Are prices on good quality coins moving up as dealers only sell to dealers?
GOLDSAINT
Posts: 2,148 ✭
In reading Sunnywood’s thread this morning we have yet another round of complaints about this being a dealer-to-dealer market at shows, but is that all?
As you may have noticed by some of my recent posts, I am very confused as to why this market continues to make new highs nearly every week. As a long time businessman with many varying experiences and a long time student of economics, I just can’t get these numbers to crunch. The coin market seems to have already factored in inflation, and it does not appear that there are ten of thousands of new collectors buying better material in the last 2 years. The economy overall is fairly weak and still not out of the recession. Almost all other liquid, or semi liquid, investment type markets, stocks, bonds, gold, silver, bank rates, etc. are stable but down. The antiquities and art markets are stable or down. Even consumer buying is starting to move down.
I personally did a great deal of car traveling this year out of Texas, a long trip to Florida and one to Colorado, plus many weekend trips to large cites in Texas. Not only is this dealer-to-dealer attitude prevalent in shows, but also seems to be prevalent in shops as well as the Internet.
On each trip I would search out coin shops in local areas to visit. I was astonished by the lack of customer service or even interest by most shop owners in even showing their inventory. Many of the shop owners would just crumble if you ask to some better coins and they had to open the safe. In fact out of some 30 some odd shops I visited the only dealers that seem to act as if they wanted my business was a shop in Colorado Springs Colo.
I have also found this to be occurring more and more even on Ebay. Many times if I contact a dealer after an auction on a coin that did not sell, I get a response that the coin has been sold to another dealer. As we already know a very large percentage of major auction sales are also to dealers.
This is a very serious issue as it relates to the overall market and the upward movement of prices.
The question here is, are we in a market created by mostly dealers selling to dealers selling to dealers? Please don’t tell me that this cannot happen because every dealer needs to buy at wholesale and make a profit. That is certainly possible with a few weeks holding period as the wholesale prices continually moves up.
In almost every other transaction involving the sale of goods there is one wholesale transaction and one retail transaction before to consumer receives the goods. How much does the price artificially move up if there are three wholesale transactions and five retail dealer transactions before the consumer finally makes the final purchase?
I won’t bore you with volumes of quotes but here are a few from other threads?
“Here's the dirty little secret about coin shows.........most dealers attend the shows only to trade between each other.”
“The times that I do go to shows to sell coins (and this includes setting up at smaller shows), 98% of the material sells to dealers.”
“ many dealers just had tables with nothing in them while they were shopping the other dealers tables”
“ by the time I got there on Saturday most of the better coins had already changed hands between dealers, and everything was fully priced”
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Comments
bigger collectors here.
Not that this is a good ananlogy to the dealer-to-dealer coin sales, but someday there has to be an "end user", the collector. Theoretically, the market could thrive just on dealer-to-dealer sales, but practically it cannot. Like Yogi Berra sez, "in theory, there is no difference between therory and practice; in practice there is".
I believe "artificial heat" created by intra-dealer sales played a part in the beanie baby price run-up before the crash. It's like the bigger fool theory or a pyramid scheme, whoever plays last ends-up holding the bag!
On the other hand, I do not foresee a near-term crash in the coin market. To the contrary, we may be at the beginniing stages of a long bull run. In the scheme of things, I beleive classic rare coins (not the modern crap) are undervalued and could support price levels at a multiple of current prices. So the dealer-to-dealer sales any actually be prudent and logical as a percurser to the next leg up. But then again, "only the Shadow knows"!!
Here is yet another quote in this morning,
“I'd much rather sell to the public at retail than to other dealers at wholesale. But alas, other dealers make up 80% of my business at a typical show.”
I really have no idea how the Grey Sheets work, and how the published prices are moved, but I would assume the pricing information comes from the subscriber dealer network. I would also assume that if dealer A sells to dealer B for X and then reports the wholesale sale, and then dealer B sells to dealer C at X plus and he reports the wholesale sale, and then dealer C sells to dealer D at X plus plus and reports the sale, is an upward moving wholesale price pushing the retail price as well?
