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An accurate determinant of Market Strength????
keets
Posts: 25,351 ✭✭✭✭✭
For reference and a general consensus of opinion from those who think the Market is just fine, I'll start with this comment which sums things up nicely: If the Heritage auctions next month do not fulfill record prices, then I would be disappointed.....I am chomping at the bits with anticipation and plan on adding some neat stuff to my holdings....
1. I would wonder why this would be a good judge of the "Market" and the strength of things now and in the near future??
2. What percentage of the hobby do you suppose will be involved in this "Market Strength" gauge Heritage Auction??
On the other hand, we have the back side of the above comment, which might be a little more encompassing of the "Market" as a whole:I do not see any weakness at all for nice coins....only LACK OF NICE COINS.....
1. So where does this leave us in your opinion?? Does it show the "Market" as a whole moving forward or just a small segment attempting to carry the larger whole to higher levels??
2. How long can the bank balance of the upper minority carry the much larger majority of the hobby to higher levels if there's nothing to buy?? How long will that upper minority choose to stay in the limelight; wouldn't it be wiser to quiet down and move to the back rooms where price information is kept confidential??
3. How long will dealer/dealer trading of marginal material be able to sustain things if collectors are unwilling to underwrite dealer profit with high prices for sub-standard coins???
4. How many average shows do the promoters have to endure before they start backing off somewhat??
5. How long will collectors continue to return to shows if they continue to see the bottom end of the material at the top end of the "Market" prices?? Won't there come a day when they'll realize it's time to stay home??
More questions than answers for me, can you help??
Al H.
1. I would wonder why this would be a good judge of the "Market" and the strength of things now and in the near future??
2. What percentage of the hobby do you suppose will be involved in this "Market Strength" gauge Heritage Auction??
On the other hand, we have the back side of the above comment, which might be a little more encompassing of the "Market" as a whole:I do not see any weakness at all for nice coins....only LACK OF NICE COINS.....
1. So where does this leave us in your opinion?? Does it show the "Market" as a whole moving forward or just a small segment attempting to carry the larger whole to higher levels??
2. How long can the bank balance of the upper minority carry the much larger majority of the hobby to higher levels if there's nothing to buy?? How long will that upper minority choose to stay in the limelight; wouldn't it be wiser to quiet down and move to the back rooms where price information is kept confidential??
3. How long will dealer/dealer trading of marginal material be able to sustain things if collectors are unwilling to underwrite dealer profit with high prices for sub-standard coins???
4. How many average shows do the promoters have to endure before they start backing off somewhat??
5. How long will collectors continue to return to shows if they continue to see the bottom end of the material at the top end of the "Market" prices?? Won't there come a day when they'll realize it's time to stay home??
More questions than answers for me, can you help??
Al H.
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<< <i>For reference and a general consensus of opinion from those who think the Market is just fine, I'll start with this comment which sums things up nicely: If the Heritage auctions next month do not fulfill record prices, then I would be disappointed.....I am chomping at the bits with anticipation and plan on adding some neat stuff to my holdings.... Al H. >>
This opening comment has me puzzled. I find it difficult to "expect a record". Expectations that exceed anything that has happened before leaves a lot of room for disappointment. I also wonder about the statement that "I am chomping at the bit with anticipation on adding ...". Again, that may not be the same mood across the hobby/industry. With the holiday season close at hand there could be some that are beginning to save for Christmas (and other holidays) shopping. There are a lot of reasons why this upcoming auction may not be "The Best One Yet", or even a great one, but they do not mean the wheels are coming off the wagon either.
I am suspicious of exagerated statements, either things are HOT HOT HOT or the hobby is going to hell in a hand basket. Generally it's somewhere right in between.
Lanlord, those statements were taken from other posters in other recent threads. I think keets is just trying to slam some other board members with this post.
2. How long can the bank balance of the upper minority carry the much larger majority of the hobby to higher levels if there's nothing to buy?? How long will that upper minority choose to stay in the limelight; wouldn't it be wiser to quiet down and move to the back rooms where price information is kept confidential??
3. How long will dealer/dealer trading of marginal material be able to sustain things if collectors are unwilling to underwrite dealer profit with high prices for sub-standard coins???
4. How many average shows do the promoters have to endure before they start backing off somewhat??
5. How long will collectors continue to return to shows if they continue to see the bottom end of the material at the top end of the "Market" prices?? Won't there come a day when they'll realize it's time to stay home??
You raise some good points. In response:
1. I think the market is moving forward, just not at the levels that we have seen previously. As indicated in other posts, fresh material that is choice will always sell, but that is the way that it should be.
