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Poll: If the market crashed tomorrow....
rhedden
Posts: 6,621 ✭✭✭✭✭
In your opinion, if the coin market had a major meltdown tomorrow, which kind of coins would would lose the greatest percentage of their value? In other words, which coins have been driven up the most by the current bull market and therefore pose the greatest downside risk?
If you would like me to add a category, send me a PM and I'll try to put it in.
If you would like me to add a category, send me a PM and I'll try to put it in.
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Recall that in 1989, the coins that suffered the most were the most popular ones, specifically the ones that were targeted by investors and speculators: high grade Morgans, Saints, and proof type coins. If it were 1988 and I said that MS-65 Morgans were a bad investment and overvalued, I'd get blasted by dealers and collectors alike. But it was definitely true! So what's overvalued right now......?
Russ, NCNE
-YN Currently Collecting & Researching Colonial World Coins, Especially Spanish Coins, With a Great Interest in WWII Militaria.
My Ebay!
<< <i>Well what if it did crash, I know alot of you collect modern high grade coins, you all would lose tons of money. >>
Values would have to drop about 80% or so before I'd be in the red.
Russ, NCNE
havior in the market which could cause a market crash independent of out-
side factors. The only area which appears it could be susceptable to changes
in perception on a large scale would be high grade coins. This should apply
especially to high grade classics because they have such huge premiums in
slightly better grades. Whle a high grade modern might go for $1000 a high
grade classic will go for $50,000.
There are few possible internal causes for a market drop. One slim possibility
is that the huge numbers of collections coming onto the market from the aging
collector base could cause excessive supply. Of course, this too, would be a
problem primarily for the classics. While old time collectors do own a few raw
moderns, you'd have to look a while to find one with an extensive collection of
them.
A sudden decrease in demand also seems improbable. While many old timers
may believe all the newbies might wake up some day and realize they've been
collecting crap, this seems improbable in real life since peoples' attitudes and be-
liefs are not easily swayed. Other decreases in demand would seem to be more
likely to affect classics as well. It's not only the old time collectors who are aging
it's also the many millions of returning baby boomers. The oldest of them are be-
ginning to retire now, but this shouldn't be a particular problem since most of them
still have small collections.
Neither dealers nor collectors seem to be over stretched in buying coins. They are
not buying them for appreciation, they are buying them for stock and for collec-
tions. These conditions are not condusive to a sudden collapse.
Outside factors could always cause a collapse in any area. Soaring interest rates,
inflation, recesssion, and even bond problems could spill over into the market. In
this case it would depend on which coin collector demographic is hardest hit. But
one thing to keep in mind if you're just waiting for some sort of outside influence to
topple some market segment is that the hobby enjoyed its greatest growth ever
during the great depression. This is when it became a hobby for the masses and
the coins in circulation were scoured for rarities. Such an event, heaven forfend,
might have a long term benefit for the hobby.
If the market were to crash it would likely be the speculative and common
coins which suffered the greatest drops.
<< <i>
<< <i>Well what if it did crash, I know alot of you collect modern high grade coins, you all would lose tons of money. >>
Values would have to drop about 80% or so before I'd be in the red.
Russ, NCNE >>
Is that how valuable your stuff is.
-YN Currently Collecting & Researching Colonial World Coins, Especially Spanish Coins, With a Great Interest in WWII Militaria.
My Ebay!
I saw that thread from the "alleged" lawyer ( lightweight really) who bought a piece of currency on ebay. People like that will be lost. Again, no loss at all to the industry.
Rgrds
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
in perception on a large scale would be high grade coins. This should apply
especially to high grade classics because they have such huge premiums in
slightly better grades. Whle a high grade modern might go for $1000 a high
grade classic will go for $50,000. "
I disagree, a good reason for a crash would be a lot of people having to buy gas for the car and/or oil for the home heating system at very high prices. This is the type of circumstance which hurts the little guy but has no affect on the weathy who by the high grade classics.
