Gold with higher premiums vs. lower premiums

[mts]

I bought a few ounces of gold earlier this year at $1506 from APMEX. I just checked their site today when gold was at $1722 to see how much the different bullion coins I've purchased have gone up in value. The interesting thing is that the premiums on the more expensive gold bullion have gone down while the cheaper stuff has gone up slightly.

For example, the premiums on Pandas has come down from 7.27% to 6.27%. The premiums for Kangaroos dropped from 6.36% to 5%. Meanwhile, the premiums on AGE's have stayed steady at around 5.8%.

Any thoughts on why premiums would come down on the more expensive bullion coins?

 

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[mts]

Here are a few more details about current premiums vs. premiums back in April.

Type April Premium Current Premium
Gold Bars 3.43% 3.78%
Maple Leaf 4.75% 4.94%
Krugerrand 5.42% 5.52%
Amer. Eagle 5.75% 5.80%
Kangaroo 6.36% 5.00%
Panda 7.28% 6.28%
Britannia 9.73% 6.00%

So APMEX premiums have gone up on low end bullion but have come down quite a bit on the higher end stuff. Kangaroos are now cheaper than American Eagles and Krugerrands. And pandas and Britannias are now far more affordable.

 

[jim4silver]

I can't answer specifically to the coins as you listed, because in my area Britannias are often very cheap, Australian Kangaroo and Nuggets are relatively cheap, etc.

It all comes down to supply and demand. My dealers tell me that sometimes a company will launch a special campaign focusing on a particular type of coin and will offer dealers around the country a higher premium to get them.

I have always said that in my area the best deal with the lowest buy/sell spread has been the Mexican peso coins, generally I like the 20 and 50 peso. The premium price is important, but more important is the difference between the premiums when you buy vs. when you sell. Sometimes the cheaper gold, ie the Mexican, 100 Coronas, etc, have a tight spread so you wind up better off than if you bought the higher premiums stuff. If you can ever get Sovereigns or 20 Francs (the pre '33 ones) for a low premium you cannot go wrong.

If a person sells to individuals instead of coin dealers the above may not hold true.

Jim

 

[mts]

I also bought one of the Mexican Onzo Libertad coins. I didn't list it here because it was a random date coin and APMEX didn't have an equivalent to gauge the price change by. But when I bought it I paid a very low premium for it which jives with what you are saying above. It was the lowest premium other than the gold bars. I didn't look into the gold pesos because I was worried that they would be hard to get rid of in the future so I stuck with the one ounce Libertad.

The Britannia was by far my most expensive coin. I didn't want to buy it but my daughter is a big fan of all things from Great Britain. So I paid a hefty premium to get her that coin. And now you tell me that Britannias are often very cheap. I think I got taken for a ride on that one.

This all makes me believe that the premiums I originally paid in April are the ones that may be out of kilter. Perhaps they have equalized now. Time will tell.

Of course, I had also looked at pre-1933 US gold. Some of that stuff is beautiful and to hold such a piece of history would be amazing. But I just couldn't justify the premiums they were asking. And APMEX doesn't appear to be the place to buy those kinds of coins anyway.

 

[jim4silver]

And now you tell me that Britannias are often very cheap. I think I got taken for a ride on that one.

I guess it depends on where you buy from. I remember back a couple of years ago the proof sets of Britannias were selling at near spot here. They were really low mintages and awesome looking coins, but for some reason the demand was low. They were in nice wooden boxes too. But back then everyone was wanting AGE coins and their premiums were the highest. I personally don't like AGEs except for the proof ones. Unless I am getting old foreign gold or old US gold, I prefer .9999 for bullion purposes.

I figure someday in the future when I decide to get rid of my collection I may be selling to foreigners (like if the Chinese decide to buy up the whole country ), and in many countries they prefer .9999 gold over anything 22K, etc. And since the bullion coins don't get spent or handled, there is no need to worry about pure gold getting dinged or scratched.

When I see the Britannias nowadays they usually go for 3 percent or so over spot, but it has been a while since I have seen them.

Jim

 

[mts]

I just took at look at some Mexican 50 peso gold coins on APMEX. I think I missed the boat on those. You're right. Very low premium and spread. Plus, they are beautiful and pretty hefty. I probably should have bought a few of those instead of the pandas and britannias. Oh well. Since I'm in it for the long term the difference in premiums I paid now will not matter when I give them to my kids in 30 years. My next gold purchase will likely be some 50 peso coins. As always, thanks for the tips!