2. The upper minority will continue to be in the limelight if auctions continue to provide high end material. Once the high end stuff dries up, then the minority will go back into hiding.
3. Collectors are directly to blame for overpaying for common coins. I don't have a problem with dealer to dealer transactions. They are just providing a service to the end clients.
4. I think there are currently too many shows. If we cut the amount in half, that would be a perfect number.
5. I am not sure if collectors will stay away from shows, but they can definitely "vote" on the prices via their pocketbooks. Once the mass collector base tires of overpaying for coins, then the market will come down a bit. But that's just the nature of the market.
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
Tom---my comment is indeed taken from another thread but is indicative of the comments made by many members. the general mood among members who believe the market is strong is simple, it's strong for the top coins and those who can afford them. i simply think that portion of the hobby is very small and that it is oftentimes deceptively used as a barometer for overall hobby strength. that thinking should be rather transparent and obvious to all, even you, if you read my post. my questions were simply aimed at gaining feedback-----not criticism for stating what many may want to deny for their own selfish reasons.
elwood---my use of the "Market" is intentional as i am just as puzzled by what some members consider the "Market" to be. is it small and limited to what we each do, or is larger in scope and inclusive of everything??
ah, finally some feedback, thanks Longacre!!
I cannot address all of your points at this time. However, I would like to make the point that coin shows and the coin market have evolved such that the buzz and activity at a coin show has become a poor indicator of the strength of the coin market. There are way too many shows, the bourse dealer competes with multiple auction formats and more other dealers and collectors than ever, and the supply of cool and interesting coins is just not on the floor.
Very few coins in my collection have been purchased at coin shows, and over time, I can see a market evolve such that coin shows cease to exist as a retail marketplace. Who needs them, really.
My proprietary indicators suggest that the market is healthy (not too hot, not too cold) for collector coins in the $250 to 5000 range. I will let you (and the others} know when that has changed.
I think you are taking my statements out of context. As I specialize in 20th Century gold, when I make my statements they refer ONLY to that segment. Regardless of your assertions, there is NO weakness in that segment of the marketplace. In fact there is a severe shortage of KEY dated material so the lack of coins statement is totally correct. Ask any dealer if they have better dated Saint Gaudens coins and they will name 2nd and 3rd tier dates not KEY DATES. So the Morse sale will be a watershed event and will set the tone for the market in the months ahead just like the Jack Lee sale will set the market for Morgans.
If the auctions bring strong prices as I anticipate it will raise the levels for rarer coins and probably carry widgets as well especially if bullion continues its rise. If the auctions are weaker than expected, we will have follow through weakness in the overall coin market. I would not bet on that at all. Too much money chasing too few coins.
Once again, I am a specialist and DO NOT cover the entire realm of coins. But in MY AREA OF SPECIALTY, there is immense strength and great demand......No better coins at all can be found probably because Phil Morse has them all.....
$20 Saint Gaudens Registry Set
you see, this is where i'm trying to gain an understanding of where exactly everyone is coming from in making their statements that the "Market" is strong. how many collectors do we know of who will be vying to own an 1889-CC PCGS MS68 Morgan or an 1870-S Seated Dollar in any grade??? i can't see where strong sales at those types of auctions relates to a strong "Market" anywhere else and for anyone else but a very select few. as some have said, there was/is/always will be eager buyers for coins like that. my impression is that Mr. Lee is a smart man and has bought several coins when things are slow and sold them when things are at the top only to buy them again when things are slow. he isn't stupid and the impression i get from his sale alone is that he doesn't want to be late for the party.
i would expect that an opinion of more average coins for the masses, coins which sell below $500 would be a better indicator for us to watch, but noone seems to be willing to offer an opinion on that segment. we hear of slow bourse traffic, lagging dealer sales and slowly replenished inventories, but those things don't seem to affect the buyers at the largest auctions for the most expensive coins(quite frequently, those buyers are dealers, not collectors) and probably never will.
to that end, your comment which i referred to is very symptomatic of what many members see as the direction of the "Market" today, just a small segment of a specialized area with limited participants.
RYK----you are also only giving an impression of a very limited area. i'm hoping to hear of a more well rounded opinion, but noone seems to be willing/able to offer one.
elephant. The core of the hobby are the tens of thousands of people who have col-
lections of things like choice and gem walkers, Morgans, indian cents and lower grade
early 19th century coins. There is a great deal of money that chases such coins be-
cause this is where the collector numbers are greatest. This demand translates to
historically steady prices except when they become overbought. It is largely these
types of coins that have not participated in the run-up of the current bull market be-
cause this demand is fairly static due to demographic forces. Some of the fringes of
these areas are even experiencing a situation which looks like poor demand and pos-
sibly lower prices. But eventually the demographic forces will reverse and the coins
will lose the characteristics of "widgets" simply because they won't be widely available
in the face of high demand.
