The Internet's impact on supply?

mr3holesinone

What impact do you think the Internet has or will have on the rare coin market?

Here's the focus of my question. With coins more readily available to more people than at any other time, are more coins being purchased out of the mainstream of the hobby and being pulled out of the market?

It would seem easy for someone to decide, "Hey, I want to collect a set of Peace dollars. They're big, silver and I only need to buy 24 of them. No, I can't afford a whole set at once but if I save up I can buy a real nice set in a few years time." A theoretical set slabbed in MS-64 would cost around $10,000, with two coins making up about 50% of that. That would be possible for a LOT of people to do, whether it's commems, Franklins, a type set or whatever.

Do you think it's possible for a significant amount of coinage to be taken off the market by various collectors over a few years time? I know that this is what historically we've called collecting but what about the newbie bitten by the state quarter program who has read reports about how well the coin market has performed against other investments? He puts a few thousand into rare coins, puts them in his safe deposit box and forgets about them when the market turns around.

Hope I haven't clouded my question too much, but if 5% or 10% or 25% of the coin supply should disappear in the next decade in this manner... What do you think?

ANACONDA

Great question.

I believe it gets coins into the right hands, faster and thus has a diminishing effect on supply.

It is quicksand to predict prices but i think the market, is strong and will be strong....and margins will continue to fall because barriers to entry has been eliminated.

I could never have become a dealer (or whatever i am) without the internet. The more dealers, the more competition.

(My theory with regard to eBay, incidentally, is if you build it, they will come.)

adrian

gmarguli

Replace the word 'coin' with every other collectible. Why will coin collecting become any more "popular" than any other collectible that is now easier to acquire?

Baley

I assume you're asking about the direction of aggregate trends, since coins as smaller groups are always in flux in and out of people's hands, as collections are formed and dispersed. I do not think the advent of the internet will in and of itself increase the average length of time a collector holds a given coin or group of coins. If anything, I would expect any given coin to trade more frequently because of the liquidity and upgrade potential than less, due to the communication facilitated by the web.

I think there will be a rather constant supply of coins basically, forever. they may gradually diminish very slightly due to fires, boats sinking, etc, but most of the expensive coins are here to stay, and those who own them know what they have. the only question is demand and how will that fluctuate. by shrinking supply, do you mean that the demand of the market, manifested by higher prices, will not coax more supply out of collectors' hands?

think about it, coins have been "taken off the market" ever since the've been taken out of circulation and saved. they always, always come back on the market someday, when the owner dies, or his kids do, or whatever. yes some just get passed on, some are in institutions like the smithsonian, but all the ones privately held, are really available for purchase, if you're willing to pay enough.

so how has the internet affected the supply/demand curve and price structure of coins? positively.

mr3holesinone

Greg: Well we are in a coin forum so that was my focus but you are correct. Baseball cards, Nascar stuff, beanie babies, civil war items, you name it, all could benefit from people being more able to find what they need to finish or start a collection. Coins have gotten coverage in the past as having an above average return by the experts in the financial marketplace. Then there's the HSN hawking coins all the time too (and probably doing more harm than good). Another reason coins, hopefully, will become more popular is that they are a tangible asset that hold value over time.

Adrian: The more competition you have the lower the margins will get. With the internet you have access to millions of customers you'd never have even if you set up at a major show each week. As far as what you are, why not call yourself a connoisseur?


Edited to add:
That's the kind of response I'm looking for Baley. My thinking is that pre-internet many people didn't have access to the rare coin market like they do now. Now it can almost be an impulse purchase, before you had to purchase a magazine then call a phone number to buy something you may or may not like once you received it. I'm simplifying a bit but that's what led me to my original question. If a 30-something buys coins and puts them away, it could be sixty to seventy years before they return to the market. I know we're heavily biased here since we're talking coins all the time, I'm just putting forth a question or scenario.

ARCO

I think that the internet will facilitate buying coins on a scale witherto unforeseen. Unless you live in a large metro area, one's ability to hunt for coins is greatly diminished. I live in an extended metro area of over 1.5 million and collecting barber halves would be mostly an impossible task if I were confined to searching just coin shops and shows in my area.

I do not know if the net effect will be less coins, but probably so if the collector base is greatly expanded. I know that I have personally sucked out hundreds of coins that I plan on hoarding till I die...or I until we get a better strip club in my area and I need some tipping money!.

Judging by how few nice midgrade barber halves exist I estimate that my two hundred nice halves constitute about 97% of the available original barber halves in existance, that have come mostly from the internet

Tyler