|
How Are Record High Gold Prices Affecting Coin Dealers' Business?
 | By Patrick A. Heller, Market Update
June 03, 2008 |
Rising gold prices has been very profitable for coin dealers, especially those who deal in bullion-priced products as well as collector coins. When gold surpassed its 1980 high of $850 at the beginning of 2008, activity soared. As the rose to more than $1,000 in mid-March, volume rose even more.
My company's monthly sales volumes during the first five months of 2008 have been the five highest sales volume months since the end of the 1980 bullion boom. Yes, higher than October 1987 when the U.S. stock market crashed, higher than the reaction to the failure of Long Term Capital Management in 1998, higher than the months preceding January 1, 2000, and even higher than after September 11, 2001.
The surge in activity has been two-fold. Our company has been purchasing record quantities of gold jewelry from the public. The weekly number of purchases of coins and jewelry we made from the public peaked in mid-March at about 12 times what we averaged in 2002. The number of jewelry purchases led the way, rising to more than 40 times our weekly average in 2002! These sellers are taking advantage of high gold prices to help them with financial problems in other areas of their budget (buying gasoline is the most often cited reason for selling gold jewelry).
In terms of sales volume, however, the largest increase was in the quantity of sales and the average size of sale for retail purchasers of bullion-priced gold and silver coins and ingots. The average sale has almost doubled the increase in the spot price of gold, so sales are not higher just because the price of gold is up. These buyers are worried about the continuing fall in the value of the U.S. dollar.
By the end of May 2008 we had passed our sales volume for all of 2007 and will likely top our 2006 annual sales within a few days.
Prediction: As active as the physical gold market has been thus far in 2008, I expect much higher prices (and volume) well before the end of the year.
Add to: del.icio.us digg
With this article: Email to friend Print
Something to add? Notice an error? Comment on this article. | |