How do you know when the market is ready to tank?

MrEureka

Everyone knows that the coin market is cyclical. Our last bull markets were in 79-80 and 88-90. Today's bull market is deja vu all over again.

The big question, of course, is how can you tell when the market is close to the top and ready to tank? Surely, many of us learned something from past cycles. Please share your insights!

joejeweler

When i'm ready or needin to SELL!

Seriously...those other bull market period for coins didn't have the "Registry" programs driving the High End of coin purchases. This one might surprise us all with it's duration!

Also......interest rates are so low right now traditional investments such as Bonds and Money Market rates are Scary! Stocks are driving people nuts in the recent past......so Coins are following another "Bull" right now......Real Estate!

Now if we could all get just ONE "multi-Billionaire" interested in truely rare coins...........watch the prices jump then! Bill Gates, Warren Buffet, or Donald Trump........you out there?

Joe T

SethChandler

When EVERYONE can't stop talking on how great the markets is. A 1963 Cent @30k is alot like a dot com at $200 a share

boz

Simple 2006

TheNumish

I wasn't around but wasn't there a coin show in 1980 when everything just stopped selling? It might have even of been a Central States. Heard one day everything was going nuts and the next no one would buy anything at any price.

When PCGS and NGC are grading a record number of coins and the demand stops growing. I think that's where we are right now. When all these coins hit the market and dealers start to dump them then prices will go down. I think a lot of enthusiasm has been sucked out with gold going back down. Also State quarters are old news and the excitement of Ebay isn't what it was.

Trime

Andy,
All bull markets end when the dealers become wheelers and the postman talks about the ways to get rich.
The coin shops and bourses are full to capacity, the auctions are attended by new faces, and the commodity makes the front page of the news.
The common becomes precious the prices make no sense and the doubters learn the wonders of previously unrecognized value. You throw up your hands and say that you will share in the wealth and buy things unwanted at prices strange. Two months later you realize it is over and once again you were a fool!

oreville

Average coin bull market does not last more than 3-4 years.

Andy, when you offer $100K for each of my patterns then I know the market is about to turn south!!!

P.S. I want to hear your detailed analysis about which patterns you do not like.

cladking

It will occur when the demand quits growing. It is often preceded by
a speculative blow-off with a rapid increase in prices. There are usually
lots of warning signs like extremely desirable coins having to be discounted
to sell. Dealers and collectors get strapped for cash and some will offer
coins at lower prices in order to buy other coins or pay bills. The "buzz"
at the shows becomes more of a hush.

The coin market tends to turn on a dime.

BillJones

When you can't sell a darn thing to anyone, but by then it's too late!

Seriously when you see large dealers rushing to dump some decent coins a reasonable prices you know something is afoot. I remember a few years ago when Heritage was dumping doulble eagles. You knew gold was headed for at least a short term fall.

Lakesammman

I guess I look at it more simply.

There is more information now regarding coin pops than there ever has been. We now know which coins are rare, which are common.

There are more collectors now than ever, both from population growth and new collectors drawn in by the state quarters program, etc.

Bottom line: Truly rare coins will continue to appreciate, no matter what the overall market is doing. There is tremendous pressure on rare, key date coins.

The common stuff will continue to languish.

Max

1 When people come up with more and more half brained ideas to make money in the coin business.
2 When dealers suddenly stop saying how hot the market is [like now]
3 When moderns start selling at crazy prices
4 When everyone has a pop top
5 When classic after classic goes back to the book [like now]

oreville

Common date wheat OBW cent rolls were selling for about $2.50 a roll in 1998. Now they are about $10.00 (often more). That is an increase of 300%. Where will these rolls peak?

dan1ecu

Just like the stock market, you can know that there's a bubble, but you can't know when it's going to burst. My guess is that when stocks start to perform better, people will want to sell some of there coins to invest in the stock market.

