Find Out If Bad Economic News Helps Rare Coin Prices Directly At Rare-Coin.org
February 15, 2010 – A steady supply of bad economic has come out recently, positively affecting both the spot price of gold and the value of the US dollar. It is common to wonder whether these events help rare coin prices. The Greek sovereign debt crisis, tightening of monetary supply in China, devaluing of currencies in various parts of the world; all of these weaken the underlying assets and push many people to the dollar or gold. The question to ask is this; do the same events benefit rare coins equally?
While the effect isn’t equal, there are similarities between bullion and collector’s coins when it comes to how their prices react. Speaking to gold in general, HSBC analyst James Steele said, "Gold's behaviour in non-USD-terms denotes underlying strength and may portend higher prices, especially if sovereign risks recede and the pace of the carry trade unwinding abates." Gold tends to react positively against any commodity that weakens, be it the euro, the dollar or oil. Because both bullion and coins react to changes in the spot price, both tend to rise on bad news.
Gold is looked at as a hedge against inflation and difficult economic circumstances. While bullion values are more volatile because they are so closely tied to price fluctuations, rare coins move a bit slower since the large portion of their value is tied to something other than the price of gold: namely, the quality of each particular coin and its scarcity.
Although gold price increases do affect collector coin values, they are not moved as rapidly as bullion, something which is not all bad. The differences in their price movements make it very desirable for investors to own both bullion and rare coins, allowing them to potentially profit from positive movements in both.
Shawn Penny
Senior Staff Writer - Rare-Coin.org