“Hmmmmmmmmm, reminds me of the story about the penny stock that a broker hustled to a customer. The customer first started buying Widget Co for 20 cents a share, broker called and said "it's moving up, you should buy more", so customer bought more at 30 cents, then 40 cents, then 50 cents, etc. 'till Widget was quoted at a dollar! The customer just kept buying and buying as the price went up and up. Finally, the customer called the broker and said "sell". The broker said, "to whom?". Seems that the customer was the only buyer--he made the market!!!!”
Major,
It certainly seems something like this, but with dealers doing all the buying.
I noticed the other day on the post about the crash of the 90’s that most of the people posting were dealers that got caught trading higher and higher, doesn’t that seem a little strange?
"only the Shadow knows"!!,
Well perhaps we can find out?
<< <i>
In the scheme of things, I beleive classic rare coins (not the modern crap) are undervalued and could support price levels at a multiple of current prices. >>
It might be pointed out that it is the classic rarities which are trading back and forth between the
dealers at increasing levels while most participants shun the modern rarities. It is these latter
which tend to be purchased by collectors and taken off the market for many years. Indeed most
of the better moderns go into strong hands and these hands usually belong to collectors rather
than speculators.
I always try to purchase Best Value Grade Morgans, $20 Libs & Saints and Classic Type Coins with high eye appeal that always seem to be in high demand if I upgrade a coin and ecide to seel my duplicates.
This type of discussion sounds too much like work to me
Stuart
Collect 18th & 19th Century US Type Coins, Silver Dollars, $20 Gold Double Eagles and World Crowns & Talers with High Eye Appeal
"Luck is what happens when Preparation meets Opportunity"
Great post. Dealer to Dealer trading has always influenced the market prices as does any trade within a market. With the perceived strong market the dealers are trading with each other at high speed because there is no fear of being the "Bigger Fool" stuck with the coin. The market is running at such a fast pace that coins are seeing multiple "Wholesale" (dealer to dealer) trades before landing in a collector's collection. With each trade bumping the price. Watch for this to continue until the dealers sense they can no longer flip the coins with ease and begin sensing they may be the "Bigger Fool". At that time the market will fall hard and fast.
And then, just maybe, dealers may begin to treat collectors as a valuable commodity instead of the inconvenience we are perceived as today.
The James A Stack specimen of the 1870-S dollar sold to a collector May 2003 for over $1M. It then sold to a collector 9 months later for almost $1.5M. The Amon Carter specimen of the 1885 trade dollar sold to a collector May 2003 for over $900k. It then sold to a collector 9 months later for almost $1.25M... how do these sales reconcile with the theory that only dealer to dealer sales are driving prices?
Roadrunner bought an 1870 seated dollar in MS65 from Legend a few years ago. A year ago he sold it to me for a 50% profit. How does this fact reconcile with the theory that only dealer to dealer sales are driving prices?
The coin market is a complex and wondrous thing. Certainly at any given time a dealer to dealer sale can be said to be raising prices. But the fact is that the vast majority of these coins are going to new homes and price is often a secondary issue. In fact, I would say the Registry effect is a much higher influence on the market than dealer to dealer sales.
If you'd like to test this theory, just bring me a nice coin I need for one of my sets and see how much the price guides really mean!
I went into a coin shop recently while traveling for work. I brought my high grade Dansco US Type Set. They had virtually nothing of interest in their display, so I asked about higher grade coins. It took a little prying, but finally the clerk (not the owner) said that they don't have anything higher grade unless I wanted certified. I said I would be very interested in seeing some coins! They had no certifieds on display. After the clerk started looking through my type set (mainly 60-64 grades) and made a comment about how nice it was, the owner of the shop decided to help. Once he took a look at it, we got into some conversation, he was more than happy to go to the back and pull out some really nice coins, unfortunately too nice. He told me that he mainly sells to dealers and the store front was more of an office to work out of. He hopes to get people coming in to sell. He doesn't care if he sells through the front, just to buy. He goes to the shows and sells and sells in large groups. So a couple of sales at a show and he is done. This goes to other threads about shows where the dealers are leaving early.
