Market Reaches Level of Exuberance

By Richard Giedroyc 

Are stocks overpriced, or are gold and silver in coin as well as in bullion format following the value of equities in tandem? Some sources are suggesting that gold and silver are moving parallel to equities due to those equities being overpriced. The record 32.9 percent decline in Gross Domestic Product in the second quarter appears to support that argument. Stock prices continued to surge despite this gloomy news.

Consider that, according to the World Gold Council, global demand for gold fell by 6 percent during the first half of 2020, but at the same time the spot price of the metal and coins of such form rose by almost 30 percent. Much of this demand was likely sparked by the coronavirus pandemic. During the same period, the Dow Jones Industrial Average rose by 40 percent, while the Nasdaq Composite Index increased by nearly 55 percent. Investment-grade coin and ingot demand rose in Europe and North America but declined in Asia.

Regardless of what may be behind the bullion and bullion-impacted coin market appreciation, the market looks “brilliant” for investor and hobby directed coins, pun intended. As always there are some price declines and areas that need to catch up with other sectors, but from the view of a hobbyist, all appear to be healthy and active. Once auctions and coin shows can once more be attended in person, it is likely that sales will become healthier. We have reached a level of exuberance, fortunately not a level of irrational exuberance.