WHAT WILL DEALERS HAVE FOR SALE IN TWO YEARS?
GOLDSAINT
Posts: 2,148 ✭
This has been an interesting couple of weeks of posts.
For several months many here, including myself, have been looking for a break in this market that just never seems to appear. As you can tell from some of my recent posts I am turning from a doubting Thomas, to a buy the coin while the coin is still there type of collector. So in general I am ignoring Coinguys advice to be patient. This may be foolish but in trying to look for a bottom to this market over the next few months I could not find any numbers to support the fact that the market might cool. In fact everything I can analyze points to a market that just keeps going, perhaps for several years.
If my assumption is correct then all boats in this market may easily increase by double in the next 24 months.
For multiple reasons our coin market just is not effected by any bad economic news. As the stock market continues to be very soft, or even looses ground, coins go up. Gold and Silver go up and down, but the coin market goes up. Interest rates start to rise, and the coin market goes up. No bad news seems to deter the enthusiasm of this market.
As we all can see many of the great collections of the past have come, and are in the process of coming, to market being dispersed into what I believe is stronger hands than they where held in before. As anyone can see by looking at pop reports, and surviving mintage reports, many of the rarities of the past are very limited. Take for example this quote today by Dale, “There have been about 5 large collections including Barber halves sold in the last 8 years, but the long-term buyers were there, putting the coins away. The population for many of the dates is less than 5 in 65, and for dates like the 04-S, PCGS has graded a total in all grades less than 40 coins.”
I do not think this is the exception, but rather the rule in most classic coin areas. With the advent of the Internet, Ebay, and weekly auctions, there are many times more dealers in today’s market than there were in 1990.
Will the big money collectors like Dale, TDN, and many others here, sell their coins if the market doubles, perhaps. Will these folks have to sell their coins? NO.
Most of us do not have this problem, but it is very real to most big money collectors, If I sell my coins and pay the taxes, then where will I put all this money?
So back to my original question, what will dealers be selling in two years if our market continues to grow at its current rate? Hundreds of rare coins are changing hands each week. Many of these are bought by speculators and dealers, but eventually they must go to real collectors. There obviously is not an unlimited supply of rare coins, and the prices would not be increasing the way they have if there were not very strong demand, as well as a large new influx of buyers.
Could it be that some of our Modern collectors are right? Could it be that in two years all dealers will have to sell is the more Modern coins along with the lower grade rarities.
Many high-end collectors don’t like or buy coins on Ebay, but Ebay is interesting because it is very visible. As little as one year ago, cleaned coins, third tier slabs, and many raw coins were not bringing good prices, but that has totally changed. What this tells me is that the market is already starting to dry up.
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Comments
I agree with many of your points.
Dale's analysis as it related to circulation strike Barbers could be applied to other classic, type, and rare date series. In certain series, if you follow them, you can really tell that there are too many collectors/dealers chasing too few coins.
I also agree that there are few places to put your money at this time with any great expectation of a decent return, let alone capital preservation. That is precisely what got me back into coins a couple of years ago and it certainly can be said now as much as then.
As for patience, in this market, it does not seem to be rewarded. There are many different kinds of patience, none of which has ever been my strength. If anything, my lack of patience has led to some of my better buying decisions.
As for what the future holds and what dealers will buy and sell two years from now, I cannot predict. It does seem that interesting coins in my area are continuing to surface, some not previously known, some at the bottom of the sea for several generations, and some from well-known collectors that have decided to cash in. I hope that there are still cool coins for sale in two years as I hope to be buying them.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I hate it when you see my post before I can edit the spelling.
Always looking for nice type coins
my local dealer
at a price based on their supply and demand. Dealers can not sell any classic or moderns which
aren't in demand nor can they be expected to sell coins at extremely high prices. As prices for
coins increase, collectors will generally have little choice but to buy the coins in lower grade or
collect something else. There are large numbers of most coins in low grade so this won't have
a major impact on most dealers. Shops will not be full of moderns in a couple years because
it's impriobable that such a large change can happen in so short a time. If you project out a
little further it would be easy to see moderns gaining greatly in importance as the newbies be-
come more knowledgeable and get down to the last several coins needed.
The corner shop already doesn't sell gem Barbers. In a couple years there may be fewer
choice Barbers at most shops too.
Actually Mr. Eureka said it best. There will be stuff for sale but at a price. As the price goes up, old collector/investors get out while new ones replace them. MS65 Morgans will likely be over
$175-$200 by then too. It's up to you or me whether to buy one or not. By the end of this upward movement all of us should have unloaded all of our traps, mistakes, and major losers...possibly for a profit. Lots of those will be for sale in 2006.
roadrunner
“As for patience, in this market, it does not seem to be rewarded.”
RYK,
I certainly agree with that. It is straining my personal budget to the max buying mid grade MS and Proof coins for my type set, but the more I watch and study this market the more urgency I feel.
“Shops will not be full of moderns in a couple years because
it's improbable that such a large change can happen in so short a time.”
Cladking,
Stranger things have happened, and we might very well see shops full of Moderns as well as AU Morgan’s, and here is what I think is very interesting about today’s market. If you could add up the net worth’s of the major collector players at the top of the 89-90 market compared to the net worth’s of the major collectors of today I think you would find that yesterdays big money players pale in comparison to today’s. There appears to be a multitude of more recent collectors that have net worth’s from 50 million to a Billion dollars. Some of these people are so strong they could literally buy every thing in several large auctions out of their annual interest payments. To us they are spending huge fortunes buying rarities; to them they are just nibbling in the market.
From a strictly investment stand point I personally think that buying coins in $1,000 to $10,000 area is the place to be. As the market contracts due to lack of inventory, and many coins go into hiding, the coins in the above price area will double in value. On the other side of this it is very hard to get a $200,000 coin to go to $400,000, and I can see the super rarities going into collections that won’t need to be sold for decades.
Someone else here believes exactly that, but I'm not so sure. Each price level has its target customer base - which base is inclined to be more price resistant? Which base is more likely to have its available funds double as it moves in and out of other investments? Seems to me that there will continue to be heavy pressure on the higher priced stuff - more so than the lower.
Hasn't this been happening with the early US silver dollars?
Is it happening again with DMPL silver dollars?
I believe dealer/collector/investor accumulation/holding back of supplies is at least partially at work.
Probably quite a few coins from different series that customers want to sell and take profits, sell because they're interests have changed, etc etc etc.
Same as it's always been.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
TDN ,
I am sure you are correct in that respect, but we also know that as the market for any very rare coin moves higher many buyers are eliminated from the bidding strictly from the financial side. Its like climbing to the top of a pyramid, less people can fit on the top. Hey my friend, even though I give you a hard time sometimes you and a few others here are really in a class by yourselves, and not subject to many of the market moves that many of us are.
“I believe dealer/collector/investor accumulation/holding back of supplies is at least partially at work.”
Oreville,
That has also been my assumption watching the dealers bid against collectors on a consistent basis. I don’t think this is a long term thing as most just cannot tie up large amounts of money for over one year, but there are sure lots more flips taking place than there were a couple of years ago.
“The mistakes are left to accumulate in the inventory, and they are essentially what collectors see at shows.”
Rhedden
After being burned last year on many Raw Bust halves, that were later bodybagged, my current attitude is that if the coin is scarce, or rare, and it ain’t slabbed its someone else boddybag!
“Probably quite a few coins from different series that customers want to sell and take profits, sell because they're interests have changed,”
mrearlygold,
For you younger guys this might be true, but in my case I am an early stage baby boomer. What I am finding here is that my interests are slowly being eliminated rather than changing. Ha Ha