I'd also pay attention to unemployment numbers. If many collectors lose their jobs, we could see some selling. I hope this doesn't happen to any great extent...

oreville

Lakesamman: common wheat obw rolls are extremely common. Yet they have been among the leaders of this market in the past three years. They are certainly not langushing.Many common items are outperforming their rarer brothers and sisters.

But yes, rare, key dates can always be counted on to do well.

dragon

An exellent thread!

I think there may be a few signs:

1) When people who would never normally buy/invest in rare coins read that the market is booming and want to get in on it.

2) When collectors start buying coins they would never normally buy to take advantage of price increases.

3) When very common generic coins just "feel" overpriced.

4) When papers such as The Wall Street Journal or Investors Business Daily start to write articles on how 'hot' the rare coin market is.

5) When the Greysheet is a sea of plus signs and the end of pricing seems nowhere in sight.

6) When every long since retired quick buck artist is seen at major shows and advertising in CoinWorld

This bull market is different from nearly al other past markets in that usually the coin market excels during times of high inflation, high disposable income, high interest rates, and high bullion prices. This is actually a very selective bull market and probably has a ways to go for the truly eye appealing desirable pieces.

dragon

Lakesammman

I guess that's my point. There is no reason for the rolls and common coins to "lead" the market. There is no fundamental reason to do so. I would be very nervous if that's where my investments were located.

oreville

Lakesamman: I think those rolls are among the leaders of the market for the following reasons:

(1) 1/2 of the 300% increase is probably due to a correction of an oversold and underpriced scenarioo back in 1998-1999.
(2) another 1/4 of the 300% increase is probably due to the increasing scarcity of the obw rolls since well over 50% of the rolls have been broken up.
(3) the last 1/4 of the 300% increase is due to the increased demand due the hobby's growing awareness of the desireability of these rolls, and are buying them as they are desperate for new fresh material for breaking them up or for putting them away as is as well as the increased value of the underlying mint state cents of the 1950's.

I remember in 1998 when Virg the penny merchant literally gave away 200 of his unopened obw 1955-D cent rolls at $2.10 each to me because no one wanted them!!!!!!!!!!!

I bought them as they are fast becoming difficult to replace. The paper wrapping on the cent rolls are becoming just as desired as the coins within especially when a bank name or Fed Reserve member bank is shown on the outside.

michael

i think dragon sums it up well

but i guess only time will tell but i think within the next year or less there will be a major correction for some coins while others will hit new highs

and other SELECT areas of the market that are currently really not in demand/or currently in demand will see huge explosions

i think original toned coins are good expecially so if great exceptional ,monsters in general but there are siome series where monster toning the current crazy prices they are bringing have more than reached their heights

but i guess only time will tell



sincerely michael

Blackhawk

In the 1970's and early 80's, just about every kid that I knew in school had some kind of coin collection. When the 90's rolled around only the nerds were left collecting. It now seems that there is a renewed interest starting among the younger people that I know...partially because of the state quarter program, and yes interest is increasing because of exposure to things like those home shopping shows where they're hawking overpriced coins.

I don't think that coins are in for a big dump anytime soon. We're not in a market that's paying $300.00 for an average MS63 Morgan...and remember, we've had 20-30 years of wage increases since then. I remember when as a 13 year old, my Dad bought me a slick 2 cent piece for $10.00(at a time when he was making $4.00 an hour)...now that was when coins were at the top of the market.

If coin collecting regains some of the interest that it once held with young people, and the coins stay relatively inexpensive, I think that values for most coins will stay stable or slowly climb for a long time.

As a collector, the reason that I came back into the hobby about 3 years ago was because the prices were back down to a level where it was affordable to finish a set. I think that most coins are still affordable. If there are some outrageous prices being paid for common coins, that will correct itself, but the average collector is not going to sell out because the cost of a BU Roosevelt dime went from $1.00 to $1.50.

