Who got caught holding the bag in 1989?

Sunnywood

When coin prices plunged in 1989, who was sitting on all the speculative inventory? Did a lot of dealers go out of business? Did a lot of people lose their shirts? Would any one of them admit it today? How many collectors were permanently driven out of the market by their losses?

Just curious ...

Best,
Sunnywood

airplanenut

All I'll say is that I was 2... I ain't admittin' nothin'

orie

Another take from an old cat. This market is cyclical. At the start of serious downturn the more common product will be the first to lose its liquidity. This is the bottom dropping out. Then the rarer coins will drop like a rock. No liquidity, who wants to buy when the market has fallen six weeks in a row? The experts will tout, "rare coins will never die, that cheap stuff was never worth the money". Don't fall for this one!!!

This market is more stable and liquid then in the past. It's on real money, not borrowed, slabbed coins and ebay.

If you saw the post last week asking for ages of members. There were very few in the fifty, sixty range. Part of this could be they're out with a very bad taste of this business.

100proof1957

i suspect the coin funds and the big dealers ate a lot of it.
though joe 6 pack probably got nicked the lions share.
i likely ate a little,actually i know for a fact i ate at least a 1000 buks,but i did buy and sell over 50 k in coins that year.
my big loss was a 41 S walker in ms64 that was out for regrade when i sold everything else @ San Diego,by the time it got back the game was over !
the ex wife still has it !
it was a 1k coin then about a 100 now

Proof

Russ

I didn't lose a nickel.

Russ, NCNE

Russ

<< <i>my big loss was a 41 S walker in ms64 that was out for regrade when i sold everything else @ San Diego,by the time it got back the game was over !
the ex wife still has it !
it was a 1k coin then about a 100 now >>



I'll take all the MS64 1941-S Walkers you want to sell at $100.

Russ, NCNE

RegistryCoin

Collectors who got "burned" in the downturn are probably not contributing forum members today.
Dealers who also didn't do so well, probably don't want to even think about it, until it clearly happenED again.

majorbigtime

There was a character in SoCal named Jonahan who became a TV/radio personality and had a hi-volume store pushing "can't lose" investment potential of coins during the boom.

He went bust, and was rumored to have become a paper hanger (bad checks) before he went belly-up.

I wonder where he is now??

100proof1957

Russ,
havent checked the price lately ! (just checked teletrade for the last year,about 185 average)
think i cracked it out and sent it to PCGS for regrade,cracked it again and sent it to Hallmark,thats where it was when the music stopped !
in fact heres the slab !

cladking

It's always the same: It will always be the greedy who get burned and it will always be
the ones who go along with the crowd because "this time it's different". Some collectors
lost some money and perhaps a lot of money on some coins but it was those who thought
there was no way to go but up who took the brunt of the losses. They were buying coins
which were not rare or especially choice because they expected huge sums of money com-
ing in from Wall Street. The reasoning was that this money had to go somewhere and the
best bets were gems of obsolete type. Dealers were selling huge numbers of choice and
gem coins to people who'd been in the hobby only a short time. The grading services were
expected to make coins fungible since there would no longer be any question as to a coins
grade. The real world was ignored by most participants as prices were pushed still higher
by a market which would never exist. Eventually everyone was "fully invested" and there
was no more money coming in from the outside causing the market to implode. Some of the
newcomers owned nothing except a "porfolio" of over-hyped and often overgraded coins. Lots
of coins for which the investor made significant sums for often brought only ten cents on the
dollar.

Few local dealers were caught up too much in this as they were buying and selling all along.
Some might have large inventories but these were the exceptions. There were a few major
firms which failed however.

Bikingnut

I didn't loose anything. I think times are very different now. With easy access to coins via the internet, I think coins will always be popular and prices will remain stable.

haletj

I have a pcgs ms64 1941-s half dollar slab that looks just like that... er, I did but threw it away. The coin is in an album. I paid $220 for it, which was a huge deal for it is very sharply struck!

291fifth

Good question. I was involved with paper money at the time and didn't follow coins that closely. Inquiring minds want to know.

Russ

<< <i>With easy access to coins via the internet, I think coins will always be popular and prices will remain stable. >>



With easy access to stock trading via the internet, I think stocks will always be popular and prices will remain stable.

Russ, NCNE

roadrunner

I sold some key pieces at the top but also held back quite a bit of average material that got waxed in the downturn. I even bought pieces in late 1991-1993 when I thought things "had fallen enough."
Boy was that a mistake! Even at 50 cents or 40 cents on the dollar, the correction was not yet over. I still have a few reminders from that period that are still worth 1/3 of the orig price.

