Coins are poised for sharp price rises in coming weeks and months, on the heels of swelling demand for basic materials.
Actionable: This week might provide an opening for those who want a one-ounce coin for less than $850.
We are just back from London, where the U.S. dollar is beating the pants off Pounds and Euros, and where the new “Quantum of Solace” James Bond film, which we viewed with enormous sneak-preview pleasure, just shattered opening weekend box-office marks in Britain, Sweden and France.
Basic materials, as described in ThomWatch words and chart on Monday, are continuing to rebound higher after getting the boot last week – (AMEX: UYM, Stock Forum). Also: See ThomWatch on materials.
My friend Van Simmons of DAVID HALL RARE COINS operates a longtime rare coin dealer in California and tells me the premiums for silver, gold and platinum coins of many denominations remain thick. This comes as consumers snap up available supply from mints in Canada, the U.S., Great Britain, South Africa, and Australia. It comes also as paper securities linked to metals (mining stocks) get hammered … and some metals, such as platinum, lose nearly half their value vs. five months ago.
- “The supplies are still tight but are freeing up a bit,” our Van Zee Man says from Newport Beach. “I found 300 ounces of platinum the other day for a client, where I haven't found one ounce in two months.”
- As for gold: “The gold becomes available, but at a premium of 8% instead of the old standard of 3.5%,” says Simmons, who at the age of 57 often refers to himself as “an old-time coin dealer still doing the same old thing.” (For 30 years now.)
- Silver: “The silver market is hard for me to believe. I had a dealer offer me US$6 over spot for one-ounce U.S. Eagles yet you can buy the 1,000 ounce bars for 60 cents over spot. If I had one-ounce eagles I would sell them and pick up and extra 50% of bullion by purchasing the large-size bars. The large bars are not popular so no one wants them.”
- Platinum: “The platinum market is very thinly supplied. Period.”
Simmons writes a monthly newsletter on the rare coin market called the Velvet Tray. It is at www.davidhall.com. Our mutual friend and former Gold Mining Stocks editor Robert Bishop calls it with some affection the “Velvet Tunnel.”
I asked Simmons about specifics on premiums, and to provide some ‘color’ about the type of folks who buy coins and blocks of metal for investment purposes.
“I just checked and on the bullion, for U.S. Eagles, Canada Maples and so on my cost is around 10% over spot but no supply. This is very high. I don't sell that much bullion, but the clients who do buy it are the smartest business people I know – rich to very wealthy and smart. I think most people are just figuring it is time to spread their money a bit.”
Finally, I let Simmons provide some of his own thoughts on motivation, which is for many of our ThomWatch audience a pool of water upon which one reflects, or drinks … or drowns. He says, “I find it funny some people will think nothing of spending $100,000 on a rare coin and wouldn't consider spending that on bullion, yet others may be worth $20 million and the thought of placing $100,000 in bullion is like they are giving blood.”
He adds, “I have the feeling over the next several years there is going to be a big demand for bullion related products, like bullion coins, rare coins and mining shares. I don't have any sellers in this market, it is all buyers – no one needs money and wants to sell. Or should I say none of my clients. I have a waiting list of about 15 people who want bullion as soon as I can get it. I have been putting most of them off as the premiums are so high I have told them to wait. But the premium just keeps going up. My buyer in my office for bullion doesn't think we can get it for 10% … he thinks it may be more like 12%.”
That’s it for now. Here at Stockhouse.com, we are working furiously on a new subscription (translation: cost$ money) report that will be published later this month; call it a ThomWatch Deluxe for those willing to part with a few hundred quid or loonies or Euros or dollars a year. (OK, we’ll take Swiss francs as well. Yen, too.)
As stated here in the free ThomWatch, I believe we will experience a return to sensible asset values soon in risky investments … and indeed, some small companies in life sciences, mostly cancer compound developers, already are showing some life. Technologies such as broadband WiMAX also are rebounding after getting crushed. These are positive signs for those of us who have held onto company securities in the most damaging sell-off I ever have seen. (Translation: Ouch!)
Our SUBSCRIPTION REPORT that begins later this month will explore the planet we live on in a search for the very few stakes that could offer excellent, in some cases cosmic, returns. It is only for those who are comfortable with ultra-intense levels of risk and willing to endure pain and suffering. (Translation: We’ll see.)
On Wednesday, I will unveil – for free – some energy companies that might benefit from the planetary blitz of security valuations.
Note: Thom’s cosmos of holdings is listed for free Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. For more ThomWatch, please see Stockhouse and ThomCalandra.blogspot.com.
TURBO THOMWATCH: For investors who profited from a meteoric rise of commodities, mining and life sciences companies, Thom Calandra acted as a beacon. Thom helped his audience find value in a quagmire of investment choices. Thom co-founded and was the driving editorial force and spirit of CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied $300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and scores of thin-crust pie joints across the planet in a search for profit, fashion and pizze de trippa gorgonzola. Thom's novel PABLO BY NUMBERS was completed in summer 2008. He and Stockhouse this autumn will offer a DELUXE VERSION of ThomWatch as a subscription report for a select audience.
