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Gold breaks out of its misery

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This week it happened --what every gold coin collector has been waiting for since gold started sliding downward back in 2011-- a breakout and the start of a new trend.

Since 2013 gold has been in a trading channel tilted firmly downwards. This week prices broke out of this channel with conviction, which points to a change in sentiment. The breakout and change in sentiment is underlined by negative financial figures, companies' profit warnings and a generally a dull wider economic outlook-- which all has been covered in the media. Bullion dealers confirm that the demand for gold among investors is back with a vengeance.

What to expect now?

It's too soon to say what impact this change in sentiment will have. I'm not saying we will necessarily experience a bull market such as the previous one where gold went from $250 to $1900 in 10 years (2001-2011). But once thing is for sure-- now is the time to buy and hold gold in all forms, coins, bars, jewellery, anything you can get your hands on. And more-- get it fast because the most desirable types of gold coins for example will soon be sold at a considerable premium compared to today.

Recommended best buys

Victorian Shield backs in my experience has the best blend of collectability and availability. They can generally be obtained for around 20 % over spot price (this would buy collectable grades around VF), they are in demand all over the world and they represent some of the most exciting types of coins to collect considering the number of dates and varieties available. 

I have done a lot of research on the Victorian shield back sovereign, going through prices since the 1970s, and my reserach clearly shows an increase in demand as the price in relation to the gold price has increased during 40 years. See this graph below, for example, which shows clearly how sovereigns' collector demand is increasing as their value above spot price (this portion of the value is recognised as a measure of gold coins relative collectability) is increasing.

The scarcer the sovereign, the more incline in increase, as shown in the respective trendlines of the three examples. None of these are rare dates, but generally an 1847 is harder to come across in VF compared to an 1855 and an 1871 is often seen in good VF or better with the same price tag. I am currently working on a book on the investability of Victorian Shield backs, which will be publicised at some point. A free e-book version will be available later this year. Please contact me if you are interested in the e-book.

CLICK HERE to explore mixed dates Victorian shield backs


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