Gold Price

I would disagree. Logically, the total value given to a coin is comprised of three parts: it's face value, it's bullion premium (how much above face value the metal content is worth, to a jeweller or scrap metal merchant) and it's numismatic premium (how much above bullion value a collector will pay for a coin).

The face value remains unchanged, unless the government legislates to revalue or demonetize the coins. The bullion premium goes up and down with the market rate for the metal. The collector premium goes up and down with supply and demand of the coins in question. These three numbers added together should give you the current "collector value" or "market value" for a coin.

Collectors and investors demonstrate their belief in this logic all the time. If, theoretically, a coin's total value were to remain unchanged (or not at least keep up with the rising bullion value) while the price of it's bullion content was rising, that would mean that it's numismatic premium was actually falling. That would make coins a terrible investment when metal prices were rising, and investors would sell them off to buy raw bullion instead. This sudden dumping of coins in the market would create a vicious circle, as the numismatic premium fell further as supply increased and demand fell. Once the numismatic premium dropped to zero, many coins would be melted down to raw bullion.

We do not in fact see this happen, except in extreme cases where the bullion price rises so fast the numismatic market can't keep up. We usually see quite the reverse: people actually want to buy coins when the price of metals goes up, because they believe the price of the coins will rise accordingly. This extra demand and reduced supply means that coin prices should actually rise even further than the simple increase in bullion value would seem to justify, as both the numismatic and bullion premiums are rising.

I've noticed that dealers around here are, logically, quick to apply this rule when the gold price is going up. Their logic becomes inconsistent when they are much slower to revise their prices downwards when the gold price falls again.

I think our thought processes are a little different here.

I was referring to "generic" and modern gold coins (non-numismatic). Many people, like myself, buy generic & modern gold coins as an investment. They go up and down with the price of precious metals.

Collectors of rare gold coins acknowledge that the spot price of gold has little effect on the value of their coins. I'm talking about the pre-U.S. Civil War stuff, gold dollars, quarter-eagles, Bust gold eagles, etc. In decent condition, these coins are worth many multiples of spot price and are little effected even if gold goes to $2,000/oz.

But I understand your point also. Most common gold pieces (& all the ones I own) are both bullion and numismatic in a way. That's why I said it's like a trick question really.

Happy collecting!

I agree with bherring1964 - the price of gold will definitely affect the price of the run of the mill gold coins, but will have less of an effect to no effect on the rarer coins. For example, the 1901 Double Eagle and its value is closely connected to price of gold. The rarer 1891 Double Eagle is less effected by the price of gold and the even rarer 1882 Double Eagle's value is probably not effected at all by the recent increase in gold.

The same can be seen with silver coins. The price of rolls of average circulated Mercury and pre 1964 Roosevelt dimes has gone up in the recent months as the price of silver has risen. The prices of the 1916-D and 1921-D dimes have been stable during the same period.

I don't think I'm qualified on making a point concerning the Numistic market, just observations. I invested in gold stocks a few years back, so looking petty good. I inherited a hand full of $5 half eagle Liberty Head ,1843-1861P's in VF. They just don't look to have done so well as a investment over the last 150 years.

It's also amazing that circulation strikes are low on most of the P's. A person would speculate they would be worth a lot more in VF, after looking at some of the Silver key date circulation strikes . I'm not looking to sell them and probably will pass them down too generations.