Coronavirus Determines Supply and Demand

By Richard Giedroyc

The spot price of gold is at about $1,750 an ounce at the moment this commentary is being written, yet 1-ounce gold American Eagle coins are selling for as much as $1,900! What is going on?

Simply put, supply can’t keep up with demand. Part of the problem is the West Point Mint facility, which closed during mid-April due to concerns about the spread of coronavirus, only to re-open in a limited capacity later during the same month. This not only impacted 2020-dated gold coins but silver American Eagles as well. As Bloomberg News put it on April 27, “Retail investors can’t seem to get enough of gold during the coronavirus crisis, and they are willing to pay staggering amounts to get their hands on it.” This is only one example of the feeding frenzy that has hit the market for coins.

Not all coins that are selling for significant premiums are bullion related. Many collectible yet generally available coins both date or condition-wise are seeing increased demand. Coins that can be termed scarce to rare are likewise enjoying widespread interest. This is well illustrated by spirited bidding at recent auctions, even when due to distancing policies mandated due to the coronavirus, bidders may not have been able to view lots in person. Instances of new auction price records are appearing even as the stock market languishes. The current watchword appears to be ‘buy.’