New markets are difficult to gauge because they have no real track record. But one interesting market that is obviously tied to the gold bullion price is the low mintage collector gold market. I'm talking about the global central mints - I'd stay away from anything that is private mint - prinicipally because there's no guarantee that private mint gold is actually gold, or that mintages are accurate.
But the British Royal mint (and its client mints in the British dependencies), the Royal Dutch mint, the French Monnai de Paris especially are all issuing gold coins with mintages as low as 20 or 30 pieces up to several hundred pieces. Because all these mints are producing a myriad of issues every year, the premiums for these coins can often be very low over bullion when bought at auction at Heritage and Stacks. And because the US private investor is largely out of the market, and the Asian investors largely buy Chinese Mint issues, and British and European investors are largely strapped for cash right now, this market is undersubscribed vis a vis the bullion market where most high value institutional and ultra rich investors buy in quantity.
The neglect of a market makes it immediately interesting. And most interesting is that over the last 30 years of these issues, I've seen several issues attract a significant collector bid. Take the French mint Sower five franc gold issues from the mid 1970's issued in quantities from 35 to 120 pieces (pitured above). These low mintage coins could have been bought for bullion even fifteen years ago. Now they trade at 3-4 times bullion. That is a significant premium. The same can be said for some of the popular British mint coins based on reproduced masterpieces from earlier centuries: the three graces, the victoria gothic portrait, the pistrucci waterloo victory, all are relatively recent and already trade to 2-3 times bullion.
Now, will this continue into the future? When bullion is $10,000 dollars an ounce will these coins trade for 20-30,000 dollars?
That's very hard to say. Probably the premiums will tighten. By that logic bullion is a better bet than those issues that have already taken off.
But for those issues that still trade very close to bullion, the downside is very hard to see. When only 100 coins have been minted, in a global market with billions of potential buyers, some of these issues will become valuable.
Right now, the entire gold bull has been driven by central bank buying and the buying of the ultra rich. Obviously they do not care much about collector coins. It's too time intensive for those figuring how to invest billions and hundreds of billions. But enventually, as the cost of living continues to soar, and other more traditional investments cease to provide returns, it is natural that at some point you'll get a avid retail demand for gold. Then those coins whose designs are paticularly impressive in very low mintages could turn out to be highly sought after.
