How Do You Know When the Smart Money Is Leaving the Market?
CalGold
Posts: 2,608 ✭✭
The hot market has brought a lot of rarities out and the amount of auction activity over the last year or two has been huge. Some collectors have built and sold top registry sets. Prices have run up in many series, especially in top pops.
Of course collectors sell for a variety of personal reasons, but one might be a belief that they will be able to buy back in later at lower prices.
Does this market activity indicate that the "smart money" is leaving the market? If not, what are the indicators that that is occurring?
CG
Of course collectors sell for a variety of personal reasons, but one might be a belief that they will be able to buy back in later at lower prices.
Does this market activity indicate that the "smart money" is leaving the market? If not, what are the indicators that that is occurring?
CG
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Comments
But to answer the question asked? You'll think I'm being a wise-a$$, but here's my answer. You can't judge which way the smart money is going until after you figure out who the smart people are. Then, watch them closely.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Camelot
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Tom
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
If ya been playing for 15 minutes and dont know who the patsie is " ITS YOU"
Course the crap i own it dont matter
Proof
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Liberty: Parent of Science & Industry
morris <><
** I would take a shack on the Rock over a castle in the sand !! **
Don't take life so seriously...nobody gets out alive.
ALL VALLEY COIN AND JEWELRY
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If you're waiting to buy, then however far you think it needs to drop before you jump in, wait until it hits that point, and then wait another three years before you even THINK about buying. The market cycle is longer than you may think. Just some friendly advice.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>Mr Eureka, you is a smart person.
Nah... I think it's the dog... that dog can get free food at a coin show! Damn!
TDN - Now, if we could just figure out what you are...
edited to say "...and if you're tellin' the truth!"
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Well, I hooked up with Laura... how smart could I be?
<< <i>When the "smart money" decides to sell all of it's small eagle silver and gold coins (you know, the pre-1798 United States kind) and prices drop by a significant percentage, I've got quite a bit of "dumb money" that will be made available to step in and do some buying. I sure wish "they" would wise up and dump that junk. >>
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>The market cycle is longer than you may think. >>
So true. Short term stuff is like Vegas.
Q.D.B. wrote a book on this years back.
Can't think of the name of the book but it really drove home this point.
Photos, please!!!
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>
Photos, please!!! >>
Yeah.....where's Legend Steve when you need him
Now ? 135-150 ?
Common crap is gonna be common crap for quite some time !
MrEureka - Be careful what you wish for!
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
being a good deal..........................................it no longer is.
Camelot
rise in value. When the trash coins start being hyped then the plug is about to be pulled
in the tub. At that point the trash coins go down the drain first and the premo coins hold
their value the longest.
Just an observation, it seems less of the MS and PR 66 and 67s are being advertised, while
MS and PR 63 and 64s are appearing more. When we get to the 61s Katey bar the door. Such
an event would seem to indicate that strong hands have unloaded the really good stuff at top
prices and are just marking time with lower grades untill prices start to drop and they can now
buy the good stuff back from weak hands at 50 to 70 cents on the dollar.
Camelot
Camelot
People who try to guess the market and buy and sell based on their intuitions are not really serious collectors. They are more short term speculators or traders and are just looking for capital gains.
I have been doing this for 40 years professionally and do not claim that I can pick highs and lows and really do not know anyone that can.
My simple advice to all interested in coins and capital growth is to continue building an enjoyable collection, something that truly interests you, and when you do lose interest, then think about marketing the collection.
Trading coins is not like trading stocks or commodities. The commissions and/or spreads are much greater. I urge numismatists to trade as little as possible. Focus on your goals, buy the quality coin that you are striving for and do not purchase with the intent to upgrade later. Each time that you transact, either buying or selling, there is a profit involved.
The largest capital gains in numismatics have been made by long time numismatists and the catalogs of their collections can illustrate those gains. A few include Garrett, Bareford, Norweb, Pittman, Stack, Starr........ Additionally, there are no taxes on the enjoyment that will be achieved either.
I firmly believe in numismatics as the world's greatest hobby, but recognize that this is a luxury and without collectors, we can all spend/melt our collections/inventories.
eBaystore
Well.... unless you pay the 'idiot' tax [like I have a few times]....
Awesome post Julian!