I'm afraid dealers are going to ruin the market in the very near future. Once things slow down a bit, then the big crash will happen. Smaller dealers won't be able to support themselves as things slow and start to dump. And watch the prices fall.
I think you are the exception, not the rule. And many of those collectors you refer to, including Oliver Jung himself, do not intend to (and indeed, many cannot even afford to) hold on to these coins for a very long time. I see the same coins appearing and re-appearing ... getting turned over and over ... in fact, your examples are quite to the point. Even great coins like the 1870-S seated or 1885 trade dollars don't stay put for long. That points to speculation. That points to buyers (even "collectors") not really being end users from an economic standpoint. That points to a frothy market.
The only thing that is supporting this market is that there is nowhere else to put your money. Stocks and bonds are listless and offer little returns; real estate is poised for a drop as interest rates rise. The dollar is too weak to invest overseas. Bullion has not been a play, despite the incessant crap published by goldbugs. When this coin market starts to go down, I pity the ones who are left holding the bag. Only true collectors, who bought the coins to hold them and enjoy them, will not be burned.
Until 2003, Legend, David Hall Rare Coins and others frequently referred to "the 1989 high." Doesn't everyone see what that means? It means it took FOURTEEN YEARS for the coin market to recover from its previous plunge. I agree that some things have changed, like the reach of the internet and the Registry program. But look out !! No commodity rises 50% in two years and just stays there. These aren't stocks with underlying assets and an earnings stream. These aren't even industrial commodities that have a use and a purpose. These aren't real estate with its many functions and intrinsic value. When this market gives up, how many years will we be hearing "The 2004 (2005? 2006?) high for this coin was ... "
Best,
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
Sunnywood's Barber Quarters (Retired)
This is true for me too.
Not really, because grading standards 'adjusted' a point for many coins.
The real reason prices are going up is because collectors are willing to pay more. There are multiple billionaires actively working on collections and accumulations of coins. There are multiple overseas buyers sucking coins out of the market. There is a multitude of somewhat wealthy specialists willing to pay what it takes to sock away that coin for their set that never seems to appear. And there is a large contingent of general collectors willing to step up and buy the undergrade that then appears on the market.
If all these people stopped buying, then prices would drop. But it isn't gonna happen anytime soon.
<< <i>TDN,
The only thing that is supporting this market is that there is nowhere else to put your money. Stocks and bonds are listless and offer little returns; real estate is poised for a drop as interest rates rise. The dollar is too weak to invest overseas. Bullion has not been a play, despite the incessant crap published by goldbugs. >>
A good point! The lack of attractive alternative investments has caused me to spend more on coins. and I suspect many others have reacted in the same way!
Or, even better, how about grade inflation slowing as the services have completed the big move toward using the full 70 point scale? How about a theory that the really nice coins didn't really drop in price at all, but rather their grades went up hiding the price increases and now that their grades have stopped going up, the increases are more apparent?
<< <i>Not only is this dealer-to-dealer attitude prevalent in shows, but also seems to be prevalent in shops as well as the Internet. >>
I know that many small coin shop owners will hold coins for dealers that regularly buy from them. These are usually the better coins that don't sell well locally because of price. These are dealers that buy lots of coins and probably make up the majority of the coin shops sales.
Virtually all the coins I sell are going into long term collections.
Dealers are not just trading with other dealers, but buying to fill want lists.
<< <i>Are prices on good quality coins moving up as dealers only sell to dealers? >>
No!!
There were billionaires in the 1990's too. They just had better things to do with their money than buy coins. I sense this market has more depth and breadth than the 1988-1989 market. But I still see speculation and froth. I see overly rapid increases driven by hype, and by everyone trying to flip coins for profit. How much of the market can be maintained by the billionaires at the highest end? Not sure ...
