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May
08
2019

Opportunity knocks!
Bill Holter

We ran this article last week for subscribers and are releasing it for the public this week.  (We will then also re-run an article done last summer regarding junk silver.)  Currently an anomaly exists that only a couple years ago could not have been imagined.  10 years ago it would have been considered an impossibility!

Back in 2010, when gold traded around $1,000 per ounce, “numismatic” pre-1933 gold coins traded for huge premiums.  This happened because there was fear the Obama administration might go the route of FDR and confiscate bullion.  That did not happen, but we did get to see a precursor to what might be should (when?) confiscation become a reality.

As a background, (and we will focus on pre-1933 $20 MS63 Liberties and MS64 Saint Gaudens), these were the “cutoff” grades in the past.  It was at these grades where the premiums over spot gold took a huge leap from just one grading below.  Just a couple of years ago, MS63 $20 Libs were $75-$150 higher than the MS62’s.  Back in 2010, MS63 $20 Libs were “bid”, meaning dealers were willing to pay $1,800 while spot gold was only $1,000. Currently you could say the jumping off point to the highest grade numismatics is at the MS63 grade for Liberties and MS64 for Saints.  The next grades higher carry much higher premiums.  Please keep in mind, these grades of MS63 and MS64 are way up the totem pole and represent extremely high grading and thus rarity.

As we told you last summer, premiums really compressed for the numismatics, particularly the MS60-62 range.  These could be purchased for roughly the cost of a current year American gold eagle or Canadian maple leaf.  Now, MS63 Libs and 64 Saints have seen premiums shrink to roughly that of eagles.  This offers an incredible opportunity whether you are an outright buyer or want to swap current bullion into rare and uncirculated coin.  Current pricing is stupid cheap!

Why have premiums collapsed?  Because since 2011, the bear market in precious metals has destroyed sentiment and created sellers who became worn out, just as a severe bear market in real estate might reduce or even wipe out premiums for waterfront vs. inland property.  The premiums will once again expand but confidence and desire to own must occur for the premiums to begin to come back.  Should a whiff of confiscation come about, good luck finding ANY product resembling the spot price of gold…

What I am talking about here is positioning yourself in gold which we believe to be the ultimate financial lifeboat …but in a first-class seat without paying any additional fare to do so.  Your downside is the price of spot gold, your upside is not quantifiable but very substantial based on history.  In the event of confiscation fears or outright confiscation of bullion, your “coin collection” could become priceless.  These are 100+year old, uncirculated and individually graded, documented and individually packaged coins considered as “collectibles”.

If you do not own gold and are looking to enter, these higher-grade collectibles are the preferred seat without the higher fare.  If you already own bars or current sovereign bullion, you can swap at very little cost into a first-class seat.  When retail demand does re-emerge, the spread between a MS62 $20 Lib versus a MS63 $20 Lib may move from the current ridiculous $20-$30 to $100 or many, many multiples.  The time to purchase anything of high quality is when the entire sector is on a fire sale.  That time is now!

If this is something you’d like to explore, please contact your broker at Miles Franklin.  They will be happy to discuss this with you and explain all the logistics involved.

Standing watch,

Bill Holter

Holter-Sinclair collaboration

Bill Holter writes and is partnered with Jim Sinclair at the newly formed Holter/Sinclair collaboration. Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to management of paper assets as he foresaw the Great Financial crisis coming. In retirement he and his family moved to Costa Rica where he lived until 2011 when he moved back to the United States. He was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present. Bill has retained a working relationship with Miles Franklin and can help with any of your precious metals needs including storage. He can be reached at [email protected]

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