<< <i>"The only area which appears it could be susceptable to changes
in perception on a large scale would be high grade coins. This should apply
especially to high grade classics because they have such huge premiums in
slightly better grades. Whle a high grade modern might go for $1000 a high
grade classic will go for $50,000. "
I disagree, a good reason for a crash would be a lot of people having to buy gas for the car and/or oil for the home heating system at very high prices. This is the type of circumstance which hurts the little guy but has no affect on the weathy who by the high grade classics. >>
It's not the grandmother putting states quarters in an album for her grand
children who is fueling the prices for high grade moderns. She is driving this
market but it's mostly wealthy individuals who are buying high grade moderns.
Yes, they are generally affordable to the little guy too, and certainly there are
some collectors of this material who are not especially wealthy.
While many middle class people are over extended financially, this really ex-
tends quite a way up into the wealthier classes. Higher interest rates and
higher gas prices will likely crimp many budgets directly or indirectly.
Again if outside factors were to cause a drop, the sector of the market to be
most affected would depend on the specific outside factor. Personally I think
it's improbable that this would occur but if we had stagflation as you suggest
then you're probably right that high grade classics would be relatively immune
from losses tied directly to this problem. The modern market would likely suf-
fer a decrease in its growth rate and higher priced coins could come under some
stress.
I saw that thread from the "alleged" lawyer ( lightweight really) who bought a piece of currency on ebay. People like that will be lost. Again, no loss at all to the industry.
Rgrds
Tom
Got to agree with you on this one Tom ... it would shake out the "players", and that would be no great loss ... some of these new wanna-be's sure are something ...
I'd say the high-grade moderns would ultimately take the biggest percentage hit ... but high-grade common's and maybe some better's ... even in some of the more classic series could get hit pretty hard. If the money get's tight again ... sans 89/90 ... who's gonna pay 15x for a point?
“We are only their care-takers,” he posed, “if we take good care of them, then centuries from now they may still be here … ”
Todd - BHNC #242
and it sets us apart from practitioners and consultants. Gregor
<< <i>Keep those votes coming... this thread is largely meant to benefit new collectors who weren't around during the 1989 market crash.
Recall that in 1989, the coins that suffered the most were the most popular ones, specifically the ones that were targeted by investors and speculators: high grade Morgans, Saints, and proof type coins. If it were 1988 and I said that MS-65 Morgans were a bad investment and overvalued, I'd get blasted by dealers and collectors alike. But it was definitely true! So what's overvalued right now......? >>
<< <i>Got to agree with you on this one Tom ... it would shake out the "players", and that would be no great loss ... some of these new wanna-be's sure are something ...
I'd say the high-grade moderns would ultimately take the biggest percentage hit ... but high-grade common's and maybe some better's ... even in some of the more classic series could get hit pretty hard. If the money get's tight again ... sans 89/90 ... who's gonna pay 15x for a point? >>
History always repeats itself. If in 1988 you had warned everyone that the market was very
speculative and dependent on money coming in from outside sources which would destabilize
it even further, you'd have gotten blank stares. Almost everyone was on the gravy train and
they all figured it could go on forever. Collectors were tripping over one another to buy what
every other collector was buying since there's always safety in numbers. Oh sure, it's a great
way to get burned on investments and speculations but you can always commiserate with one
another when the market tanks and no one will call you a fool.
Today a few people are collecting coins which have never before been collected and it seems to
surprise some people when the prices of the rarities increase many fold over their "historic" val-
ues. Perhaps the historic value merely reflected the fact that there was no demand. Perhaps
once people learn that these are real coins and one can have real fun collecting them, there can
be no way in which they can return to their historic values. Perhaps, just perhaps, they will con-
tinue to grow and continue to lend huge support to the classic coin market.
But, of course, if these ever did get speculative interest then the poll results would be just the
opposite. Everyone would think moderns are the bedrock of the market and they would be trip-
ping over one another to buy the latest hot coin. They'd be warning all the newbies about the
dangers of worn out old classics.
For future reference; if this occurs then just dump all your moderns and buy any old coin you can
find.