Best,
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
Sunnywood's Barber Quarters (Retired)
<< <i>That certainly is a positive, but it's not the only reason. How about the fact that many people have more money to spend now than at any time in the recent past? Or that the populace of the US is getting older and returning to the things that interested them as a youth? Or that coins have lagged other art forms for a long long time and have catching up to do?
Another good point. I also believe that many of the "baby boomers" collected in their youth and may rekindle their passion for coins as they enter retirement. Many are affulent, and could provide a big source of new demand IMO.
I think one reason I'm seeing the trunk [yes, you got stuck with the wrong end!
There's just an awful lot of money out there for high end stuff right now. Will that last? For a while.
<< <i>TDN,
There were billionaires in the 1990's too. They just had better things to do with their money than buy coins. I sense this market has more depth and breadth than the 1988-1989 market. But I still see speculation and froth. I see overly rapid increases driven by hype, and by everyone trying to flip coins for profit. How much of the market can be maintained by the billionaires at the highest end? Not sure ...
Best,
Sunnywood >>
There's definitely a speculative component to this bull market as has been pointed out
in this thread. But much of this speculation is based on the improved fundamentals
caused by buying by returning baby boomers and newbies. These collectors do comprise
the entire income range and are buying coins for collections. It would be surprising if there
weren't some speculation in the market under these conditions.
So long as the speculation doesn't get too far ahead of the market and cools before the
numbers of new participants peak then there is no reason that it must cause a set back
in prices.
There have always been J.P. Morgans, King Farouks, Eliasbergs and Norwebs ... and there are such collectors today, just as there always have been. Only a privileged few like yourself know who they all are. However, the degree to which that stratospheric level of collecting influences the rest of the market is unclear.
Best,
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
Sunnywood's Barber Quarters (Retired)
Even though the previous 2 down cycles in coins only lasted a few years, you have to take monetary policy into effect to see what is occurring. The environment created by the FED over the past 20 years has been very accomodating to stocks and real estate. Not so for coins. The government has gone along with this to the point of creating a country where 68% of the families own homes. It has been a major change. As long as the party for stocks and homes was out there, no reason to buy coins or PM's. It was manipulation at its finest. It will take some time from here to wring out the excesses. Coins, commodites and tangibles will be the rule for a while.
GoldSaint, if you have really seen the things you have stated in your initial post, then we are much closer to the end of the market than I would have thought. Art and antiques should be moving in the same direction as coins. It might be interesting to see when art and antiques fell out of favor in 1980 too. But I would expect that tangibles all track fairly close together (beany babies excluded of course). But dealers DO influence the velocity of trading and the net price of coins before they are firmly placed. The number of active dealers & speculators has increased since 2000 and it has surely had a strong effect on prices. A number of dealers break aways from larger firms at this time to strike out on their own. Same thing happened in 1988-1989. Those same people left the hobby are merged with larger dealers when the roof caved in. A large number of them are now back. All of this means more competition for the same coins, more $500,000 inventories to keep stocked, and higher prices.
Things are never totally different than in the past. There is no new paradigm because of the internet or state quarter demand. There are certainly positive changes that have occurred. But the driving force up and down will still be speculation, and a large amount of it is from dealers. Enough so that if you took it away immediately, there would be a profound effect on the market. But I also occur with TDN that we still have lots of inflation to account for and that coin prices have a ways to go yet. M3 that has been created over the past several years is just now showing the effects. The past 12 months have shown a 10% increase in money supply. While not good for the economy, it is going to affect coin prices. This is a much larger effect than any dealer trading.
roadrunner
TDN,
If you look in some of the Ebay stores of some of our better Ebay dealers i.e. snake, Stevens, Greattoning, etc. It is easy to see that these dealers are plowing their profits back into great coins with very high prices just waiting for the market to catch up. These are but a few that are visible, who really knows what the bigger dealers like Laura have put in the safe. I do think many of these dealers after more than 2 hot years can just stock and wait. This is of course up to them, but narrowing the market also drives up the price.
“Roadrunner bought an 1870 seated dollar in MS65 from Legend a few years ago. A year ago he sold it to me for a 50% profit. How does this fact reconcile with the theory that only dealer to dealer sales are driving prices?”
