Prices rising 10% a week??

MoneyLA

Ive been chatting with a few dealers over the past week, and more than a couple of them are talking about the red hot market and remind me of the time when prices were rising ten-percent a week, and suggest we might be about to re-enter that type of super-hot market. by the way, these weren't "sellers" but dealers interested in "buying." anyone else got the feeling? cheers, alan mendelson

Fairlaneman

In the last month some prices on Web Sites have just went crazy on Mercs. Decent Mercs on Ebay seem to be bringing some quite strong prices also. At this point I am almost priced out of the Market. I guess this is because the mid 80's is still remembered.

Sure wish a Crystal Ball was present and correct.

Ken

cladking

It should be remembered that the last time the market went so fast that
it eventually came down even faster. Yes, it does seem that a rapidly increasing
amount of money is starting to chase a rapidly dwindling supply of coins. The
big beneficiaries will be coins that have never been fully appreciated before.
These range from pop top Morgans which were generally only worth 8X or 10X
the gem price in 1989, to MS-60 1983-P quarters. Will this time be different?
Ask me again in a couple years. Certainly high grade coins don't have to be the
most important thing to large numbers of people, but they certainly are now.
This has been growing and growing and it is these types of coins that are get-
ting the attention now. While few are probably dramatically overpriced now,
exercise extreme care if you are considering investing in these markets. The
hobby has a way of chewing up investors and spitting them out and after a cou-
ple years of a rapidly rising market the risk could become extreme. I'd caution
everyone to try to keep a collector's perspective and to avoid mere speculation
wheter that's in Morgan dollars or clad quarters.






last sentence tweeked

dollardude

I'd like to throw in my two cents on this one. Yes, I agree that this is a hot market, and it may peak out at a 10% gain per week. In my opinion only, I think it will continue to climb for a year or two, then drop. I believe the rise is related to the recent decline in the stock market and the desire to invest in something other than stocks, e.g., gold, silver, and rare coins. I also believe the rise is collector-driven and the collector's desire to obtain original coins. So many people are cleaning coins that the supply of original coins is dropping, thus raising the demand and price. The reason I think the rare coin market will drop in a year or two is because the stock market is beginning to turn around, and the investor portion of the rare coin market will decrease. I myself don't really care -- I just collect for fun. I am fortunate to have started collecting when the prices were very low. Now that the prices have skyrocketed, I almost wish the market would go down!

Steve27

I have noticed just the reverse in high grade modern type coins (e.g. MS68 State Qs and Sacs are now sub-$30 coins). I wonder if there is a move from modern to classic coinage.

scher

interesting subject..steve do think that the moderns just got overhyped liked the tech stocks..or just that so many remain ungraded it has scared people away..why the steep drops...?
bruce scher

BNE

With the ultramoderns in PR70DCAM, some of the decline may be attributable to grade-loosening at PCGS. In the series I follow, proof Jefferson nickels, the most startling impact I've seen has probably been on the 71-S in PR69DCAM. For decades this was a key coin in that grade: only three of them up 'til about six months ago. Then, the loosening began. There are now SEVENTEEN of them in that grade. (More than some of the 80's and 90's issues in 70DCAM.) What used to be a $5000 or higher coin a year ago went for $320 on TT on Monday. (I was the underbidder at $300.)

At the same time, despite higher pops in earlier top-pop proof Jefferson coins (I'm talking about 30's and 40's issues), the prices seem to be holding up. The bids for some of these that are up for auction in Long Beach are encouraging -- the prices are holding for former pop 2-4 coins that are now pop 6-10 coins. . . .

pontiacinf

BNE i believe its not grade loosening, I think its higher prices chasing out higher grade stuff stashed years ago.

supercoin

10% per week??

At that rate a $100 coin will be worth $2 million in two years. I'd jump off at about $1 million if I were you -- don't accept any trade-ins, either.

Nysoto

At 10% per week the $22,000 1940 Lincoln Cent will be worth $303,160,000 in 100 weeks, less than two years - thats right $303 million.

