Jim Bisognani: Gold and Silver on a Rampage

As we near All Hallows Eve, the metal markets — specifically gold and silver — are scaring some, while exciting others. It has been no secret that gold has been the heart and soul of the metals market this year, blazing a path of new records seemingly every trading day. With every new milestone, yours truly has pondered if I should pop out my gold crown in my mouth and place it in a safe deposit box.

This is my 350th installment of the Weekly Market Report, and today, gold has powered over $2,750 per ounce! Hmm... just how much is that gold crown worth? It is said that records are meant to be broken, and the yellow metal is certainly taking advantage of that adage. As a youth, I remember when gold spot was a mere $35 per ounce (I know, I am old). Then, a $100 surge made the news.

Then, churning along through market manipulation, inflation, oil embargo and international conflicts, gold blazed up to $850 per ounce in 1980. There were whispers of gold breeching $1,000 per ounce soon after, but that magic number wasn't truly attained for another nearly 30 years. The metal poised to break the $2,000 threshold during the height of the COVID-19 pandemic in the summer of 2020. Since then, gold has been in a holding pattern. Yet, during the last year, barrier after barrier has been breached. Now that gold has claimed more than $2,700 per ounce, we have to wonder: When will $3,000 be attained? Who knows?

My favorite metal, silver, has finally heard the wake-up call as well, trading at $35 per ounce for the first time in over a decade. To be a part of this monumental mayhem is exciting. With each new high, and with silver now surging, the ramifications to the collectible and numismatic market have widened.

Exactly one year ago (as this article posts), gold spot was $1,965 and silver spot was $23. While gold is revealing a 40% advance during that cycle, silver has rather quietly flexed its muscles and is outperforming gold with a 52% escalation during the same time period. Even with this surge, the ratio between them is 80-1, which is still much too high, in my opinion. What this all means is that, in the short term, the spreads on the most generic pre-1933 US gold (Half Eagles, Eagles and Double Eagles) in circulated condition through MS 62 are going to be very tight indeed.

Digesting some pertinent data… Just one year ago, $20 Saint-Gaudens in MS 62 were being sold at $2,100 per coin (equal to 10.5% over melt value). Today, that same coin is quoted at $2,740 (just 3.5% over melt value). Given this remarkable information, I had to research pricing for higher grades within the series.

$20 Saint-Gaudens Certified Type: Percentages Above Melt Value

Last year, the average spread between grades MS 62 through MS 64 was 12.5%. Today, the spread between the same grades is averaging just 4.49%! But even more exciting for the gold bug, aspiring coindexter or serious collector, in this market, there is nary a 3% increase over melt value between MS 64 and MS 65 graded $20 Saint-Gaudens.

Taking the steeper grade

Now, if a $20 Saint-Gaudens graded MS 65 is comfortably in your wheelhouse, I can suggest another exciting prospect. Consider the following — an MS 66!

That's right — the Ultra Gem MS 66! Last year, these were selling at $3,300 or 36.08% above the MS 65 caliber coin. Today, the same MS 66's are being offered at $3,220 each, which is just 12.3% above the MS 65! This is truly amazing stuff.

So in this respect, as the gold market continues to accelerate, spreads are not only virtually nonexistent in lower to mid-grade, but they are shrinking rapidly in loftier designations as well. My fellow coindexters, if you were in the market for a $20 Saint-Gaudens, then MS 65 and MS 66 coins appear to be fantastic bargains.

A major California trader concurred, "It is a great time for the collector, yet it has been difficult buying quantities that I would like at this time. Much of the US gold is actually becoming scarce at these levels."

Now back to silver, my favorite metal

My research began with the ever-popular Morgan Silver Dollars. These silver cartwheels have an enormous following worldwide and are not only collected by date and by series, but collected in bulk as well. As a well-known Florida dealer told me, "Morgan Dollars are bullion on steroids."