I think Roadrunner also collects these is this not right? Our very smart friend RR is always looking for an opportunity to make a good profit, but with his feelings about the coming inflation I don’t really think he cares if he sells or not.
rainbowroosie April 1, 2003
TDN made me an offer I could not refuse on my 1870 seated dollar. When I bought the coin from Legend I had no intention of selling the coin until I felt the market was peaking. To me the coin was of MS65 quality using 1989 standards and until we got back to 1989 pricing ($50K+) I was happy to keep the coin for several years. I also had a desire to own a gem MS seated dollar since 1988 but could never afford one and I never saw one I really liked. Unfortunately TDN decided to start doing a MS dollar set and I got a polite email one night stating if it could be sale. I declined as this was one now one of my best coins and a blue chip long term keeper. Another email or two ensued and I realized that maybe getting a 50% profit in one year wasn't so bad after all plus TDN was getting another coin he needed for his set.
It was more luck than anything that I was able to buy the coin in the first place by being at the right show at the exact right time, and then having TDN decide to start a registry set.
The money was just turned back into buying other coins. As long as they are nice, I'm not too picky on what series they come from. But you don't get hurt selling for a profit. I learned that the hard way many times over by not selling in 1990.
roadrunner
On this point, I disagree. The internet improves communication about and therefore liquidity of coins, and can shrink margins while broadening both the range of coins available for purchase as well as the audience for selling; I would not be involved in coins to anywhere near the extent that i am without the internet, and I am positive I'm not alone. My computer allows me to buy and sell with efficiency that would not be possible "the old way"
And the state quarter program is, in my opinion, the best thing to happen to numismatics since the circulating bicentennial program of 1975-1976. I believe the current bull market owes more to the internet and the state quarter program than most folks give credit for.
Liberty: Parent of Science & Industry
Dealers were being out bid almost every time.
All I know is, when I buy, I always compete against collectors. I do not see much dealer to dealer trading.
In fact, I have tracked many coins and can confirm they go from auction to a new collection (I can't stand it when another collector wins a coin I really want).
Mike
roadrunner
And I sort of wonder if a person who sells their coins after only a few months might really be just a speculator rather than a collector.
<< <i>
...The internet improves communication about and therefore liquidity of coins, and can shrink margins while broadening both the range of coins available for purchase as well as the audience for selling; I would not be involved in coins to anywhere near the extent that i am without the internet, and I am positive I'm not alone. My computer allows me to buy and sell with efficiency that would not be possible "the old way"
And the state quarter program is, in my opinion, the best thing to happen to numismatics since the circulating bicentennial program of 1975-1976. I believe the current bull market owes more to the internet and the state quarter program than most folks give credit for. >>
Excellent point. The internet and grading services also make it possible for the first time
for collectors to satisfy their need for quality. In the past it was almost impossible to put
together high grade sets because of the difficulty in locating the coins and the expense
involved. While some coins might be possible to chase down with enough dealers helping
in the hunt, this was not easily accomplished with coins which were not available in large
quantities and of lower value.
Putting together a set of silver Washingtons in MS-66 or Franklins was a Hurculean task
before the modern age. Now one can relatively easily buy most of the coins from their
living rooms and cherry pick the rest.
When we are planning for posterity, we ought to remember that virtue is not hereditary.
Thomas Paine
roadrunner
from the levels that seasoned dealers are comfortable with, then we are closer to the end then the beginning.
Inflation has been under reported by the government tampering with the index over several administrations.
The high debt level of both the national, state , local governments as well as individual debt is frightning. Most people
have diminished their ready cash assets and have drained most of the equity out of their homes. Short term debt seems
to be maxed out. Any serious downturn, after the elections, will cause forced sales of hard assets as people are forced to service
debt at any cost. In the uncertain future that lies ahead of us, cash reserves will allow survival thru the difficult period. Save the very
best of your collections and sell the rest to raise that important cash reserve. The economic cycle of boom and bust has not been revolked,
it hase only been delayed and to some extent, moderated. To be forwarned is to be forearmed. Be prudent, be cautious be careful.
