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Thursday, March 12, 2015

Gold: the Disconnect between Bullion and Investment Objects

While the price of gold bullion remains under pressure you hear more and more how gold is just "another commodity."  You hear this from analysts who have something at stake in the argument against gold.  Many just want to appear "right" about the downdraft in bullion.  Others are engaged in puerile pissing matches with other analysts.

But those who follow and engage in the massive and ever increasing bull market in Gold Investment Objects have no doubt that gold exerts the same fascination over human beings that it has done for all of human history. Because although all historically important objects are increasing in value even as the dollar rises, gold objects are outpacing objects made of all other metals.

Take the George III coronation medal for example.  George III is a very popular King as he ruled over one of history's largest empires and he was the last King of America.

in gold with a mintage of 858  this medal in top condition sells for about $12000 and up.

In silver with a mintage of 800 this medal in top condition sells fo about $1200

If this were a discrepancy peculiar to this particular issue, that would be one thing.

But take this wonderful Claudius coin minted in 43 AD that depicts the Emperor-to-be, just after the assassination of Caligula, hiding behind the curtains in the palace window, where he was discovered by the Praetorean guard, and then hailed as emperor under their protection.

Now, there are no mintage figures for this coin, of course, but the gold appears more frequently in the auction archives  than the silver example. But for argument's sake let's say the number of extant coins is about equal.  Given similar condition the gold sells for about ten times the price of the silver.

Certainly the same is true for this Caligula aureus in top condition which sold recently for about $280,000 whereas the silver denarius in top condition though a bit more common, is still a condition rarity and sold for about $28,000

And take the famous Constantinian multiples or medallions that were issued to mark historic events.  The gold multiple of 7 solidi to mark Constantine's Jubilaeum is the most expensive gold medallion at over 750,000 dollars.  The most expensive silver medallion at 250,000 dollars marked Constans' victories over the Sassanians and Samartians.  Both beautiful, and probably unique- but clearly gold is prized more highly than silver.


Another interesting example of a considerably more common coin is the Brutus issue depicting three or four lictors on the reverse.  These are two different coins, of course, but the gold is somewhat more common than the silver and in top conditions sells for nearly double the price.

And while we're at it, is it a coincidence that the world's most expensive Investment Objects are most often made of gold.  And it's not that the gold bullion content adds the value.  It's the intrinsic value of gold.

What does that mean?  It means people value the material itself.  The Thing In Itself.  Res Qua Res. Ding an sich. 

So: to those who claim gold is just another commodity soon to be consigned to the scrap heap of history, I would say: don't bet against human nature, it generally prevails in the end.

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