<< <i>I disagree, a good reason for a crash would be a lot of people having to buy gas for the car and/or oil for the home heating system at very high prices. This is the type of circumstance which hurts the little guy but has no affect on the weathy who by the high grade classics. >>
I for 1 Sir will never sell for heat or Gasoline to run an Auto. I will burn wood and walk before I sell my hoard
<< <i>Real simple answer: which ever series was the most hyped. Moderns will by far have the steepest downside (IMHO). No one can prove to me there is a real secondary whoelsale market base for them.
Dealers LOVE to make them, not buy them made. Thats the backbone of long term survival. >>
The hype has been found.
Just like the classic coins in this pool are divided into many categories (with MS Morgans being viewed entirely differently than, say, proof type), the modern market is equally as diverse. For example, a MS Memorial Cent with a mintage of billions of coins is nothing like a 1995-1996 Atlanta Games $1 Silver Commem coin (I discussed the Tennis and High Jump $1 coins the other day with a mintage of 15,000-17,000 coins - lower than many of the most sought after classic Commems) or even a Swimming Half Dollar Commem. A modern MS Jeff nickel in high grade is nothing like, say, a Jackie Robinson $5 Gold Commem. "Great" moderns show strong demand from both the buy and the sell side while "run of the mill" coins (such as common date PR69's) show little demand from the buy side. No different than the "classics" - these days you can hardly give away the "couple grade under" classic Commems for anything other than discounted prices - the coins simply turn and turn from auction to auction, while the "great" classic commems and color coins set record upon record. Etc., etc., etc.
Wondercoin
P.S. The current pool essentially reads to me - 58% moderns; 42% classics (which are simply divided out while the moderns were not).
what a wonderfully simple post which explains a lot to an open mind!!! at 58% vs. 42% it seems that we feel the whole market will suffer in a downturn. you also pointed out several modern issues which already command premiums-------please stop!!!
you really nailed it with your comment about lower graded Mint State classic commems. for many issues, the MS62-64 coins are a bargain because everyone's whipped up in a frothy frenzy over the MS66-68 coins. it also happens that many of those same whipped up collectors/dealers are the same hypocrits that just love to crack on high grade moderns. i see no difference in the two segments, both are driven by the same forces.
al h.
We are very fortunate to have so many great tools at our disposal that were not available in 1990.
Our great host has provided us with weekly charts giving us basic information about the market, and the Internet has changed the complexion of buying and collecting to the point that it no longer resembles any past markets.
It is my belief at this point in time that we are in a long-term bull market that may continue for at least the next ten years. In addition we are no where near the tops of the 90 market and may very well exceed those markets before the market stabilizes at very high levels.
First I believe that the number of collector/investors that are currently estimated today at 100 to 150 thousand will double in the next ten years.
I think that our perception of the value of many coins is that they are getting very pricey, but using the CU 3000 to analyze the market, there is no adjustment for inflation and most if not all sectors are very undervalued.
The 2004 market for modern coins is less than half of what it was in 1989 and adjusted for inflation it is about one third of what it was.
The Morgan and peace dollar index is 32% of its high’s and adjusted is approximately 25% of its high.
All other index’s are also down by nearly two thirds.
I do believe that dealers are pushing this market to a much greater extent than a few years ago, but I also believe they are being much more selective. I don’t believe they are speculating in either Moderns or Morgan’s, or any other specific class for that matter.
What I also see is the typical push to buy into something of hard asset value across the board. There is a huge amount of paper out there pushing into all hard asset markets, and away from paper markets.
I also see very different types of buyers. Ten to twenty times the amount of collector/ investors today compared with the last bull market that have very deep pockets. These people will not have to sell anything in a slowing market or even a collapse.
Rather than seeing drastic drops in many areas of the market over the next few years I see many sectors taking breathers waiting for new money and credit to arrive. Yes credit, because one other thing that was not available in the 90’s market was middle, upper-middle, class people with $25,000 credit cards.
What I see rather than substantial drops in the market is a very short supply of good coins the next ten years, and regardless of my post on Laura’s and TDN sales of half million-dollar coins, I believe we will see more of that, and not less.
