Liberty’s Outlook Bullion Report – November 2011
Originally from Volume 17, Issue 11 of Liberty Coin Service’s Liberty’s Outlook
Gold And Gold Coins
Gold closed on the COMEX today at $1,728.75, up a solid $114.00 (7.1%) from last month.
Last Friday the Royal Canadian Mint announced a $250 Million Initial Public Offering of Exchange Traded Receipts (ETRs) for physical gold to be stored at the Ottawa Mint as part of the Canadian Gold Reserves program. Each Receipt is being priced at $20.00 and will be represented by the amount of physical gold it will purchase at the London PM fix on the closing date of the offering, planned for later this month. Each Receipt will have 0.35% of the gold content subtracted annually for expenses.
These receipts are planned to be listed for trading on the Toronto Stock Exchange. These Receipts will not be registered under the US Securities Act of 1933. Therefore, they may not be offered or sold in the United States.
This announcement is similar to how the gold exchange traded funds operate, except that the initial value of an ETF share was 1/10 of an ounce of gold. The Mint’s program will allow smaller purchases than do the ETFs.
The Royal Canadian Mint has a fairly good reputation but I still would not advocate purchasing these Receipts. Although they may technically be redeemable for physical gold in large enough quantities of Receipts, they are still paper gold. When you have physical gold in your direct possession, you never have to worry about whether another party is going to go bankrupt or default on you.
They physical gold issues with the lowest premiums are still the US American Arts Medallions (3.5%), the Austria 100 Coronas (3.5%), and the Mexico 50 Pesos (3.6%). For the time being, supplies are readily available at reasonable premiums for almost all issues.
Much of the Common Date Classic US Gold Coins are in the doldrums. Lowgrade and problem pieces for many denominations are trading wholesale at close to their intrinsic gold value. You might be able to pick up some really low premium pieces on a hit-or-miss basis just by asking a dealer.
Even with a higher gold spot, the 8-piece $2.50-$20.00 Liberty and Indian sets in Choice Mint State-63 through Gem Mint State-65 quality are down by nearly 4% to more than 6% from a month ago. While I think appreciation prospects for commondate $20.00 Double Eagles are limited, the other coins in MS-63 and higher grades are still trading well below levels they have reached in the past. Even more attractive are the Better-Date US Gold Coins that can be acquired for right at or close to the prices of common-date issues.
Silver and Silver Coins
Silver ended COMEX trading today at $33.93, a huge jump of $4.13 (13.9%) from four weeks ago!
With higher spot prices, premiums have declined from last month. I still recommend US 90% Silver Coin (2.0%), which premium had dropped almost in half from early October. 90% Coin has several advantages – lower cost per ounce, they are coins struck by the US Mint, and they have the greatest liquidity and divisibility. Reminder: don’t pay a premium for half dollars.
When you want to sell, you can just about guarantee that you will not be paid more for them than you get for your dimes and quarters. Although there has been little to no price increases for Common Date Morgan and Peace Dollars demand is up noticeably over the past month. Doubtless, the higher spot price has led wholesalers to again actively seek all grades of Dollars, including Mint State Rolls and High Grade Individual Coins. Don?t be surprised to see national marketing campaigns over the next few months – at much higher than current levels.
It is a wonderful coincidence that we rerecently acquired a large collection that contained sizeable quantities of Mint State-60+ 1884-O and 1887 Morgan Dollar Rolls. The exciting news is that the 1884-Os were have unusually sharp strikes for New Orleans Mint Morgans. You can see all the feathers on the eagle?s breast, where many O-Mint Morgans have little to no detail. Review our enclosed offer for details.