Market Matters: Basal Values – It’s All Worth More

泉神贯注-大平

Market expert Vic Bozarth says building a set of PCGS-graded MS63 Peace Dollars, along with other strategies, may represent opportunities for those who have both numismatic and bullion ambitions.

By Joseph Ford - August 8, 2024
Original link: https://www.pcgs.com/news/basal-values-its-all-worth-more

Who doesn’t want to know what’s hot or get the inside scoop on the coin market? Bullion markets are in new or long-unfamiliar territory. What do today’s precious metals prices mean for coin collectors? During active bullion markets, some coin collectors fear the value of their collection has somehow diminished, especially when it seems everyone is chasing bullion deals.

Bullion markets continue to show strong, wide support. Your bullion decisions should always be based on premiums and timing. But how is this affecting rare coins?

Let me share what I’ve been hearing from the bourse floor… I’ve often written about focusing on value in all your numismatic or bullion purchases. There are factors, some of which many folks don’t recognize, that shift values before that move is recognized by the market. Currently, the market floor, or basal value, of so many numismatically related bullion items is also appreciating, but the market hasn’t necessarily caught up.

Let’s talk about rising basal values first, and then I will offer a tip you can employ to maximize the potential demand of your numismatic purchases well into the future.

Hot bullion markets, while they might siphon away some capital from rare coins, do not diminish the value of rare coins. The lack of interest or even press time for rare coins during a hot bullion market are transient things. The basal value of many of your rare coins is appreciating despite you not seeing it in relation to current marketplace prices.

The basal value of so many coins is dependent on the bullion value of that particular coin. While most coins have additional numismatic value above their melt value, the basal value is often dependent on the melt value plus a fair-market premium. If the basal value is rising with bullion prices, the overall value of your numismatic items is also rising. Indeed, the higher-grade items must move up, too, right?

I would argue that the market hasn’t caught up with the “real” value of a numismatic item in the scenario we are currently experiencing. Prices for many silver and gold coins, especially in better grades above the basal value, must increase, too. Especially if you have decided to sell your coins, knowing basal values in relation to their melt value is crucial on many issues. Is the offer taking into consideration the additional value of those coins and their higher-grade cousins?

Dealers have few qualms about paying premiums for great coins if they can find them. Recently, the dealers I spoke with all had the same sentiment. If I can find nice PCGS-graded rare coins, I can pay decent premiums because my customers appreciate the difficulty in locating nice coins. Two well-known dealers said they sold “most” of their new purchases from recent major shows almost immediately once they returned home.

One of the most effective ways a collector can maximize the demand their coins will enjoy in the future? Focus on value in terms of the spread between grade-based prices. Let’s face it. We all have to deal with a budget. You can maximize the potential of your coins by focusing on the coins most collectors will want and need for their collections.

I’ve always called this “buying the grade before the big jump in price.” In sheer dollar amounts there will always be more customers for a less-expensive example of a desirable issue. The additional benefit of focusing on those lower-grade coins is two-fold in that you can buy more coins and the higher demand on those more reasonably priced coins may be even larger in the future.

So many rare U.S. coins are much scarcer or rarer depending on their grade. For example, a complete set of PCGS-graded MS63 Peace Dollars is something many collectors can build, depending on their budget. The difficulty, and indeed spread, in prices is significant from MS63 to MS64, but quite dramatic from MS64 to MS65 for several issues. Some MS65 issues are priced multiples higher than their MS64 counterparts, and some MS64 dates are significantly more expensive than their MS63 examples.

In the long term, you will almost always benefit from buying the nicest PCGS-graded coin you can afford for your set. But, pragmatically speaking, I really like the better-date Peace Dollars issues graded just “before” the huge spread in price from MS63 to MS64 or MS64 to MS65. Invariably, while there is great demand for the highest-graded example of a date, there are generally a lot more customers for more reasonably priced MS63 or MS64 examples.

There are always buyers for scarce and rare PCGS-graded coins. Sure, they might have some interest in bullion-related items, too, but with increasing precious metals prices, your rare coin holdings are appreciating as well.

Whether you are buying or selling coins, market prices are all about demand—they always have been. It is your responsibility to make your buying and selling decisions wisely. You know what many wise coin dealers are doing with their bullion profits? They’re buying rare coins.