That said, I prefer to collect coins that are so rare and relatively inexpensive that it would be foolish to pass on the right coin, even at a market top. But if I collected proof gold, you bet I would try to time my purchases!
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>Numismatics is a hobby. Numismatists build collections over a long period of time. They upgrade, add varieties, and expand their collections. I urge collectors to dispose of their duplicate coins.
People who try to guess the market and buy and sell based on their intuitions are not really serious collectors. They are more short term speculators or traders and are just looking for capital gains.
I have been doing this for 40 years professionally and do not claim that I can pick highs and lows and really do not know anyone that can.
My simple advice to all interested in coins and capital growth is to continue building an enjoyable collection, something that truly interests you, and when you do lose interest, then think about marketing the collection.
Trading coins is not like trading stocks or commodities. The commissions and/or spreads are much greater. I urge numismatists to trade as little as possible. Focus on your goals, buy the quality coin that you are striving for and do not purchase with the intent to upgrade later. Each time that you transact, either buying or selling, there is a profit involved.
The largest capital gains in numismatics have been made by long time numismatists and the catalogs of their collections can illustrate those gains. A few include Garrett, Bareford, Norweb, Pittman, Stack, Starr........ Additionally, there are no taxes on the enjoyment that will be achieved either. >>
Worth repeating!!!!
I am sorry Julian, but I think your analysis is just all-wrong, and the below statement is the reason why.
“FORBES' 21st annual edition of The Forbes 400, the aggregate net worth of the nation's wealthiest 400 citizens leapt 10% in the past year, to $955 billion”
What we already know is that several Billionaires are in the Gold and Silver market.
We already know that there are a few other Billionaires that have registry sets.
We also know that many of Laura’s very wealthy clients do not published the fact that they are building sets, and she will not discuss who they are.
So all of these statements no longer apply,
“Numismatics is a hobby. Numismatists build collections over a long period of time.”
“People who try to guess the market and buy and sell based on their intuitions are not really serious collectors”.
“The largest capital gains in numismatics have been made by long time numismatists and the catalogs of their collections can illustrate those gains. A few include Garrett, Bareford, Norweb, Pittman, Stack, Starr”
and lets throw in TDN statement,
“Well.... unless you pay the 'idiot' tax [like I have a few times]....”
I think what we are seeing here is a group of people with nearly unlimited funds buying what they perceive as rare works of art. Any coin that has less than say 25 know examples in a rare mint state condition is subject to their purchase. I also don’t think that MONEY in itself plays a role in their discussion.
Is a rare painting worth 5 million dollars? When these people buy these paintings do they ever intend to sell?
These coin purchases that we all think are outrageous are just 15 days earnings to many of these folks.
It is not necessary to spend a long time building a great set, if the coins are available, and you have millions to spend.
None of these decisions to buy coins have anything to do with analysis, investment decisions, or speculation; it is simply moving dollars out of paper to something real.
These new buyers are not concerned with long-term capital gains; they never intend to sell their coins just as they never intend to sell their art.
If this market continues what I believe you will see is that the entire top end of the rare coin market will be put away in vaults not to see the light of day for decades with little or no concern about the value swings.
Much of the rest of the market will tag along on the heals of the high-end rarity market to the point that most old time collectors will be priced out of the market.
If there is a collapse, and correction, it will not come from the top but from the middle downward.
Several here say this is not like the 89 market where Wall Street played a big part in the buying and selling.
This is also incorrect. This is Wall Street money; it just is not FUND money. Much of this money is however the huge paper fortunes made in the market over the last decade. This is not the old days where huge fortunes were made over 40 years of hard labor or perhaps generations. If you look at the list of the Forbes 400 what you find are hundreds of Billionaires and multi-millionaires that made quick money in the stock market selling their paper to the American public.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>Much of the rest of the market will tag along on the heals of the high-end rarity market to the point that most old time collectors will be priced out of the market.
If there is a collapse, and correction, it will not come from the top but from the middle downward. >>
Goldsaint, do you mean that the rest of the market will be propelled upward by the runaway prices being paid for super rarities, or that the rest of the market will be stagnant because the people with deep pockets are only after the best coins?
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
Goldsaint, the redistribution of wealth is a recurring phenomenon. All of the things you describe have been applicable in the past. Relatively speaking, there has always been a top 10 percent class that can do whatever they please, and have done so in the years gone by. I see no distinction in your statements that separates today's wealth from yesterdays.