Not surprisingly, with the 50%-plus increase in spot silver (melt value for these coins today is around $26.50), prices for "culls" (average circulated and BU 1921 Morgan and Peace Dollars) has advanced, albeit modestly, during the last year. See below:

Morgan & Peace Dollars: Percentages Above Melt Value

As expected, the circulated through BU 1921 Morgan and Peace Dollars are all trading at higher levels commensurate with the increase in price of silver. Yet, the percentages over melt value have diminished dramatically and, in the instance of the 1921 BU Morgan Dollar, it's a reduction of virtually 53 percentage points (33.96% over melt instead of 86.9%)! The best value by far, my fellow coindexters, would be the VG+ 1921 Morgan Dollars at a mere 8.49% over melt value.

It's a rather amazing turn in store for those coveted pre-1921 Morgan Dollars, one which should excite coindexters and collectors of this immensely popular series.

Pre-1921 Morgan Dollars

This is correct, my fellow coindexters. In the face of an over 50% increase in the price of silver spot, pre-1921 Morgan Dollars — those ever-popular silver cartwheels — are being sold at between 12-17% below last year's pricing!

While for many, gold and silver coins or bars are a hedge and protection against foreseen and unforeseen calamity, for others, it is a store of value. However, during this cycle, the rising prices seem to be contrary to the norm when it comes to the metals market. Usually, rising yields on Treasury bonds and a stronger dollar would have the opposite effect for gold and silver. However, as of late, gold and silver have been seeing significant breakouts, and the main driving force appears to be geopolitical.

For numismatists, gold and silver coins just go with our territory. As we acquire pre-1933 gold or Morgan/Peace Dollars, we do so as collectors first. Though we are cognizant of the rising intrinsic values, the coins are part of a series or collection we are building. Many others are drawn to the safe haven approach and are happy to acquire precious metals in the form of 90% pre-1964 US silver coins, Silver Eagles, Gold Eagles and such. Regardless, our hobby hasn't been phased because collectors will always find something to acquire and cherish.

I recently spoke to a well-known East Coast collector, who said that he is finding a much broader market for medals and political memorabilia. "Perhaps it is because of the upcoming presidential election, but I have seen an obvious surge for Hard Times Tokens and related campaign material," he said. "Tokens and medals struck in gold are very popular, given the current 'gold bug' climate."

That goes for me as well. I confess that I am a history buff and political junkie. I have been since I was a kid. I, too, share a similar passion for early campaign-themed copper, political memorabilia and related ephemera. When I can afford to, I love to pick up a few well-worn Hard Times and Civil War tokens. I really enjoy those historic coppers and especially relish the well-circulated ones.

With this in mind, I decided to pull out one of my favorite political campaign tokens. I had purchased it from my good friend, Tom Hall, more than 40 years ago. He said, "It was some kind of a tiny gold coin, maybe some variety of a California fractional gold coin."

Tom was right: it was roughly the same size as a California fractional gold Quarter Dollar. However, it turned out that the little gold piece (a mere 10mm) was a President Garfield campaign token from 1880, which was struck in gold! Imagine today if either of the major parties' campaigns had "gold giveaways" depicting their candidate.

A campaign relic in rare condition

Here it is, the 1880 Gold James A. Garfield Campaign Token (DeWitt-JG-1880-16) graded NGC AU 58. I had it certified by NGC around 9 years ago.

Click images to enlarge.

As collectors and aficionados of this type of material will attest, many of the survivors of this diminutive 144-year-old presidential campaign relic have suffered some degree of impairment. Unfortunately, the few that come up for sale are often heavily polished, holed or both. And, given the small size and soft composition, many have suffered a case of the "bends." Yet, this tiny gold piece has a truly original look to it.

Interestingly, the use of gold for this particular campaign token was apropos as President Garfield despised paper currency and desperately wanted the US to be on the gold standard. One of Garfield's most memorable quotes best illustrates his thought process: "Any party which commits itself to paper money will go down amid the general disaster, covered with the curses of a ruined people."

I wonder what he really thought about paper currency.

Regardless of motivation, whether you're an investor, collector or beginning coindexter, there are numismatic opportunities for those interested in gold, as well as those looking to acquire silver at reduced prices, or political tokens. I mean, how can you beat that?

My friends, if you haven't already done so, please register to vote. Until next time, be safe and happy collecting!

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