Market Report: Vintage Gold Coins Thrown Into Melting Pot (src: Coinage)
The population of classic Mint State-62 or lower-grade U.S. Double Eagle gold coins is shrinking due to the low premiums (amounts of money paid over the melt value of the gold) we have seen in recent months. With banking problems and other financial issues hitting Europe and South America in recent years, we are seeing more Double Eagles coming onto the market from institutions in those countries, as they seek liquidity at any price. Many of these troubled financial institutions have sold their Double Eagle gold coins to dealers for above melt value, and the premiums help the bottom lines of those institutions, as they replace the coins with bars containing equivalent gold. The dealers resell the better-grade coins and melt the more common-date, lower-grade coins. The result has been that the premiums over melt value for less rare Liberty head double eagles and Saint-Gaudens double eagles have dropped to near-melt or actual melt value.
Some dealers around the world are now melting their less rare U.S. Double Eagles in MS-62 or lower grades in order to sell them as gold bullion, which is often a more expeditious way to sell them. Given that there is a limited population of these coins minted 85 to 170 years ago, this trend is potentially good for future Double Eagle premiums in all grades, as these coins are now forever off the market after being tossed into the proverbial melting pot.