What will affect the upward trend in prices?
coynclecter
Posts: 2,111
I was around in 1989. Like the song says "it was a very good year" Then came late 1989 and the market began its strong , fast decent. The same happened with real estate prices about the same time. I'm not sure what the stock market or interest rates were doing. I'm not trying to be negative about the current market, it may very well have a few good years of upward trend but nothing goes up forever. I'm just trying to determine what "signs" we might look for that the prices are starting to crash. Would it be Interest rate hikes, stock market moves, gold prices falling???
Can anyone recall the signs that precipitated the fall of 1989 other then the realization that coins were not going to be accepted by Wall Street like so many thought would happen?
Can anyone recall the signs that precipitated the fall of 1989 other then the realization that coins were not going to be accepted by Wall Street like so many thought would happen?
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and it sets us apart from practitioners and consultants. Gregor
Although many dealers disgree, I hope that Wall Street NEVER becomes seriously interested in the coin market. Coins derive their fundamental value from collector interest, and to a much lower extent in the case of gold coins, the market price for bullion. All the Wall Street people want is profits. And market prices increases that are built on speculation are bound to fall. And if speculators have driven prices to levels that are WELL above those that have collector support, the market will fall hard as it did in 1989.
One of the worst areas in the late 1980s was the old commemorative coin market. This market is quite prone to promotion among the less informed because there is a very large supply of the Mint State coins available. At the same time promoters can point to what appear to be small mintages, which would make the coins look like they are "scarce."
During this time "investment experts" told us that there were TWO markets for commemorative coins, one for collectors and a second one for investors. The collectors bought "low grade" (MS-60 to 64 coins for the most part) while the investors bought the high grade stuff (MS-65, 66, 67 and oh my! the holy grail MS-68!!!).
Without a collector base in the investor market had only one line of support, which wiser Wall Street people would have called "the bigger fool theory." When the supply of "bigger fools" ran out, the game was over, and the price of many commemative coins fell by more than 50%.
So if my barber and the super market check out clerk and my Brother in Law all start telling me about coins they bought I'd say we would be near the top of a coin bubble
Your story reminds me of a story I heard about old Joe Kennedy (father of JFK) told about the stock market and great depression. One day a fellow who was shining his shoes told Joe about "hot stock" that he was planning to buy. With that Joe knew knew that it was time to get out of the stock market because it had become totally saturated.
In a word, "Osama". This evil man has the potenital to reek havoc on a global basis!
there will normally be no real warning signs. But there are always huge red flags when
something is about to tank. These include the shoe shine boy who gives stock tips, but
also the growing belief among most insiders that the only way prices can move is up. When
everyone is buying then there is no growth possible. New material coming on the market
is weighing down a market which has already achieved steady state. Suddenly the market
will feel heavy and a few will try to get out and the selling snowballs.
It is wise to step back from your time and place and look at things from a different perspec-
tive since these manias can build insidiously and be virtually invisable from an insiders or even
a casual observer's perspective. They can infect anything from common wisdom to tech stocks.
Overbought wisdom can be disasterous to a group and overbought commodities will be dis-
asterous to individual finances.
Prices will reverse on all segments of the coin market. As long as you sell when everyone is
buying you'll be at least OK. Avoid buying things you don't understand and start worrying
when "everybody" is in agreement about anything.
Do your own due diligence.
Buy rarity.
Experience the World through Numismatics...it's more than you can imagine.
The signs were there in the financial markets of 1989-90 that said a recession was coming. That's what helped put the brakes on the coin market. It was not entirely due to Wall Street money leaving.
The market did peak in many areas in the summer of 1989, but strong prices were still prevalent even into March 1990. Morgan dollars in MS65 were still $300 each (64's at $100). MS64 Saints were around $1000/coin. A common date seated 25c in MS65 could still fetch $4000.
If you feel a recession is coming in our near future, you shouldn't be speculating on rare coins.
roadrunner