Camelot
roadrunner
Economic indicators are easy to look up on the internet and I stand by my comments.
When we are planning for posterity, we ought to remember that virtue is not hereditary.
Thomas Paine
To compare apples to apples you first have to have a system where indicators measure what is really happening. We've had these discussions before. CPI, PPI, and Core CPI numbers are mildly putting it, messed with. Just the fact that 30% of the CPI is based on the increases of equivalent "rents" of your homes (when 68% of the country own homes) is absurb in itself. The BLS's jobs report each month bases 2/3 of it's data on "estimations derived from formulas" rather than real jobs created. That's right, they only count 1/3 of the actual jobs and estimate the other 2/3. That makes the accuracy +-200%. The number of houses sold is not based on houses sold but the number of contracts created. If you don't follow through on the contract it is not backed out of the data. It's pretty obvious overall how the stats are massaged.
roadrunner
previous thread on massaged CPI stats
Is this a falling gold market???
I was also at the ANR auction. I saw well over 35% of the bidders being collectors and investors.
It seemed that well over 65% of the winning bidders were collectors and investors!
It was standing room only with only 2 empty seats and numerous observers standing in the doorways.
It couldn't have been the free dinner afterwards as less than 1/2 of the bidders stuck around to enjoy the lovely dinner. Of course, the desserts (which I carefully avoided looked awesome).
Very well said, I think.
I had the unfortunate task of selling off all but a handful of my collection to cope with unemployment and its repercussions - ready cash was welcomed from a market that was very kind during a hard time for us.
We were quite lucky that we had the coins to augment severance and other assets.
This market is more stable and liquid then in the past. It's on real money, not borrowed, slabbed coins and ebay.
It's time for the old stock market joke.
Broker: Buy 10,000 shares of XYZ. It's going up.
Investor: OK
Broker: XYZ went up 50% today
Investor: Buy 50,000 shares
Broker: XYZ went up 100% today
Investor: Buy 100,000 shares
Broker: XYZ went up 200% today
Investor: SELL, SELL, SELL
Broker: To who?
My posts viewed
since 8/1/6
“I sat through a few minutes of the ANR Sale. I couldn't believe how many collectors were BUYING the six figure coins.
Dealers were being out bid almost every time.”
Bullseye, There is always a way to beat all the dealers, outbid them!
I have been trying a new approach to bidding the last few days as I have thought about who my real competition was. I have been looking up the current wholesale prices and adding 10% to 15% to that price.
Particularly on Ebay you would be amazed how many bids disappear.
This of course does not work against a dealer will to really pay up for a coin that he has a customer for, but it does eliminate bunches of the competition.
“At the start of serious downturn the more common product will be the first to lose its liquidity.”
Orie, maybe this is it, have you been reading all the posts by people saying,” I tried to sell my collection of more modern coins to the dealers that had signs that said I BUY EVERYTHING ,and he would not by mine”
Thanks to all, for all your every good Brain power, and opinions!
I asked a friend what was up with the morgans...he is a pure collector and has no investment strategy w/coins , just circ. stuff, but I look to him for advice because he has the touch...a wizzened prognosticator. He stunned me with his response to my question about the morgans so I will offer it to everyone else here with the hope that more conversation will occur, not so much with this part of the thread but within this general thread.
We in America are seeing the greatest transfer of wealth to have occured in the history of the world. The generation that gave us the boomers and won WWII are dying, now. They are 80-85 years old now and all they have accumulated with their work ethic and foundation in old values is now being transferred to their children...the much discussed "Boomers". The boomers for the most part, are well educated, self sustaining, and in the workforce. Their parents are leaving the boomers their wealth and it is not a few million dollars, it is in the hundreds of billions of dollars over the next 10 years and the transfer is not making a sound. It is not in the papers, it is not on wall street, it is not seen. Maybe it is the IR S has everyone quiet, maybe it's just that it is no bodys business. This is wealth is transferred directly to the people, no earnings statement, no 401K dispersement, it is property, liquid assets, cash! This is not theroy...just ask some boomers, I'm one and I got some and now is just the beginning of it. So, I'm not going to theorize about this but I wanted everyone to plug that into this equation we are working on. There is going to be a sustained infusion of cash that will last for the next 10 years +/-.
