Proof / semi numi dead premium in a price reset

[mr-dead]

Many sources seem to think a gold price reset is coming sooner rather than later (I know people have been saying this for years but we will give them the doubt)

Considering many of us are currently paying a hefty premium for proof and semi numi coins do you think this premium will just equate to a loss in profit further down the line.

For example, lets say gold hit £2k / oz

Queens beast bullion currently around £1k, after reset around £2k - £1k profit

Queens beast proof currently £1.8k, after reset are people going to pay £2.8k for them?

or is the premium paid going to reduce selling for say £2.3k netting a £500 profit rather than the £1k profit on a bullion coin.

 

I can just see many proof coins going in the melting pot at spot price during a price spike.

[Kman]

I remember a couple years ago when gold went from £800 something to £1000 something

It took a while for the premium on Victoria shield sovereigns to raise up to match on Ebay, but they did 

I think desirable numismatic coins will always float healthily above spot, just might take some time to adjust if there's a big upswing in spot a short period

 

[Panda82]

Is that make proofs more rare?

[sovereignsteve]

26 minutes ago, Panda82 said:

Is that make proofs more rare?

exactly. in the short term many proofs and rarer nums will get melted, therefore later on....................

[swAgger]

Good question to muse over. And wouldn't it be a happy problem to face. So much so, that i think many sellers would be delighted to settle for a lesser premium gain in that event because of the reset gain. Short term. But after a while the reset becomes less of a shock to the system for buyers too, and soon becomes the new norm after. So the premiums on the good numi stuff would stay healthy. I would think too, 1/2oz done to larger diameters would become the new format from mints, instead of 1oz.

[sixgun]

The more pertinent question relates to silver coins because they magnify the question being asked.
Let's say you bought one semi-numismatic silver coin at £28 or 2 x bullion at £14.  Let's say spot silver is £12.50 for easy reckoning. 

Then imagine silver goes to £100/oz. An 8 fold rise in price. We can argue about possible prices, the main point is there is a big rise in price.

Would the semi-numismatic coin command a price of 8 x £28 = £224 compared to the basic bullion coin at a supposed £112?

I think it unlikely the semi-numismatic coin will command £224 - i expect it will be a lot less. The basic bullion coin will be the winner.

There is logical reason for my expectation. When the price of silver jumped 8 fold the silver element of the value of the coin jumps 8 fold.

In the case of the £28 coin, 45% of that value came from the silver. In the case of the basic bullion coin the silver component of its value was 90%.

The value of a coin is in two parts, the value of the metal and the value of the 'coin'.

When you compare the prices of gold and silver coins you can see this working. The premium over spot in gold coins is much lower as a percentage of the price of the coin. As the value of the metal rises the relative value of the 'coin' element falls.

If you are investing for future prices in a future reset i think you should buy basic coins close to spot. You will not lose money on numismatic coins but if we see a significant revaluation of precious metals you could have bought more coins if you went for basic bullion coins. In recent years we have seen precious metal prices performing poorly and the numismatic element of a coin has protected the fall in prices. i am not about to sell all my numismatic coins to buy basic bullion but i think that would probably be the better investment decision to make right now.

[RoughDog]

I see the premium for collector coins as more of a flat rate above spot than a percentage.

Which is probably why gold collector coins don't seem to gain the same percentages as silver collector coins.

It seems like the good thing about collector coins is that the seem to protect in a market where spot price is static or gone down.