Gold Breaks Value Barrier
The gold market is glimmering—but for collectors, the shine may come with a catch.
Things may change by the time you get to read this market commentary, but as this is being written, gold has broken through the psychological $3,000-an-ounce barrier.
The spot price of gold may look great on paper, but how many collectors are really unloading their gold coins due to the high price of the metal versus how many are taking a hold position? The new higher prices may be more of an annoyance, as collectors now need to assess whether their future buying plans still make sense at this level. Dealers are concerned since whatever they buy at these new price levels has a lot of downside potential. For dealers, the position has to be from a sell, not a buy-and-hold position.
Costco’s consumers don’t appear to be phased at all. Costco continues to realize six figures in gold sales monthly. Their buyers are oblivious to any difference between PAMP Suisse Lady Fortuna 1-ounce ingots and 2025 American Buffalo gold coins, both of which they sell. These consumers have yet to face the realization that it’s a one-way street. Costco does not buy back what it sells.
So, is the new higher price of gold (as well as silver and platinum) a good thing or not? If you are a gold bug and ready to take profits, the answer is “yes.” If you are a serious collector planning to continue adding to your collection, maybe not. We don’t know if gold can continue at these values, but it wasn’t so long ago that we were surprised by gold breaking the $2,000 barrier. This is a good time to re-evaluate whether you are truly a collector or an investor.
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