I also believe that many collectors of today selling their high-grade collections will look back in 5 years and see that they sold way to early. Many of these very large, older collections have been, and are coming to market, but how many are left?
It is my belief that once these collections are dispersed to the very deep pocket guys of today what we will see coming out from the upper middle class collectors will be much lower grades, un-slabbed cleaned material etc.
We are already seeing many of these coins come into the market and the prices are rising.
Have the TPG’s taken the fear away from many new collector/investors that will come into the market the next ten years? Absolutely
Are there billions of more paper dollars in the U.S. economy than there were in 1989? Absolutely
Are many of the standard investment areas i.e. stock markets, real-estate markets etc. already past their peaks and over valued? Absolutely
Do many collectable coins today have a relationship with Gold and Silver which are also inflation hedges? Absolutely
Are we now seeing huge transfers of wealth from the War generation to the baby boomer’s, most of which is tax -free? Absolutely
Will the number of collector/investors in the market today double in the next ten years? Why would it not?
Do you have time to fill those holes? Will this market double in value in 12 months?
Yes you have time if you are persistent, and no the market will continue to move upward over the next several years raising all boats.
Keets: You are the 2nd collector who has asked me to "stop" this week.
Hey - what do you know - it is now moderns 51% and classics 49%
Wondercoin
Most of the market, while hot, has been much more orderly than in past bubbles. I would guess the pullback might also be more orderly and not as steep as in the crash of '89.
As long as the top 3 MS Ike collectors stayed involved, the values on the top coins wouldn't change much.
-Khayse
<< <i>Moderns...
Dealers LOVE to make them, not buy them made. >>
So do some collectors.
Russ, NCNE
"These people will not have to sell anything in a slowing market or even a collapse."
<< <i>I think *any* common coin in hypergraded conditions -- modern or not -- are setting up for the hardest fall. I was torn between picking the moderns and MS-65+ common-date Morgans.
Most of the market, while hot, has been much more orderly than in past bubbles. I would guess the pullback might also be more orderly and not as steep as in the crash of '89. >>
Ziggy29: Good points. This is the point I've been trying to make. The market is high grade
to a large extent. Yes, all coins are increasing in value but much of the interest and the price
increases are in all the high grade coins. Even rarities are bringing premiums in high grade
now.
While I don't believe this market is in real danger certainly if there were a massive change in
collecting these could be more affected. It seems to be actual collectors paying the premiums
so there may be little danger. This market is probably the result of the natural desire of collec-
tors to find the best specimen available. This is really possible for the first time because of the
internet and third party grading. Putting together high grade sets of something like Franklin
halfs was a massive undertaking before recent times. It was also extremely expensive since
the only viable way to do it was to go through rolls and rolls of the coins. These were expensive
and difficult to locate in many cases.
Today it's a simple matter of consulting a few online price guides and cruising ebay.
While this market may appear on the surface to be unstable or unsustainable, there is little chance
of any real change in the structure and while our nature could go back to weighting quality a little
less, we'll always seek good quality however it is defined.
JC: The pop on the 1930(d) Lincoln cent in PCGS-MS67RD increased from 2 to 6 in a short period of time earlier this year and the retail asking price dropped from $22,500 - $25,000 TO around $8,000 - $9,000 OVERNIGHT. Let's just say a pop moving from 5 to 29 would likley greatly impact any market. Disingenuous to tie it into only moderns, as seen in my early Lincoln cent example IMHO. It took (4) coins in my Lincoln example to adjust the price nearly 67%.
On the other hand, (4) brand new 1909(svdb) PCGS-MS67's might have -0- impact on the market as the coins could possibly be gobbled up instantly. Same with moderns - if I got in (4) PCGS-MS70 High Jump Silver Dollar Commems tomorrow, I could sell them all with no price change IMHO. Yet, a change of 4 to a state quarter pop might significantly impact price. AGAIN, THE MODERN MARKET, LIKE THE CLASSIC MARKET, IS A MYRIAD OF MARKETS - MANY DISTINCT FROM ONE ANOTHER.
