Starting a collection of Gold Sovereigns

[Peckris 579]

Talking about Spink's (and other price guides), as the price of gold is so volatile, any guide is pretty much useless once it is on the booksellers' shelves. Can anybody think of a serious objection to publishing prices as 'BV' or 'BV+' if it has some numismatic value?

Apologies if I've posted this before, but my memory isn't what it was...

Traditionally guides have printed a '-' under grades where a coin doesn't have a value above bullion, which I've always thought was fair enough. It's coins that have a numismatic value where a problem creeps in - ideally one would like to see "BV * 2" (for example), but the market doesn't seem to work that way. Obviously the numismatic value will always be above BV, but by how much? In a rising gold market, collectors wouldn't necessarily see that as a reason to pay a vastly increased price just because the BV has gone up, especially as they will know that the gold price can drop again just as sharply.

As a working example - let's say BV starts as X and goes up to X*4 over a few years; a coin's listing might start out as :

F £(X*2) VF £(X*4) EF £(X*10) UNC £(X*18)

How should it be a few years later when X has increased 4 times? Would a collector pay £(X*8) for a specimen in merely Fine? I doubt it. £(X*4+) would be more realistic. And VF perhaps £(X*6). EF certainly not £(X*40) when the original EF price was purely based on 'scarce numismatic' value and not BV.

I think BV does skew the market, but when a coin acquires a purely numismatic value, it's less affected by that, but one would see a 'compression' occurring, with the lower grades rising to reflect BV more than higher grades. And that effect would reverse if and when BV dropped.

[davidrj 194]

A cautionary article for those contemplating investing in bullion - link

David

[Coinery 1,148]

A cautionary article for those contemplating investing in bullion - link

David

Sobering!

The first things that came into my mind were the heavy chains of wedding bands and old rings, the endless small charms and sovereigns...the old Romanies knew a thing or two!

[VickySilver 830]

Uggh, Peck, don't think it will work that way as you pointed out in the earlier bit of your post. As bullion values grow, the premiums are wiped out for numismatic value. Not an example dear to many on these boards, but this is what happened to the US platinum series fractionals through whole oz. 1997-2008. There was a good bit of interest in these when platinum was a few hundred USD and then the value of the metal crept as high as USD2200. Even though the price retreated to sub-1500, it seems all the nascent collectors lost interest in the currency bits despite very low mintages and no sign of any return.

Also, can you imagine in way of example how the numismatic value of, say, a 1931 half crown in VF will crawl back into the picture compared to its silver value?

[Peckris 579]

Uggh, Peck, don't think it will work that way as you pointed out in the earlier bit of your post. As bullion values grow, the premiums are wiped out for numismatic value. Not an example dear to many on these boards, but this is what happened to the US platinum series fractionals through whole oz. 1997-2008. There was a good bit of interest in these when platinum was a few hundred USD and then the value of the metal crept as high as USD2200. Even though the price retreated to sub-1500, it seems all the nascent collectors lost interest in the currency bits despite very low mintages and no sign of any return.

Also, can you imagine in way of example how the numismatic value of, say, a 1931 half crown in VF will crawl back into the picture compared to its silver value?

Thanks for the insight into US platinum coins. It's all a complex area. However, the point I was trying to make was to do with coins whose numismatic value (usually from scarcity) will always exceed the BV - to give an extreme example, the value of a 1933 penny will never be affected by the price of copper.

There are sometimes exceptional circumstances - your reference to platinum is nowhere near as extreme as what happened to silver in the abortive Bunker Hunt attempt to corner the market in 1980. For a few months, BU George VI florins went from £2 - £5 to £12 across the board. I can't remember if prices were quoted for EF and VF also, but by the end of the year, prices had reverted much to what they were. Gold has risen six-fold? seven-fold? over the last fifteen years, which is also extensive but not extreme (remember too that gold went DOWN considerably in the 90s); plenty of time for the numismatic market to react. Interestingly that didn't happen to your platinum series, but maybe that is a more specialist market? And perhaps the US market is different in these respects than here in the UK?

Your reference to VF 1931 halfcrowns is interesting. They would, I feel, react to changes in the price of silver, as any numismatic value (not that much!) is borderline in relation to the BV. You will note that EF/UNC 1925/1930 halfcrowns don't leap about as the BV changes, which is the point I was trying to make.