1997 Ends With Rare Opportunity in US Coin Market

1997 Ends With Rare Opportunity in US Coin Market

Analysts and dealers are predicting that precious metals may be set for a run as the year closes – creating unique buying opportunities in the precious metals market and in the rare US coin market. Silver prices were last above $6 dollars an ounce in May of 1995, when prices peaked at $6.14 an ounce, and many experts are predicting prices of $7 per ounce by year end – perhaps upwards of $8 per ounce by early 1998. Analysts point to the fact that silver is in its seventh year of supply deficit. The deficit is beginning to put pressure on the market – inducing higher prices. Behind the scenes, one group contends, "a syndicate" of bullion banks and hedge funds have been building up a large position of physical silver with the aim of squeezing the market. This has been done before. In January 1980 silver hit its peak of $48 an ounce when two Texas brothers tried — and failed — to corner the market. A unique buying opportunity also exists in the gold bullion market, according to commodity watchers. Although conservative analysts have adopted a wait and see attitude on gold – mainly due to concerns about central banks selling their bullion reserves – those bullish on gold point to the fact that the commodity has hit its virtual “price bedrock”. Gold cannot dip below $287 per ounce for any extended period – as this is the amount it costs to mine one ounce of gold. Prices lower than $287 will eventually result in a suspension of mining activities – freezing the supply and driving prices upward. “Gold is the bargain of the decade right now,” says one analyst. “For the investor who likes to buy at the bottom and ride the cycle back to the top – now is the time to enter the market. You won’t see gold at these levels again.” Many portfolio managers who are advising clients to take advantage of the opportunity in metals recommend that buyers make their gold and silver purchases in the form of rare US coins. Historically, coin prices follow metals prices – but in a rising market, coin prices rise more sharply than do bullion prices. “Scarcity is the keyword,” says one specialist. “There is a premium attached to coins due to their limited supply – and when the market moves, that premium becomes exaggerated.” When gold and silver prices increased during 1979 and 1980, rare coins boomed. Some collectable coins were doubling and tripling virtually overnight. “No one can predict the future,” says one market analyst, “but when metals begin to rise from current lows, those holding rare coins will see generous returns – and virtually no downside risk.”

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