While at a show in the San Francisco area a gentleman came up to our buying center to enquire about a “current price” for the ungraded circulated Gold St. Gaudens $20 pieces he had in his pocket. Upon examination of the coins I explained that these were indeed circulated common date pieces and that they were trading at right around the melt value of the coin. At the time, that was about $1,475 for each coin. Clearly disappointed by this quote, he looked up at me and said “but when I bought these I paid a $200 premium over gold, what happened? I said, “what happened is that Gold has done exactly what you had hoped it would do when you were willing to pay the $200 premium over melt!” My next question of course; “what did you pay for the coins?” He replied “$550 each.” I then put on my best straight face and jumped on my soapbox. Even though he was in the profit by nearly 300%, he was still under the expectation that the “premium over melt” would always be there. I said to him, the coins you bought for $550 each have done everything you expected they would do all these years later, and yet you are lamenting about the loss of a premium? That premium is what you paid to “get into” gold at the time. Think of it like this. It was so damn apparent that these coins one day would be worth more than $350 each, that people were willing to pay $200 more for them just to “get into the game.” Fast forward 20 years and here you are with an item that you PAID $550 for and is now worth $1,475 and your “concerned” that your premium actually did what you paid for it to do? Stop worrying about premiums folks. They are just the equalizer’s between supply and demand, and as such are just trying to tell you one thing. The higher the premium, the higher the perceived return, the lower the premium means less people think it will triple again in 20 years. Premiums are not a crystal ball, or right or wrong even, they are just an indicator of sentiment. And 20 some years ago, the sentiment was that Gold was so undervalued you would be willing to pay $200 over melt. Today the sentiment is that we are not willing to pay $200 over melt because we are not so sure if it can do it again.