A Reintroduction to Ever Popular Saint-Gaudens Gold
By Brian Zweig
If you’ve followed our alerts over the years about pre-1933 U.S. gold coins, you’ve noticed two takeaway messages:
- The supply of vintage American gold coins is finite, and thus its premiums are subject to fluctuation.
- Vintage U.S. gold coins' premiums are very much a function of collector and investor interest. This heightened demand and fixed supply results in higher prices.
These two points are more than just anecdotal observations; they’re phenomena demonstrated by years of historical data. Going back to the 1970s, we can point to numerous economic events that resulted in an immediate (and dramatic!) surge in demand for U.S. gold.
Why do we bring this up today? It’s been quite a while since we’ve been able to say this, but we might be in one of those situations again. Not only is the price of gold staging an impressive rally, but it’s happening against the backdrop of troubling economic headlines. This combination tends to have major implications for the pre-1933 U.S. gold market.
For over two years, the spot price of gold was trapped in a narrow range of $1,200-$1,350. The yellow metal stayed within a calm and tight channel while the equity and real estate markets demonstrated tremendous strength. Consequently, interest in gold (and demand for physical bullion products in general) could not have been weaker.
When this most recent rally first began, we saw a wave of liquidations and profit-taking. Many investors began to sell when gold hit $1,400, as that price level had not been seen in five years. Then, something entirely different when gold climbed another $100-$125 per ounce. Buying activity picked up considerably – including among investors who had been on the sidelines for years.
Sure, a quick jump brings out momentum investors and folks wanting to ride the bandwagon. But that doesn’t entirely explain the renewed interest in gold. Political strife, currency wars, talk of recession, loose monetary policy, stock market volatility, and global uncertainty have been dominating the headlines. These are all forced that bring new participants into the bullion market.
So what do vintage gold coins have to do with this? Without fail, in all previous bullion rallies, U.S. gold premiums have expanded. To clarify, we’re not just saying that values rose because spot prices jumped too. It is true that rising spot prices will benefit the melt value of a vintage gold coin. However, the premium (i.e. the margin between melt value and total market value) can expand significantly.
Let’s rewind a decade to the recession of 2008-2009. As gold made a sudden move from $850 to $1,150, the $20 Double Eagle premiums increased over 50%. The MS63 $20 Saints, for instance, traded for a 30-35% premium in late 2007. This translated to a total market value of around $1,100. By 2009, it was commanding a 55-60% premium against a spot price of $1,150. That means the coin was valued at $1,750+ in total.
Those who bought 1 oz. gold bullion coins in 2007 pocketed a solid 35% return over the following two years. Few investors would argue with that kind of performance. However, those who bought MS63 $20 Saints realized a remarkable 65% profit during that same time. That’s nearly double the return!
No firm has a crystal ball on where prices or premiums are headed, but all we can do is recognize certain triggers. The current economic environment is ripe for a bullion rally, as investors engage in the proverbial “flight to safety” in times like this. When there’s a surge of interest in precious metals, it’s usually just a matter of months before these newcomers to the field discover pre-1933 U.S. gold.
We’re already witnessing some of the early signs. Not only are wholesale distributors reporting huge jumps in volume, but some bullion premiums are already creeping upward. The bellwether 1 oz. American Gold Eagle, which had been trading for a historically low margin over spot, has already seen a spike in premium in the past week.
If gold Eagle premiums are any indication, a coin with the same design might be the next to see a bounce. Remember the MS63 $20 Saints we mentioned earlier? They commanded a 30+% premium in 2007 and a 55+% margin over melt in 2009. Today, that same exact coin is buyable for 9% over its intrinsic metal content!
We have many clients – many of whom have been “quiet” for years – getting back into gold now. A common question among them is which gold product makes the most sense in today’s market. While there are numerous great options, pre-1933 U.S. gold offers the absolute best value today. For just a tiny margin over the cost of a 1 oz. gold Eagle or Maple, you can own a coin with collector appeal and numismatic upside. These historic vintage coins are more than just a pleasure to own and hold; they offer upside that most bullion products simply cannot.
In essence, pre-1933 U.S. gold coins provide two potential sources of return. Not only can they benefit from a rise in spot gold prices, but they stand an excellent chance to appreciate in numismatic value. These coins have commanded premiums of anywhere from 30-70% over their melt value in the past decade, yet are commanding single-digit premiums today!
However, these historically low premiums may not last long. The ingredients are in place for a major rally in the bullion markets. We’re not just talking about further gains in the gold spot price; this turbulent environment could bring an immense wave of fresh blood into the precious metals marketplace. Not all of these new investors will find their way to the pre-1933 U.S. gold coins, but a large percentage always do.
We’ve seen this scenario play out time and time again; it consistently results in elevated premiums. Therefore we urge you to take a close look at certain $20 Saint-Gaudens Double Eagles today.
We think certified Uncirculated pieces in the MS62-63 range offer the absolute best value. For just 10% over melt value, you’re getting a Mint State specimen that’s been professionally graded by PCGS or NGC. With uncertified/worn/cleaned/damaged coins selling for 4-6% over melt, these Uncirculated pieces at 9-10% premiums strike us as a brilliant way to own gold.
MS63 Saint Gaudens Double Eagle at 10% over melt*
MS62 Saint Gaudens Double Eagle at just 9% over melt*
Don’t miss this opportunity to own one of America’s most beautiful and iconic coins at a tiny margin over spot. We may look back at 2019 as one of the last times these coins were available at bullion premiums. Whether you’ve been consistently stocking up on gold or just getting back into precious metals lately, these $20 Saints represent your best bet. Pounce on this chance to own historic U.S. gold at historically low premiums!
To add the $20 Saint-Gaudens Double Eagle to your portfolio at great value today, please call us at 800-831-0007 or email us.
*Prices subject to change based on market fluctuation and product availability. Prices reflected are for cash, check, or bank wire. Free shipping, handling, and insurance are available at any quantity. Offer expires Friday September 13, 2019, or while supplies last.