They lose interest in numismatics, sell and move on. Even when the money doesn't matter.”
Andy,
I have no opinion on what name should be given to these new folks. They may in fact not be Numismatist at all, but rather accumulators of rare assets. If they are buying up big diamonds they are not gemologists.
In normal circumstances I am sure you would be correct, but these are not normal times. In the late 60’s and early 70’s there were several Billionaires, Hughes, H.L. Hunt and a few others. The Forbes 400 listed several, and the total net worth of these folks combined might have been 15 Billion, but now it is 955 Billion.
There is so much printed-paper now in the World it is almost beyond imagination. It is my belief that many of these folks want to convert this paper into REAL items, and will not be sellers at any near point in time.
Here is something to mull over, the average person in the Forbes 400 has a net worth of about 2.4 Billion.
If they just invest very conservatively they should be able to earn 5% each year on their money, so $120 million per year.
If all the major auctions sold 150 million in coins per year, and one third were true rarities, so 50 million in rarities, one of the Forbes 400 guys could buy every coin, every single year, just out of the interest he made each year.
Lets see if we can get TDN to help us with an experiment.
If he will take his Trade Dollar collection, add up the highest retail ever paid for his coins, add 25% to the whole collection, and put it for sale with Laura as an all or nothing sale, will it sell?
Of course if TDN does sell then he will have paper, my guess is that he does not want paper and neither do many of the other wealthy people in America!
If he will take his Trade Dollar collection, add up the highest retail ever paid for his coins, add 25% to the whole collection, and put it for sale with Laura as an all or nothing sale, will it sell?
Yes, it would sell. Rather quickly at that.
Of course if TDN does sell then he will have paper, my guess is that he does not want paper and neither do many of the other wealthy people in America!
True - I'd rather have the coins than paper.... but a bit of diversification might be nice in the long run.
Kranky
Yes, I think that after a dealer sells his rare coins he thinks the whole market is a wash with money, so he raises the prices of his other coins. You have a catch 22. When we average collectors see the prices moving up we also assume the market is going to out run us, so we buy, and the cycle begins again. The problem with this is that there is no way to run a Billionaire collector out of money, but in the lower markets we are already seeing many collectors priced out of the market. That’s why I think that if we have a correction it will come form the middle.
“Goldsaint, the redistribution of wealth is a recurring phenomenon.”
DMWJR
Never in the history of the United States have we seen so much liquid capital in so few hands. 955 Billion dollars in just the hands of 400 people, WOW
“ Yes, it would sell. Rather quickly at that.”
TDN
So where do you think there might be a limit? At 50% higher, or perhaps 100% higher?
When Laura makes statements like “ this coin went for $130,000 but my guy said latter he would pay $250,000, this sounds irrational ,but is it to a guy earning 120 million per year.
Everything in the upper end of the market seems very hush hush these days, so we really do not know who many of the players are. Not the dealers but the real players. Many of the Forbes 400 people are accustom to hiding purchases of property, stocks etc. many have agents, and surrogates. Perhaps in the end days we will never know where all the high-end coins have gone we will just know they are gone.
50% higher = tough sell. 100% higher = no sale
When Laura makes statements like “ this coin went for $130,000 but my guy said latter he would pay $250,000, this sounds irrational ,but is it to a guy earning 120 million per year.
Not always.... depends on the circumstances. It would be irrational if the coin was interchangeable or replaceable, but probably not if it was rare and unlikely to be seen again. For example: I figured the 1841 proof dollar in the Richmond Collection [ex: Pittman] at $100k. However, I knew there were at least 3 people wanting that coin, so I upped my number to $125k but was still outbid. Later, the buyer indicated to Laura that he had no limit on the coin. It was one of the last few he needed to complete his set. This 'crazy' price realized was a combination of relative cost [two fairly wealthy people chasing the same coin - the cost in 'hours of salary' was not that high] and a case of set value outweighing the individual coin value. Since I didn't have the same additive of set value, I was outbid on the coin.
Everything in the upper end of the market seems very hush hush these days, so we really do not know who many of the players are. Not the dealers but the real players. Many of the Forbes 400 people are accustom to hiding purchases of property, stocks etc. many have agents, and surrogates. Perhaps in the end days we will never know where all the high-end coins have gone we will just know they are gone.
