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Why Are Prices Of Common Small Classic Gold Coins So Much Over Spot?

 
 
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Pillar of the Community
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 Posted 07/15/2019  5:21 pm Show Profile   Bookmark this topic Add RPT to your friends list Get a Link to this Message

Currently on APMEX you can buy a

double eagle (0.9675 oz) $1,445.16

eagle (0.4838 oz) $750.15

half eagle (0.2419 oz) $432.58

quarter eagle (0.1209 oz) $379.99
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 Posted 07/15/2019  5:53 pm  Show Profile   Bookmark this reply Add llewellin to your friends list Get a Link to this Reply
People collect them
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 Posted 07/15/2019  6:35 pm  Show Profile   Bookmark this reply Add moxking to your friends list Get a Link to this Reply
Availability. There are gazillion common date St. Gauden's in MS 65 and better.

There are few type 2 gold dollars in MS-63 or better.

If you think there's a big difference of over bullion prices on gold coins, try figuring the over bullion value for a 16-D Mercury.
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 Posted 07/15/2019  6:47 pm  Show Profile   Bookmark this reply Add Coinfrog to your friends list Get a Link to this Reply
Right. The further back you go, the more likely the lowest denomination gold coins will typically show the most relative wear within their series.
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 Posted 07/15/2019  7:08 pm  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply

Quote:

If you think there's a big difference of over bullion prices on gold coins, try figuring the over bullion value for a 16-D Mercury.


Try figuring it on the 1794 Sp 66 Dollar
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 Posted 07/15/2019  7:25 pm  Show Profile   Bookmark this reply Add tdziemia to your friends list Get a Link to this Reply
If I understand the question correctly, you are asking why the price compared to bullion value as a percent is highest for the smallest coins.

I can think of three reasons:
1. the seller focuses on profit dollars per sale and not percent margin
2. demand for the smaller coins is higher due to their lower price, and this is what he market will bear.
3. a combination of (1) and (2)
Edited by tdziemia
07/15/2019 7:27 pm
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 Posted 07/15/2019  7:40 pm  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply

Quote:
I can think of three reasons:
1. the seller focuses on profit dollars per sale and not percent margin


This has nothing to do with it overall.

Think about it and the value of each coin, there weren't many transactions happening with $20 dollar gold coins prior to the gold ban when even in 1940 the average house price was less than $3000.

It's just like today, $1/$5/$10s all get used more than $100 bills. The smaller gold coins got used more, and are rarer and some are conditional rarities. The $20 are basically the Morgans of gold coins, there's absolutely no shortage of them.
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 Posted 07/15/2019  7:42 pm  Show Profile   Check silverwolf's eBay Listings Bookmark this reply Add silverwolf to your friends list Get a Link to this Reply
Think of small common denomination gold coins, the same way you would fractional gold bars.., compare the premium of 1 gram gold bars to 1 ounce gold bars, you will have your answer.. anyone selling gold has to sell 31-1 gram bars, to sell an ounce of gold, where one purchase of an one ounce will move an ounce of gold.. so the seller is hedging.. Money in to cover money out..
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 Posted 07/15/2019  8:53 pm  Show Profile   Bookmark this reply Add tdziemia to your friends list Get a Link to this Reply

Quote:
This has nothing to do with it overall.

Think about it...


I did, I also ran the numbers, and found it has EVERYTHING to do with it.

If you look at the OPs numbers for sales of a double eagle, eagle, and half eagle, the "margin" relative to bullion is not very different. For bullion at $1410, it is $81 for the double eagle, $68 for the eagle, and $91 for the half eagle.

However, for the quarter eagle it is $210.

This tends to confirm hypothesis 3: for the larger denominations, the pricing strategy is set on profit per transaction (about $80).
For smaller denominations there is a $125 dollar premium.

The break point is not between the double eagle and the others. It is between the half eagle and quarter eagle.

The strategy and the lesson are both crystal clear.

Edited by tdziemia
07/15/2019 9:05 pm
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 Posted 07/15/2019  9:13 pm  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply

Quote:
I did, I also ran the numbers, and found it has EVERYTHING to do with it.

If you look at the OPs numbers for sales of a double eagle, eagle, and half eagle, the "margin" relative to bullion is not very different. For bullion at $1410, it is $81 for the double eagle, $68 for the eagle, and $91 for the half eagle.

However, for the quarter eagle it is $210.

This tends to confirm hypothesis 3: for the larger denominations, the pricing strategy is set on profit per transaction (about $80).
For smaller denominations there is a $125 dollar premium.

The break point is not between the double eagle and the others. It is between the half eagle and quarter eagle.

The strategy and the lesson are both crystal clear.


Ran the numbers on what exactly? Classic gold is pre 1933 gold.

If you think it's just a pricing strategy you don't know that market
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 Posted 07/15/2019  9:28 pm  Show Profile   Bookmark this reply Add tdziemia to your friends list Get a Link to this Reply

Quote:
Ran the numbers on what exactly? Classic gold is pre 1933 gold.
If you think it's just a pricing strategy you don't know that market


I just ran the numbers on the OP's post, which didn't differentiate by date. I took the ASW times bullion price and compared to to the selling price referenced by the OP. No mystery. Just multiplication. Please check my math. Sometimes I go fast and make a mistake.

And yes, based on those inputs, it's easy to see a pricing strategy. But I'm always interested in learning, because I'm new here compared to many others. But if I were buying on APMEX I sure as heck wouldn't buy anything smaller than a half eagle without shopping around.
Edited by tdziemia
07/15/2019 9:37 pm
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 Posted 07/15/2019  9:34 pm  Show Profile   Bookmark this reply Add Coinfrog to your friends list Get a Link to this Reply
Quarter eagles have had their own well-established collector base for generations, from Indians all the way back. It has NOTHING to do with bullion value.
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 Posted 07/15/2019  9:36 pm  Show Profile   Bookmark this reply Add basebal21 to your friends list Get a Link to this Reply

Quote:
I just ran the numbers on the OP's post, which didn't differentiate by date.


The is titled classic gold. That is pre 1933 gold, also the mention of 2.5 gold.

The recent gold market today is completely different than classic gold
Edited by basebal21
07/15/2019 9:49 pm
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 Posted 07/15/2019  9:43 pm  Show Profile   Bookmark this reply Add tdziemia to your friends list Get a Link to this Reply
Cool.

I read the OP one way. Maybe you read it another.

I've learned something about APMEX pricing strategy from doing the analysis. That's absolutely clear-cut.

You make other good points based on your knowledge of the market, and I think those points will help collectors too.

Ciao!
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 Posted 07/15/2019  11:01 pm  Show Profile   Bookmark this reply Add Conder101 to your friends list Get a Link to this Reply
It is really rather simple. There are a lot more people who can afford to buy .125 or .25 oz of gold than there are those who can easily buy .5 or 1 oz of gold. For a double eagle you have to spend over $1300 before you even get to any numismatic premium. The threshold for the quarter and half eagle is much lower. So it follows that there are a lot more collectors of the smaller denominations. That means more demand and more numismatic premium over the gold value for the smaller coins.
Gary Schmidt
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 Posted 07/16/2019  06:22 am  Show Profile   Bookmark this reply Add tdziemia to your friends list Get a Link to this Reply
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