Foreign buyers / dealers / investors of U.S. coins - a forbidden topic?

DesertLizard

Who are the major players in Europe buying US coins? Why do US dealers deal with them vs. other US dealers? Do they try to "corner" parts of the US coin market only to dump their purchases later when prices are up?

I am trying to fill in a few gaps in a story I was told and need help. I asked one dealer about it in LB and his eyes got big like saucers and he claimed he knew nothing, right!

PM me if you wish to keep your comments private.

CLASSICS

i think they should all sell...wizzed, artifical toned, buffed, phony, dipped, rusted, recut, bent, re-colored, and any other overgraded, over valued, over priced, piece of crap to saddam. when he finds out he was had, he would curl up in a corner somewhere, and have a nervious breakdown...another one bites the dust.

Askari

I'd be interested in hearing more, DL. First I've heard of it. Believe it or not, there are a fair number of Europeans who collect US coins, most as part of their "world" coin collection. The scenario you sketch would apply more to high-end silver and gold ... and there, the dealers are not who you should be concerned about.

A few years ago when Russian president Vladimir Putin began cracking down on those "oligarchs" and "mafiya" who had transferred so much wealth out of the country, there was a big push to launder said monies in more untraceable ways. The prices of higher-end silver and gold rose rapidly in less than a year's time (with no concomittant change in the fundamentals of silver or gold). European dealers I know couldn't get enough higher-end precious-metal coinage to keep up and I made very few purchases there to add to my German collection. This had tapered off, but it is possible that wealthy Middle Easterners are doing the same in anticipation of what might follow a US victory over Iraq. It wouldn't be the first time there was such a major move of monies in such a situation.

DesertLizard

A clarification or two.

I am referring to dealers, people who move ALOT of inventory, buying then selling in the $1+million range. These are not "collectors" but coin business people, "investors".

Second, they are buying/selling both at the high end as investments, and the low end where alot of inventory can be purchased over time [i.e. Morgan $] then sold retail to newbies.

Maybe when some dealers return from the show they can shed light on this.

truthteller

National Gold Exchange, Heritage, and a few other midsize US dealers CONSTANTLY sell huge amounts of US gold in Europe. They have offices there, mainly France and Germany, where they buy or sell large quantities of US gold. It's no big secret.

TRUTH

gsaguy

<<i think they should all sell...wizzed, artifical toned, buffed, phony, dipped, rusted, recut, bent, re-colored, and any other overgraded, over valued, over priced, piece of crap to saddam. when he finds out he was had, he would curl up in a corner somewhere, and have a nervious breakdown...another one bites the dust.>>

Where's Swimmer when you need him?

GSAGUY

Askari

Truth is right. Those are the biggest players, but there's nothing new to it. Sometimes the volume is stronger one way and sometimes stronger the other way, but it generally flows with price differentials and economic conditions.

Maybe you could layout more of the story you heard, DL?

DesertLizard

Truth, Ashkari,

This has nothing to do with Heritage. The mechanics goes something like this: US dealer partners with a foreign investor* and set up a "fund" of say $2-5MM. They then go out and buy alot of say Proof Sets, Proof Gold, etc. I am not talking about the modern junk 99% of dealers have in their cases. I am talking about pre1933 proof gold and early date proof sets runs.

There's more to the story than I can reasonably divulge here, sorry. Someone else who does know will have to fill in the missing blanks that I am witholding and the ones I don't know.

*I don't believe you can invest in coins however in this instance the foreign partner is truly an investor who has zero interest in "collecting", this is strictly a business transaction designed to make a profit.

Askari

Well, nothing is impossible, but I don't know that $2-5M is going to move the market much unless it's terribly tightly focussed ... and then you hit liquidity.

Not knowing all that you've heard, my suspicion is that you are catching wind of the Middle Eastern scenario I outlined above. They usually work through middlemen and have probably instructed them to transfer a lot of their soft assets into hard. Certainly, such expert middlemen would be aware that higher-end "old gold" has preserved or enhanced its value over the long run more than other areas; moreover, if you're moving a lot of money, it's less hassle to procure in less bulk. That would indeed tend to raise values, but whether they would drop sharply would have to depend on how fast they could unload.