In the last two trading days, gold soared to $1220, then dropped to $1160. This might scare some people, but volatility is no surprise to those of us who have been involved in and studied the gold market for years. In fact, it is a good sign that current price strength is solid. When a market rises very quickly, it often falls at equal or faster speed. A more solid long term pattern is more like two steps upward, one step down. And that is exactly the kind of movement we have seen these last several years of this rally in precious metals. These dips in price are properly recognized as buying opportunities for the long term.

The most important thing to avoid is being so ensconced in the daily price movements that you lose track of the long term view. And the long term view has not changed. Economic uncertainty, out of control Federal spending and disgust with the Obama/Democrat policies grow more present in the minds of Americans. The dollar is weak and the nearly 13 Trillion in Federal debt and our total inability to stop it from increasing assures it will get even weaker over time.

Consequently, for most people, now should be a time for accumulation. However, if you are a seller for any reason, either for liquidity, for simplifying or upgrading your coin portfolio, or your age, the good news is that you can get favorable prices for most of your coins. This is because demand is strong not only for gold, but for key date rarities and even so-called “junk” coins. Demand should continue strong, not only because of market conditions, but because large coin companies have flooded radio, television and print with massive advertising, exposing ever greater numbers of Americans to the logic of buying hard assets. This, along with continued strong advertising by the US Mint, has helped boost trading volume for virtually all coin dealers, as they constantly need new product to feed an ever hungrier appetite for coins. “Buy” requests continue to out-number “Sell” notices on the Certified Coin Exchange, a ratio that seems to grow more and more lopsided as time goes on.

While strongest market demand now emanates from established buyers, more new buyers come into the market every day. If this trend continues, and I believe it will, increasing demand will likely send prices further upward over the long term, and possibly even in the short term. We have seen such movement with one bellwether coin, the MS-65 Saint Gaudens $20 gold, which has more than doubled in price in the last couple of years, easily out stripping even the powerful gains in gold bullion prices.

The MS-65 St. Gaudens aside, the focus on gold is starting to make prices of rarities and pure collectibles seem cheap by comparison. That makes them a good buying opportunity. This is especially true for Pattern Coins, Bank Notes, Morgan Dollars and, surprisingly, more common dates of 19th Century gold - IF you can find it. Rarities should lag the gold price for a while, but if history is a guide, they will at some point outstrip gold by substantial margins. Good deals are also available on common generic material, though its long term increase potential is less than that of the rarities.