That is one of the main influences in the coin market now. There is going to be a sustained infusion of cash for nice coins, nice coins are about to become very expensive and as you know...the coins follow the money. Try and touch a nice coin right now...I'm seeing these 6 digit coins running around right now and there is money for them...or they would be $2,000 coins again. Now mind that these 6 digit coins are rare coins by any definition, there are very few of them and they are very rare but that money is there too. The stuff I'm looking at right now is showing some signs of pressure. My coins are not too pricey but very hard to find in the open market for good reason. The smart dealer response is take these nice coins off the market till the price comes to get them out again. But remember, I'm talking about nice coins, not exceptional coins. I'm referring to ms 62/3/4 level quality coins with a little bullion insurance policy behind them, It is kind of a no-brainer, especially for dealers with legs that can weather a little wait. I'm seeing stuff I want in the auctions and some of them are withdrawn or get shilled up or have high reserves but they are definitely going for the most money, the front edge of the market. But go to a coin show or a dealer lookin for nice stuff and..."sorry, don't have any of those". They are trading but not so as you can see...they are under the radar and they are going to stay that way unless the money comes to bring them out. Im seeing cleaned coins in my group, misrepresented coins in my group, mostly lower end near ms material that would go by the name of "junk" in the nice coin venues. The boomers will find most of the nice stuff, there are a lot of collector/investors in that group and they are not stupid...they have seen the stockmarket crash, the coin/bullion crash, the property crash...all seasoned investors with a lot of money that they didn't have until recently.
I will end it here for my part...hope to generate more conversation in this thread because it is very interesting and it does affect all us coin people.
Mike
roadrunner
Failing gold market? You be the judge.
I am not even going to try to paste any of your reply, as it is all very excellent. I for one am going to have to think about this for at least a day. The ramifications of your post are truly mind bending. Not only do I believe you are correct in your post about the huge transfer, but then will the market expand as coins are sold by children that do not care to collect, and what will the decline in the stock market mean to those that were planning on large gains for retirement? Will they buy coins or pay down debt and cut their monthly nuts, etc. etc. ?
Thanks Mike lots to think on
ly these coins will hit the market just about as soon as they are transferred to a new owner. This
process has already started but will peak later because many collectors sell off their collections when
they retire. The increased supply will likely just about balance out the increased demand. Of more
importance in this equation is the percentage of collectors in the older generation compared to the
percentage in the younger population.
The Baby Boomers have not been the "savers" that the Greatest Generation have been. Now the liquidity of the Greatest Generation is being passed onto the Baby Boomers with a temporarily larger sized Federal exemption from estate taxes which puts more net liquidity in the pockets of the Baby Boomers.
I have seen the Baby Boomers use some of the inheritance to pay off their mortgages and to buy collectibles.
The Baby Boomers were the largest collectors of collectibles the world has ever seen. Their parents were not into collectibles the way the Baby Boomers are!! The Baby Boomers had to curtail their purchases of collectibles for the past 10 years and were not large buyers until recent years since they did not have the liquidity of their parents.........until now.
After having the evening to think on your post, here are a few of my comments.
First I agree that a huge transfer of wealth is, and will continue to take place.
I also think only a very small amount will be in the form of better coins as I agree with Orville post in its entirety. I don’t think the last generation as a whole were collectors of high-grade collectables, and those that were coin collectors, like my father were more hobbyists, and not that concerned with investment.
As to Cladkings post I think he is right that many collections will come to market, and many new buyers will come to market, but I do not see how anyone could see how this will shake out until all of this happens.
Although I disagree with TDN as far as many dealers putting back some better coins waiting for prices to rise. I think that he is also correct in that not many dealers will put back coins for long term, say more than a few months, unless they are also collecting.
