coins include American gold eagles, South African gold krugerrands, Austrian gold philharmonics and Canadian gold maple leaf coins, among others. We are regularly asked which gold coin(s) are the best to purchase. Considering that personal preferences vary, we don’t typically recommend one specific coin over another. Rather, we recommend that individuals stick with government issued gold coins or well-known privately issued bars and rounds. Gold coins that are produced by obscure countries or that are minted by small unknown private mints may be more difficult to sell in the future. By the way, if you’re paying over 5% for a one ounce gold bullion coin, you’re paying too much. However, premiums tend to increase for fractional or smaller denomination gold coins. Shop around until you’re able to find a coin dealer that is willing to sell you bullion gold coins at a reasonable premium.
Even though we began our discussion with gold coins, we have had more demand recently for silver coins than any other product. Specific coins that appear to be in the greatest demand at the moment include U.S. 90% silver coins minted in 1964 and earlier, American silver eagles, Canadian silver maple leaf coins and many other government issued one ounce silver coins. We’ve also seen strong demand for silver bullion in the form of silver rounds and bars. Our customers have various reasons for purchasing silver coins, but most view their purchase as a hedge against inflation and a weakening dollar. Some customers are purchasing silver coins under the assumption that they’ll need them for bartering purposes in the event of the collapse of the dollar. These individuals are primarily interested in 90% silver half dollars, quarters and dimes, oftentimes referred to as junk silver. Just yesterday we met with a customer who inquired about the current demand and premiums for 90% silver coins. I told him that fewer individuals are selling at the moment, but that premiums are still near their historical average. When I mentioned that early last year, premiums soared to nearly 30% and that supply was practically non-existent, he decided to move forward with a sizable purchase. As is the case with gold coins, we recommend purchasing items that are recognizable so that you’ll have a broad and liquid market available to you when the time comes to sell. We previously wrote an article on the different type of silver coin and bullion buyers, which may be of interest to individuals that are new the market.
In addition to gold and silver coins, we’ve had some interest from customers in platinum and palladium coins. However, since these metals are primarily viewed as industrial metals, they’re more closely correlated to the health of the economy and don’t appear to be strong of a hedge as gold and silver against a falling stock market and reduced consumer spending.
In conclusion, when mainstream mutual fund managers warn of systematic risk and recommend that individuals invest in gold and silver, it’s time to act. We’ve recently seen an increase in demand for gold and silver coins, so it appears as though many of our customers are of the same mindset. We highlighted above gold and silver coins that are of particular interest to folks at the moment and provided some recommendations as to the type of coins that you should be considering. We’ll continue to keep you posted on any new developments in the industry that may be of interest to you.