A large number of mid-range dealers got their butts handed to them.
I can think of 2 or 3 off-hand that owed Heritage money so they went to work for them to pay it off. Beavertown coin in New Jersey started going bellyup in 1990 but dragged it along until 1997. Old Elliott Goldman was offering guaranteed 90% buybacks at the peak of the market and you could just see how ridiculous that was. Anyone offering guaranteed buybacks...forever...is full of it. True collectors knew better than to be in the market past March 1990 but dealers who had to do business had a tuff time....the crack out guys especially. Most of them went down the tubes at that time not to return until 1995-1996.

roadrunner

mrearlygold

<< <i>

<< <i>With easy access to coins via the internet, I think coins will always be popular and prices will remain stable. >>



With easy access to stock trading via the internet, I think stocks will always be popular and prices will remain stable.

Russ, NCNE >>

BigMoose

Russ, point well made!

Cameonut

I think most of the dealers were dollar cost averaging and didn't take the brunt of the hit.

I do think the buy-and- hold collectors took a paper loss at this time - probably haven't got to the positive side even yet. I have a couple of pieces that I bought in '89 that have not seen the same pricing levels. But, keep in mindl, that there has been some grade-flation and they might grade a bit higher now. This would offset some of the loss.
Cameonut

pontiacinf

all i know is due to personal situation my holdings except a select few have been dispearsed at healthy $$ and Im not buying again until the bottom does drop....so Ill be filling the bag at others expense...not mine

of course my beloved jefferys (martys killer capital dispaly and 2 full books of bu&proofs) along with serioushigh grade jeffery rarities will never go anywhere, as well as my statehood proof reg set and sac reg set which is for a little one near n dear to me heart

fcloud

I don't know about other parts of the country, but here in the mid-west, people are out doing things and don't do too much with coins. But when winter returns the market here picks up. This is a year in and year out thing. I think January will bring out a whole new group of collectors as the most populated state in the Union gets its new quarter!

Bikingnut

With easy access to stock trading via the internet, I think stocks will always be popular and prices will remain stable.

(I knew there would be a wise guy out there somewhere)

Good point, but I think there's a big difference between stocks and coins.

Dennis
COWQ

jdimmick

I was still in school and a low budget buyer, so it had no affect on me!

MICHAELDIXON

I didn't have alot of inventory at the time. Prices, such as $500 for a common date certified MS65 Morgan kept me from putting alot of money in stock. But...when the crash hit, I lost around $65k.

tmot99

<< <i>With easy access to stock trading via the internet, I think stocks will always be popular and prices will remain stable. >>





Said with just the slightest hint of sarcasm?

aem4162

why did prices drop?

mrearlygold

<< <i>

<< <i>With easy access to stock trading via the internet, I think stocks will always be popular and prices will remain stable. >>





Said with just the slightest hint of sarcasm? >>




Sarcastic? Who me?

Tom

GOLDSAINT

Sunnywood,
One interesting side note here. I have had several PM’S the last few days, on my dealer market post, from people that had this warning, “if you think the market is beginning to turn down and you have coins on consignment with dealers to sell, get them back quick. I lost all mine in the 90’s turn down as dealers went belly up”

100proof1957

all i own now are some wheaties and my proof NGC registry set.

1957joe

I was on the sidelines at the time. I didn't loose a thing. Lucky I guess!

Shamika

Thank God I was chasing women instead of coins at the time. I had shelved my coins in 1987 and got back in around 1995. I never new what happened.

oreville

ttt

garsmith

In 89 I was collecting casino dollars- I didn't start collecting real dollars until 99

jmski52

I was mostly into Modern Bullion by then, and didn't notice much although I think that I bought a fairly nice Large Cent then as well. I bought this 1/2 ozer in '89:

OPA

<< <i>I was on the sidelines at the time. I didn't loose a thing. Lucky I guess! >>



Same here ... only purchased a few Mint products at the time...

Bayard1908

<< <i>With easy access to stock trading via the internet, I think stocks will always be popular and prices will remain stable. >>



Stocks have always been liquid. Until the internet, rare coins were not.

TwoSides2aCoin

Then... in 1990, in some remote little place in America, a guy started looking at his "new" proof set and noticed that there was no mint mark on this gorgeous looking, otherwise flawless red Lincoln cent.
This coin also happened to be Premium Quality for the year, and for the issue price of $11.00 he smiled and put it away. Thus, launching a new breed of collectors. All seeking dreams, and enjoyment in the hobby of coin collecting.


And the rest is history

SCDHunter

Every coin I owned in 1989, I still own today.

Yep, someday those 1971-s Ike proofs are going to be worth more than the $10 I paid for them!

wondercoin

The coins I was pursuing back then (highest quality 1934-58 wheat cents, Jeff nickels, silver Roosies and Wash quarters, MS Franklins, Ikes, all 1965-date clad, etc) - no impact whatsover in 1989-90 best I recall - most of the markets were still in their infancy stage. I did lose some money on the generic MS65 Morgans and Walkers I "diversified" into at the time. Overall, in 1989, if you had been pusuing /dealing coins dated 1946 and newer, I believe you did not get hurt very badly at all.