Nah - the dealers know. But what incentive do they have to trumpet the news to the world?
<< <i>Never in the history of the United States have we seen so much liquid capital in so few hands. 955 Billion dollars in just the hands of 400 people, WOW >>
That couldn't be further from the truth. Just the opposite. There is more wealth in more hands than at anytime in history. We no longer have the Tycoons of old, that controlled this country and it's assets. We no longer have someone like Getty, who contolled 5-7% of the US Economy. That is equal to 350-490 Billion in todays dollars. He could buy and sell Gates and Buffett, without blinking an eye and still have enough money left to buy out half of the Fortune 400. Now that was power.
One of the things driving this market is, that more people, have more money than ever before. The people I have sold coins to (5-6 figures coins) are upper middleclass that have a love/passion for coins and there collections.
I know one collector who is a small businessman that has an amazing collection. 1802 Half Dimes, 76-CC 20 Cent piece, 1827 Quarter, etc, etc, etc....he is so unassuming that many dealers probably blow him off.
So, it's not just billionaires who are driving the Rare coin market. My quess would be that very few "Billionaires" are buying rare coins.
<< <i>
<< <i>Never in the history of the United States have we seen so much liquid capital in so few hands. 955 Billion dollars in just the hands of 400 people, WOW >>
That couldn't be further from the truth. Just the opposite. There is more wealth in more hands than at anytime in history. We no longer have the Tycoons of old, that controlled this country and it's assets. We no longer have someone like Getty, who contolled 5-7% of the US Economy. That is equal to 350-490 Billion in todays dollars. He could buy and sell Gates and Buffett, without blinking an eye and still have enough money left to buy out half of the Fortune 400. Now that was power.
One of the things driving this market is, that more people, have more money than ever before. The people I have sold coins to (5-6 figures coins) are upper middleclass that have a love/passion for coins and there collections.
I know one collector who is a small businessman that has an amazing collection. 1802 Half Dimes, 76-CC 20 Cent piece, 1827 Quarter, etc, etc, etc....he is so unassuming that many dealers probably blow him off.
So, it's not just billionaires who are driving the Rare coin market. My quess would be that very few "Billionaires" are buying rare coins. >>
Thanks, you said it far better than I could.
There are at least half a dozen. While that may be few in number, it don't take many!
There you go again. The same guy who is outside looking in, and always complaining. I think you are just a grumpy jealous man. You talk about all these billionaires, and for some reason, you think these patrons are not part of the hard-working class. Kills me. I work over 60 hours a week, but because I make a bit of money, I am looked at (by democrats, mind you, and you), as not part of the "working class", even though I work at all hours of the day and night.
GOLDSAINT: I am going to give you an example of a Billionaire, that you I am sure you would complain about getting rich fast, and consider not a Working-class man...
William Gates - Microsoft. Well, let's see, he is worth about $50 BILLION dollars, but it is all Paperstock. If he SOLD all his shares, the stock (and company morale) would plummit. But what has this "get rich quick man" accomplished in his life? Well, let's see: Hired over 100,000 employees over Microsofts tenure, while at the same time providing thousands of families with a good living and better life and work-managing tools from the computer, and has given over 28 BILLION DOLLARS to charities so FAR!!!!
But I am sure you would have a problem with that.
And GOLDSAINT, why do you CONTINUE TO PRY INTO OTHER's BUSINESS about who bought what, why would anyone pay for that, or even what SOMEONE ELSE WOULD DO WITH THEIR COLLECTION. IT IS NONE OF YOUR BUSINESS. You should not be nosing around what Bruce would sell his collection for, or what price he would. If you get an answer, THEN WHAT??? So you can put your hand over your face and CRY, that is't not you???
Why don't you go collect stamps. And furthermore, why don't you move to a non-capitalistic state, like the Ukraine. You will not be missed.
P.S. GOLDSAINT: The reason you THINK it is all "hush, hush" is because again: NO one (like dealers)NEEDS or WANTS to talk to you about the buyers, or investors, or collectors, and again, it is NONE OF YOUR BUSINESS.
Lloyd
I think the smart money has left some market segments that are cooling down.
In the other segments, either the smart money has left or else it's still "in play" but being routinely priced out by "stupid money."
I promise to post the results.
Okay?