Minting Money

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I'm reporting from the largest coin show on the west coast Friday. Hundreds of dealers are expected at the Santa Clara Convention Center for a show put on by Collectors Universe.

Gold is up 36 percent in a year.

The World Gold Council says global demand reached a 10-year high in 2010. In particular, demand for bars and coins jumped 35 percent in the fourth quarter, thanks in large part to huge buying by Chinese investors. Demand in the U.S. actually fell during that period, despite a spike in buying last November with QE2. But a lot of U.S. investors have started stocking up on silver instead, where the price has more than doubled in less than a year. (Track Gold Prices Here)

Then there are rare coins.

"That has just shot through the roof," says veteran collector and dealer Mark Teller.

"There's a very limited supply of good material, forcing market prices up." Particularly hot are Chinese gold coins. "A coin that sold for $1,200 two years ago could be selling for $25,000 today." He doesn't expect that to continue, but he does feel there's a new normal. "Probably the rock bottom right now (for gold) is about $1,250 an ounce."

Teller showed me a wide variety of coins, including a 1907 $20 U.S. gold piece which was discontinued because its high relief made it impossible to stack the coins. That $20 gold piece is now worth about $20,000. He also showed me a Russian 2-ruble coin with Peter the Great which Teller says sold for $1,000 fifteen years ago. It's now worth $25,000.

Despite these eye-popping prices, Teller says the premium between rare coins and bullion is shrinking. "What's happened is the rise in bullion has happened very quickly, especially this last jolt," he says. "The numismatic coins haven't caught up...(people) will pay $1,500 for a common bullion coin, but they won't pay $1,500 for a coin that weighs almost exactly the same that's legitimately scarce."

Teller thinks this lack of balance actually makes rare coins a better value now. Of course, he admits he's a collector at heart. "It's not about the money, it's about the collection." And he doesn't plan on selling. "The Romans collected the coins of the Greeks...we are just the caretakers of these coins. Nobody owns these coins forever."

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