Risky bubble in Gold Coins market: Eric Roseman

February 22, 2009

Commodity Online
NEW YORK: Eric Roseman, a veteran of the commodities and stock markets, on Friday warned that a dangerous bubble is coming up in the gold coins market especially in the United States as Americans are overpaying on American Gold Eagle coins by hundreds of dollars.

In a special report on how to invest in gold now while avoiding the huge mark-up on gold coins many dealers are charging, Roseman, Investment Director for the Sovereign Society, issued a stern warning to 'gold bugs.'

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Gold coin sales are at their highest level in 21 years. The yellow metal itself has surged 34% since November 13th.

But Roseman said no one in their right mind should pay double-digit premiums to get their hands on gold coins. Unfortunately a few bad apples are marketing these coins aggressively. These middlemen are making an absolute fortune at the expense of the general public. "Stop buying coins. They are catastrophically overvalued!"

Why is Roseman calling this a "dangerous bubble?"

Call it the "eBay factor." For the past several months, thousands of investors have been flocking to the popular auction site to bid on gold coins.

One of the most popular coins on the market is the Gold Eagle – produced by the U.S. Mint. It contains one ounce ($960-worth) of gold.

The problem is – you can't buy this coin for $960. Thanks to intense bidder interest and the soaring price of gold – some people are paying $1,300...$1,400...even $1,500 for these coins. In other words, they're overpaying by hundreds of dollars – contributing to a bubble that is destined to pop.

"This is absolute madness," said Roseman. "No one in their right mind should pay double-digit premiums to get their hands on gold coins. Unfortunately a few bad apples are marketing these coins aggressively. These middlemen are making an absolute fortune at the expense of the general public."

Roseman remains bullish on gold – as he's been for the past eight years. But instead of mainstream coins, he recommends investing in mining stocks, like Goldcorp (GG), gold bullion bars, and a specific kind of coin that trades close to its bullion value. Roseman recently released a special report – revealing how investors can now save up to $600 an ounce on gold coins – and avoid the huge mark-ups many dealers are charging.

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