There is a point to be made though. We, as collectors and dealers can do the hobby a huge favor by welcoming people (especially the young) into the hobby with open arms. We sometimes lose sight of what this is all about...an enjoyable hobby that creates fellowship and in many cases, lifelong friendships. When the emphasis shifts to how much money can be made and we see dollars signs in every underhanded and unethical scam, then we are just hurting ourselves.

I won't visit my local coin dealers anymore because they won't answer my questions. They both are very aloof and act like your wasting their time because your only buying $10.00 or $20.00 in merchandise. And why should they when both have a steady stream of the needy and unknowledgable coming into the shops to sell their holdings for 2 cents on a dollar. In many cases we're just crapping on ourselves.

To make a short story long , The more that we patiently help those who are just starting out, the less we'll have to worry about market fluctuations. In that way, we're the masters of our own destiny.

Bill

sinin1

I do not see any big drops in the entire coin market soon -

Sure the top pop moderns will drop as more are made
some areas may make surges and retracements


We are at a fairly low bullion price for silver compatred to the last 30 years - nothing like dropping from 50 dollars an ounce to 20 in a matter of weeks.


We may be getting near a correction when coin people start bidding on baseballs signed by players on a team that went to Japan in 1944 (the entire team including Lou Gehrig) - for $4000, $5000, $6000, ...
with no idea what they want it for.

freeblue

Very interesting thread. Thanks for all the inputs.

I see a lot people saying what are the signs of top market. But most of them refrain from stating where we are now.

It all depends which kind of coins you are talking about. Maybe we have topped out on the moderns?

freeblue

dorkkarl

<< <i>Everyone knows that the coin market is cyclical. Our last bull markets were in 79-80 and 88-90. Today's bull market is deja vu all over again >>

what tanked in both those time-frames was NOT the coin market. in 79-80, what tanked was the bullion market, & in 88-90, what tanked was the slab market

K S

ER

If you believe PCGS Market Report & News, it's never going to tank.
Always "white hot, roaring, soaring" blah blah blah!!!!!

oreville

I think the modern coin market in quarters will peak within the next 18 months. But I do not see any major price correction just yet. A flat top. Why?

The new Jefferson nickel design will be gearing up as our aging statehood quarter program enters its final half of its lifespan.

Keep in mind that the SAE's have already peaked and dropped in value.

cladking

I'm still predicting that the states quarters won't top until 2007 or so. By then
the whole coin market will be on fire and moderns will still be leading the mar-
ket. The states issues will be fairly hard hit and moderns will get hit harder. By
this time the moderns market will be a much larger share of the total market, so
this will cause some losses even in the classic market.

Of couse there will be numerous signs of the impending collapse and most people
will completely ignore them. There can be no collapse when everyone is looking for
it because such people can't quit buying something that they never started buying,
or don't buy for ANY other reason.

MrEureka

In retrospect - I'm not exacting a market timing guru - one of the best signals for me has been when I find myself thinking about buying into a rising market that I've long rejected as overpriced. The day I consider paying a few grand for a common modern coin in 69 or 70, you should all start selling.

cladking

Sounds like you're still a few years away.

My timing is no better. Moderns were "supposed" to get hot 25 years ago! Go figure.

MrEureka

what tanked in both those time-frames was NOT the coin market....in 88-90, what tanked was the slab market

Karl -

I had lots of REAL coins (even by your standards) in slabs in 1990. Believe me, the coin market tanked. It wasn't just the plastic. Of course, I wish you were right about this. I could have cracked all of my coins out of slabs and avoided some big losses.

kieferscoins

Do you think now with the message boards, we will have a heads up or will it tank like before without anyone knowing?

Cameron Kiefer

ARCO

Many coins never tank. Key date and semi-key date coins to my knowledge have rarely dropped in price in circulated grades up to AU.

Both bull markets had two extremely potent external factors driving the prices up. The first was the great run up in gold and silver prices in 79-80. and the latter was the introduction of investors via pooled money in mutual funds dedicated to rare coins.

