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Metal Market Report July 2021 - Week 1 Edition

July 2021 - Week 1 Edition

Parent Companies of PCGS and NGC are Bought Out – a Sign of Rising Certified Rare Coin Demand

In the past six months, the parent company of the coin grading service, PCGS, was acquired for about $700 million by a group of private investors led by Nat Turner. I remember very clearly the founding of the Professional Coin Grading Service in 1985. PCGS was a way to provide an independent and reliable means for coin buyers to know the grade and presumed value of their investment. The other major, and very popular, grading service, Numismatic Guaranty Corp (NGC), was founded two years later, in 1987. Taken together, they have given great credibility to the buying and selling of rare coins in the 35 years since they were founded. 

Now we see that Certified Collectibles Group (CCG), the parent company of NGC, has sold a majority stake in their firm to a major investment firm, Blackstone, whose assets under management in 2020 totaled $619 billion. CCG is a recognized authority in all forms of collectibles, including stamps, coins, comic books, sports memorabilia and paper money. 

The sale of CCG and Collectors Universe over the past six months has underlined the fact that certified collectibles are now more desirable to mainstream investors – so desirable that major firms are paying top dollar to take a sizeable stake in the market. This means more millionaires and billionaires will be entering the rare coin market that NGC and PCGS serve, along with the other collectibles. There will rarely be an increase in rare coin supply. Some are lost. Most are a part of permanent collections, with only a relatively few in the surviving population coming onto market in any one year. 

Be sure to make your “wish list” available to your account representative so when one of your desired rarities becomes available you will be able to capture it for your portfolio or collection.  Many rare coins are taking off in price.  When top-quality rare coins with low population reports come in, they tend to go fast, so remember a lesson my mentor once taught me about capturing the best bargains: On the road and in the wild, there are “fast rabbits” and “dead rabbits,” so it is best to act fast when the finest rare coins come on the market.  Be a fast rabbit.

 

Gold is Rising Again 

Gold has been rising gradually and steadily in early July, first rising sporadically after the positive jobs report on Friday, July 2. Gold stayed above $1,780 since early Friday, eclipsing $1,800 on Tuesday July 6. This has been a welcome development.  Meanwhile the rare coin and physical bullion markets continue to heat up.

 

Gold Bullion Sales at the U.S. Mint Rose 32% in the First Half of 2021

During June 2021, sales of the Gold American Eagles slowed down to only 4,000 ounces due mostly to a cessation of sales in anticipation of the debut of the new reverse design coming in July. However, the American Gold Buffalo coins were quite popular, selling 27,500 one-ounce gold coins in June 2021 – a gain of 267% over the 6,500 ounces sold in June 2020 during the height of the pandemic scare. Sales of both types of U.S. gold bullion coins were up 32.4% in the first half of 2021 versus the same six months in 2020.

Now, investors are looking forward to the design change on the Eagle reverse coming this month, the first design change since the Eagle series debuted 35 years ago in 1986. There will also be a significant debut of a series of Morgan and Peace Silver Dollars to honor the centennial of the year in which the two series made their transition in 1921 – the final Morgan Dollar mint year, and the first Peace Dollar mint year. These series will also be distributed this fall, making 2021 a major Year of Transition in coinage.          

We continue to see steep premiums on American Eagles due to delays in deliveries and high demand. Be sure to call your representative and inquire about bullion coin options if the Eagle premiums rise too high. We’ll always keep an eye out for the best prices and timeliest delivery for all varieties of bullion coins.

 

First-Half Summary

The U.S. Dollar Index rallied by 3% in June 2021, putting a damper on gold’s spring rally, pushing the key precious metals below zero for the first half of 2021 vs. double-digit gains for stock market indexes.

However, the first half was a tale of two quarters, with stocks beating precious metals badly in the first quarter and then the two asset classes growing in tandem during the second quarter, as the U.S. dollar fell in April and May before rallying in June.

 

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