Wondercoin
<< <i>It only takes PCGS to increase a few pop top numbers, says from 5 to 29, to crash a modern pop top market. >>
Not necessarily. You're addressing only the supply side of the equation with that statement. If the number of collectors who need or want the coin exceeds the number available, the increase in supply becomes only a secondary factor.
For example, a year ago the population for the 1967 SMS Kennedy in MS67DCAM was 39. Today, it's 47, or an increase of about 20%. Yet, right now the coin is bringing an average of about 67% more than it did a year ago.
Russ, NCNE
<< <i>But the coins that never had subtance to begin with-such as Moderns >>
Yeah, that damned pocket change that only idiots collect.
Russ, NCNE
I agree both of your statements. Yes, when supply side is overloaded and demand side cannot catch up, price will drop.
For statehood quarters, the demand number could be found by analyzing the set registry contents.
I don't want to hijack the thread, let's go back to "If the market crashed tomorrow...." I still believe the most common coin in the coin dealers' invectories will tank first and big time.
Laura, sorry, I still cannot believe modern pop top will drop more than Morgan dollar will drop (percentage-wise). Usually, dealers dump coins first (since they have the first hand information), and then investors follow. How many collectors will realize the paper loss, I don't know. A great collection always goes through several coin market cycles. Don't you think so?
"But the coins that never had subtance to begin with-such as Moderns WILL take the biggest hit overall."
Moderns are defined then as "POST 1930" and the coins from 1930 on up (i.e. moderns) "have no substance"?? There are quite a few Classic Commems, Walkers, Mercs., Lincolns, Buffalos, etc. that fall into the "modern" category.
Anyway, I have personally actively collected coins since the mid- 1960's. I have experienced the last crash myself - I was (foolishly) buying up generic Morgans in PCGS-MS64 at $240/coin and PCGS-MS65 at $800/coin. I also have a few Lib nickel proofs to this day which I also bought at their peaks. Luckily, I was just a college student and then an associate at a firm at the time, so my "warchest" was (fortunately) very limited to say the least. Luckily, at the time, I also bought some nice Roosies, Jeffs, Ikes, Lincolns and other more modern coins. Since I did not have the cash to buy great classic coins, personally speaking, the moderns I bought performed far better in the "crash" than the common quality classics a "starving student" could afford at the time
Wondercoin
and it sets us apart from practitioners and consultants. Gregor
In a word, "moderns".
Liberty: Parent of Science & Industry
it would stand them on their ear"
Cladking: Also, don't forget, the typical PR69 ultra modern coins trade dealer to dealer at $8/coin or $10/coin in bulk. There are many small dealers who buy these coins and enjoy selling them for, say, $15/coin at shows or on ebay, etc. (and they deserve their $5/coin profit IMHO). Now, consider that when a collector choses to buy up these coins at public auction, often times the collector faces up to a 40% buyers fee, shipping and (often) tax. For example, if you were to buy a typical PR69DCAM coin on Teletrade (and I really like Teletrade - this is not a negative on Teletrade) for $15, I believe you add a $6 buyers fee, additional money for shipping and possibly tax (there was another thread on this recently). That $15 coin now cost the collector nearly $25-$30 delivered. Need to resell it? Well, since the dealer can buy them all day long for, say, $10 - even if he offered the collector the entire $10, the collector loses 2/3 of his money on that coin. Meanwhile, the original consignor of the coin to the auction may have earned upwards of just $5 to carry that PR69DCAM product.
Does the above discussion have anything to do with 1968 NO S Roosies which have increased in value from roughly $5k to $15k in the past couple years, or 1990 NO S Lincolns which have increased in value from roughly $4k - $6k to $8k - $15k in the past few years? Or even top grade 1972(p) Ikes Ty 2 which increased in value from $4k-$5k to $10k-$12k in the past few years? Of course not. IMHO, the modern market is simply WAY TOO LARGE to generalize how it ALL will perform - just as key date, high grade Morgans are nothing like generic MS65 81(s) specimens.
Wondercoin