I also think Oreville is correct that the last generation were more conservative, paying more attention to paying down debt, and living within their means than the Baby Boomers.
Roadrunner and I are in the same camp as to what the next few years economically will look like. My guess is a long round of stagflation, and I also think that the stagnant part of the equation will change the plans of many boomers who will be forced to spend their inheritance on paying down debt, moving to warmer climates, putting back money for health care, and cutting down their high flying lifestyles. Many that might have come into the collectables markets may not as they are forced into reality by their retirement, and a much slower economy. Personally I also see other huge changes, first I think the stock market is done, and we may not see the large increases we saw in the late nineties again in our lifetime. Second I think there will be a huge shift in the real-estate markets. I think in the next few years millions of more expensive homes will be on the market in urban areas with no buyers, while warmer coastal, and rural areas will experience skyrocketing prices.
As far as your original post goes, I think without having a crystal ball that looks at least five years out we will all just have to wait and see.
For now, and back to my original question, it does appear that there are many more dealers in the coin market today, and those dealers are not only moving the market up but are also many times the main competition for collectors building their collections.
It is impossible to tell who your competition is in many Internet and other type auctions due to the non-bidder disclosures, but you can certainly tell on Ebay.
I tested my theory once again last night buying a high grade Buffalo for my type set.
Four out of the five other bidders were dealers at some level. My bid that was 14% above the wholesale price chased all of the dealers out of the auction, and I won the coin.
One thing I think we have learned here form every ones posts is that we collectors need to keep a very close eye on our dealer bidding competitors. If the dealer competition begins to slow down that will be an important signal that the market is topping out.
Link to 1950 - 1964 Proof Registry Set
1938 - 1964 Proof Jeffersons w/ Varieties
I hadn't considered the new coins coming to market as estate material but did notice the comment about classic coins and raw moderns...that does make sense just as it makes sense that those coins will be cast into the great sea as soon as they are transferred. That could/should mean more nice coins to come to market and that will affect the classic coin market, we should start seeing something there I would think but what it is that we will see is kind of just a guess but we are looking for something there.
I agree about the stock market being toast. The money has already been made there and it will be a while before you see true fundamentals of the corporations being reflected in the stock price...I would be much more inclined to play craps than put that money in the market because at least I know how to play craps and dice don't lie...but then Enron happened about 4 blocks from where I work.
I agree about the realestate markets...but that is a tricky thing to try and fathom because of the cheap money that is going to go away but surely the housing market is near the edge of being overbuilt like it was in the mid 80's. I look for more fall out here but that boomer money is going to move those households to better climates. In Vegas there is a 6 month wait for a new house to be built...and that is after you plunk down your earnest money so that part of the equation is certainly a reality. I am seeing that in Phoenix, Flagstaff, New Mexico, Texas and the like so that is certainly where some of that money is going to go.
After viewing the items in this thread I have to agree that indeed the collectors are pitted against the dealers in this one. Used to be the dealers were the ones the collectors went to for material but the dealers aren't selling to collectors like we were used to. Ebay/Heritage seems to be the great equalizer for this anomaly. Dealers have greater coin budgets than collectors (in general) but they also have to be much more cautious beacuse they can't be buying 20 coins at the high end thinking that they can sell the marginal stuff and sock away the gems for future scores, not when the collectors are sucking up all the marginal stuff (the 62-4's) from the net. I do agree with your observation about the net coins.
The things that we have working in our favor over stocks and other speculative investments is that we know the fundamentals of our coins...we know the pops, the price history, the grades, the buyers and sellers, and we know where to find the coins albeit a bit of a circuitous route to get to them (the net and bid boards). What I get from this discourse is that the net is going to play a bigger role in the coin market because that is the only level playing field for collector/investors to deal with speculative dealers. I still believe that the best relationship is going to be the dealer/collector collaboration. Having a good dealer ally is certainly the best of all worlds but that relationship is no longer a given. Once again, the one thing that we have working in our favor is that we know our fundamentals and they are not a boardroom secret.
Thanks so much for all the contributions to this thread...now let's get out there and find some nice coins!
Mike