BNE

pontiacinf: I don't think that someone had a stash of "primo" '71-S's stashed away, then submitted them for the first time as prices rose. the '71-S was a hugely expensive coin for the past several years and there was a gigantic incentive (especially if you needed one for your set) to make one in 69. The difference is, somebody decided to keep this a rare coin for a long period of time, then someone decided to let the floodgates loose. All the new 70s (which weren't given out for the longest time, as a matter of policy) can also be attributed to loosening. These were the same coins that were premium quality 69's before -- someone just decided to go ahead and give them the grade. The fact that a bunch of early 68s started to be made at the exact same time (when they were as rare as hen's teeth before) shows that a policy decision was made.

I wish it wasn't true, but I truly think it is. If one were to track the grade distribution of proof Jeffs made during 2000 through 2002, compared with the ones made this year, you'd see a bell curve that is noticeably skewed to the right for the later period, IMHO (I don't have the time to actually do this). These are not "better" coins that came out of a trove. . . .

dollardude

If you look at the CU3000 index, it has been roughly a straight line up at a roughly constant rate since January 2002. The 6 month moving average has also been roughly a straight line up at a roughly constant rate since May 2002. There is no doubt this is a hot market, but I don't see how the market can sustain this rate for very long. The CU3000 index includes all coins -- classics and moderns. If you look at just the 20th Century (modern) coin index, it too has done roughly the same thing as the overall CU3000 index. Proof gold is the only specific market segment that has lost ground in the last year.

coolkarma

<< <i>BNE: At the same time, despite higher pops in earlier top-pop proof Jefferson coins (I'm talking about 30's and 40's issues), the prices seem to be holding up. The bids for some of these that are up for auction in Long Beach are encouraging -- the prices are holding for former pop 2-4 coins that are now pop 6-10 coins. . . . >>



I must say I am surprised at how well the pop top proof Jeffersons are "holding": 1938 PR68 - $3,335; 1941 PR68 - $4715; 1942T1 PR68 - $4140; 1942T1 PR68 - $3565 (all prices including fees). I found these astounding prices They certainly are compatible with the notion that prices are rising very quickly

Richard

MoneyLA

Those of you who mentioned the astronomical price compounding at ten percent a week are indeed very correct about what you are pointing out. This is why runaway bull markets in any commodity cannot continue because eventually the prices of the commodities exhaust the availability of money to buy those commodities. There is a price inelasticity for everything.

When I report and comment on the runaway housing market in Southern California -- and especially when I speak to groups about the subject -- I often ask this question:

"Can you today afford to buy the house you are now living in at the price you would ask if you were to sell it today?"

Usually the answer from nearly all or all in the room is "no."

In Southern California home price growth has exceeded income growth by such a large extent that consumers have maxed out their ability to purchase a new home. Even those selling one home to buy another are facing a crunch where the home price inflation has exceeded their income inflation (which is probably under 3-percent).

Bottom line: the home price inflation ends, and if conditions force a sale then deflation is the result. A tough job market can trigger that deflation.

Now to coins: how far are we from the same fate? At what point does the coin price inflation outreach the ability of collectors to buy and when does the coin price deflation start its victious cycle of sellers who are forced to sell for economic reasons prompt others to sell out of fear of falling values?

Sorry, but I had to let the "economist" inside me vent.

cheers, alan mendelson

cladking

Your question is of course rhetorical, but I'll respond anyway.

Obviously there is little danger of anything advancing 10% weekly for two years. In '89
when the prices were advancing so rapidly it was really more that the advances would
approach these rates and even then it wouldn't include all the Morgans each week, there
was some cycling in and out of the limelight. This went on about a year and a half or so
at that time and did require some time to build to so torrid a market.

While the Morgans achieved unsustainable levels (perhaps like the S California housing mar-
ket), they did so by soaking up much of the available capital in the coin market. The modern
market is still very small. It is a tiny fraction of the size of the market for the older coins. A
rare, scarce, or common modern brings a fraction of the price of what a comparable classic
would bring. While I would not necessarily predict, and certainly wouldn't encourage specu-
lation, there does seem a significant chance that these disparities will diminish greatly and
will require a couple of years for the process. During this time I would expect some healthy
gains in the prices of the older coins. There are substantial amounts of new money flowing
into the market and I'm guessing that this will increase. There will be many hot series and hot
coins, but when this is over it will eventually include most all coins and likely exonumia as well.
No one should be in a hurry since the entire process will likely take about twenty years.