Wondercoin

PerryHall

I was collecting in 89 and my coin buying slowed waaaaay down since the coins I was collecting (US Gold) were becoming unaffordable with my budget so I was actually happy to see the market fall. By the early to mid 90's, every coin seemed like a bargain to me.

IrishMike

I won't say how much but it was significant and the major reason I went back to collecting crap and trash coins. It still makes me winch to even think about it. It reaffirmed what I already knew and that is you are never as smart as you think you are.

EagleEye

I was working for Elliot Goldman, Allstate Coin. He was playing the sight unseen bidding game and all of a sudden got his bids hit big time! The computer made "ding" sound every time a bid was hit and it sounded like a pinball machine. He got stuck with something like 300 MS65 Morgans.

Seeing that made me a very strong opponent for sight unseen trading. I hope it is dead.

He was buying 1909-S VDB's using his famous "I want them all" tactic. He had about 2 double-row boxes filled with MS-64RB to MS65RD slabs of these. I leaned they were not that rare then. I think he made out OK on these only because there was someone else who "wanted them all" .

SkyMan

Me. I was diversifying my assets, starting around late 1987, and could not believe how much coins were appreciating even in a given week. I was NOT a collector at the time, strictly an investor, but after a while I became a collector instead of an investor, (of course that's when I started to make money over the long hall).

Actually it was a REAL learning experience that kept me safe in other speculative markets at other times since then. However, I still have several coin that I bought back then that I've been VERY happy to have owned for 20 years(and yes, I'm quite sure I've made a handsome profit on them), such as (all grades are Rattler grades)...

PR64


MS63


MS61 (The shield is fully struck, the haze there is an artifact of imaging.)


PR65 (The white flecks in the field are an artifact of imaging, they do not exist.)

Fairlaneman

No bad taste from this 60+ guy who dumped everything he had in late 88. The market was not bothering me. It was the dealers that were grading everything Gem and asking moon money through 87 and 88. They forced me out and I stayed out untill 98 or 99.

Ken

BBN

I was an 18 year old HS senior more worried about getting some from my tramp ex girlfriend so I was OK.

cladking

<< <i>The coins I was pursuing back then (highest quality 1934-58 wheat cents, Jeff nickels, silver Roosies and Wash quarters, MS Franklins, Ikes, all 1965-date clad, etc) - no impact whatsover in 1989-90 best I recall - most of the markets were still in their infancy stage. I did lose some money on the generic MS65 Morgans and Walkers I "diversified" into at the time. Overall, in 1989, if you had been pusuing /dealing coins dated 1946 and newer, I believe you did not get hurt very badly at all.

>>




There was no speculation in these coins then and I don't think there's
very much now. A lot of the speculation was in gem dollars and walkers
but it extended to other series as well. While the price guides will say
that people in these areas were wiped out and still have huge losses,
this is very misleading. Real collectors buying Morgans in those days may
have paid too much for an MS-65 morgan but that coin might be an MS-67
today and he has a substantial profit. It was the speculators who could
be assured of mostly getting low end and common coins.

Raw moderns did get hit in '89. When dealers need liquidity they sell ev-
ereything that isn't nailed down and prof/ mint sets are the first to go.

Ikes and other moderns were mostly unaffected.

Raufus

Will the current situation be as bad as '89 or not? I know that there is no crystal ball, but I'm very interested in the opinions of forum members.

cladking

<< <i>Will the current situation be as bad as '89 or not? I know that there is no crystal ball, but I'm very interested in the opinions of forum members. >>




As someone already pointed out there is not a lot
of speculative money in the market as there was in
1989. Some erosion in value on in inflationary ad-
justed basis might be expected until the economy
recovers but a drop will occur only in overbought
and overspeculated areas for the main part.

EagleEye

:: Now sitting in Dallas/Ft. Worth Airport::

In 1989 the rise in prices was fueled by rising sight unseen bids. If you had the guts to take all offers, you could put out a high sight unseen bid and the market would magically rise with you. If you were pushing the prices higher than what anyone else (including your customers) would pay, you took a big risk. If you got hit with one or two coins, you could maintain your bid. If you got hammered (a real numismatic term from 1989) you had to pull your bid and the market would drop. Multiply that by the number of dealers with sight unseen bids and you have a precipitous drop in prices overnight.

I think of it kind of like a Bernie Madoff ponzi scheme.

Today the coin prices are not governed by sight unseen bids. They are derived from retail sales (CW Trends and PCGS) and dealer to dealer sight seen transactions (Grey sheet). If there is a softening of prices (and I think there should be in many series) it will come from weaker retail sales rather than weaker dealer buy prices. The difference is huge. One could drop overnight (dealer buy prices) and the other takes months to show up in the market (slower sales).