My guess is that the only real potential for a cyclical downturn would be the the modern high grade craze. Older coins pre-1920 or so are pretty much exhausted out and old original rolls turning up to skew the pop numbers would be scarce to nonexistant. The moderns have much more potential to have great population increases to bring down the house.

Circulated coin collectors can rest easy at night. PCGS registry set collectors going after common dates in the highest grade might want to keep their pulse on things.

Tyler

satootoko

<< <i>How do you know when the market is ready to tank? >>



You don't.

jeffnpcb

BECAUSE YOU ASKED THE QUESTION!! Apparent bidding away from eBay shows this is not reality! MS Lincolns in the teens and twenties as well as classics prove this wrong.

Blackhawk

Another consideration is that many collectible coins were taken out of circulation and melted in 79-80. There are less collectors now, but in many series, especially the 20th century workhorses i.e. Barber, Walking Liberty, Franklin, to name a few, there are less coins available now than there were in the 60's and 70's.

paigowjohnny

When somebody actually ponies up $150 for a full torchie....
<<sigh>>

BillJones

When dealers tell me, "I got a really good deal. I only had to pay three times "bid."

Believe it or not this sort of thing was said in the late 70s when inflation was at its worst. Not long after the this market collapsed (much worse than in the late 1980s) and a lot of dealers went into backrupcy.

IrishMike

No way to know when it will tank, I remember the 80's and 90's. In the long term true rarities will hold up but in the short run every coin is subject to a loss potential, bull or bear market. You overypay wildly and chances are that baby is yours forever or you take a big hit.

baccaruda

i think people are gonna try and exploit the novelty of the "full torch" thing until a market value is established. $150 is a little crazy considering that you could probably buy the entire MS Roosevelt set with the album for $120, and you might actually get a 52-P with a full torch.

keets

trying to predict something like this based on past circumstances and past collectors/collector habits is like grabbing at straws because so much has changed in the past 15 years that affects the hobby as a whole. as dorkkarl said, the 1980 crash was due to an artificial silver market. the 1990 crash was probably a result of the frenzy created at the start of the grading services. prices and available populations/grades of coins needed to stabilize after hype and collector/dealer madness shot them sky high.

there seems to be more information available today which gives a new collector or any collector for that matter an advantage not known when most of us started in the hobby. choices and selection are greater, also. as a whole, i think the "hobby" is smarter than at any other time. just the fact that many consider when it may happen should lessen the effect of any downturn in the coin markets. the U.S. Mint is busy helping keep interest levels high among newbies which helps make thing roll onward. if they keep things limited to a couple of commem programs per year and seriously consider new classic oriented designs things could be fun for many years to come.

i personally don't anticipate a crash or bust or tanking any time soon. just the same, i try to be cautious and pay attention to what happens with regards to prices for the issues that are really hot. they'll slow first with truely rare coins and key dates probably not slipping at all. as others have mentioned, when the big players notice something afoot it will only be a matter of time till we all hear about it.

funny thing about markets tanking, hardly noone sees it coming but usually everyone knows when it's happened!!

al h.

Cam40

There are advantages to both ends of the market spectrum.When its `in the tank`you have great buying opportunities.
On the other end,in a bubble market,you can sell for the more money usually.

Despite 9/11,exposed corporate greed and sagging consumer confidence , War and Terrorism,this coin market
looks nearly unshakeable and HASNT tanked really.
Had we not had any of those issues faceing us as a Nation,who knows what the coin market would be doing right now.

Seems about every 10 years theres a resurgence in coin interest.So I guess its going to be really hot in 2009 when they come out with the 100th year commem Lincoln...and possible the new Dollar design.

oreville

I seem to remember that the coin market also tanked in a smaller way around 1970??????????????

Seems to be a 10 year cycle developing here???

We also had a small peak in 1999 and a small correction in 2000-2001?

BigE

It doesn't really matter if you keep your collection forever-------BigE

agapaone

When the public at large finds out they were taken by outfits like the "Shout at Home" network.