The "starter" type coins, high grades, and major rarities are all still doing quite well.
These are coins that either aren't widely available or are being collected by the legions
of newbies.
It's interesting to note that many other areas in coins tokens and medals are also
doing extremely well where they are hard to find or being chased by newbies. Civil
war tokens, Modern European coins, So-called-dollars and many other related areas
are seeing increasing demand and prices.
No I will NOT be buying the 27-d in the sale even though I would love to but someone else won the powerball lotto....Yes, while it is true that the "market" for the rarities is smaller there are a great deal of well keeled collectors that wait for such events.....If you want the Ultra or the 27-d this may be your only chance for years to find one....That is also true for many of the rarer dates in the sale.....While it is not the entire market and only a segment I do believe it impacts the whole market.....I guess we will just have to see what happens when gold busts through $500.....
$20 Saint Gaudens Registry Set
I think that "Market" means something a bit different to each individual, and think that you would probably agree. You and I collect on probably a very level field $$$ wise, but no where the same in what we look for in our collecting. I enjoy high grade silver Washingtons, nicely toned Morgan dollars, seated Liberty halves in as nice a grade as I can afford(usually XF and up) and circulated Barber halves in VG/F. As far as my "market" is concerned, prices seem soft to stable on Washingtons and SL Halves, stable on Toned $ and HOT on Barbers.
I wish that this next show and auction would have a big impact on my "Market", but it won't...Maybe at FUN.
<< <i>For reference and a general consensus of opinion from those who think the Market is just fine, I'll start with this comment which sums things up nicely: If the Heritage auctions next month do not fulfill record prices, then I would be disappointed.....I am chomping at the bits with anticipation and plan on adding some neat stuff to my holdings....
1. I would wonder why this would be a good judge of the "Market" and the strength of things now and in the near future?? >>
I don't think an inference as to the "market" or strength can be drawn from this statement. What you have is an isolated case where a very important collection is being brought to the market( I think the original post was about the Morse collection), and one collectors opinion that there is going to be strong bidding for it. If this collection came on the market even in a weak/down market, I think prices would still blow the roof off.
<< <i>2. What percentage of the hobby do you suppose will be involved in this "Market Strength" gauge Heritage Auction?? >>
Again, I don't think it is a gauge, just one collector's interest in one particular collection.
<< <i>On the other hand, we have the back side of the above comment, which might be a little more encompassing of the "Market" as a whole:I do not see any weakness at all for nice coins....only LACK OF NICE COINS..... >>
This statement is conclusory, and not an indicator of the "market." However, my personal experience in the areas I collect supports this theory. The number of "nice for the grade" coins in the market seem to be diminishing. All I seem to see are the same old tire mediocre coins that come around every few years, and they are not producing any surprising prices. These could be described as coins buried in their graded holder. So, I agree with the conclusion based on what I see in the market. When a nice coin comes on the market, prices are strong.
<< <i>1. So where does this leave us in your opinion?? Does it show the "Market" as a whole moving forward or just a small segment attempting to carry the larger whole to higher levels?? >>
I don't see an attempt by the upper minority to do anything other than collect top coins. When they come on the market, there is a feeding frenzy for them. When they are not there, the upper minority is silent. When I see a coin on the market that is nicer than an example I own (regardless of the grade on the holder), I pull out all the stops. But I don't buy just to be buying, or because the plastic around a coin is more attractive than the plastic I already have.
<< <i>2. How long can the bank balance of the upper minority carry the much larger majority of the hobby to higher levels if there's nothing to buy?? How long will that upper minority choose to stay in the limelight; wouldn't it be wiser to quiet down and move to the back rooms where price information is kept confidential?? >>
First, I assume you are talking about what I would call "grade pull." In other words, if the top pop coin doubles in value, does it put the next grade up to a higher pricing level. Personally, I don't think this process falls across the entire spectrum of the market, but rather occurs in hot spots at the top (as specific as a single year/mm) where there are far more collectors than material. Sometimes you have a pop 1/0 coin with 5 in the undergrade. Sometimes you have a pop 1/0 with 200 in the undergrade. I don't think this theory can be expanded and used as an indicator for the market as a whole.
Sellers of market driving coins have realized that they will profit more if they create spirited bidding. That has a negative impact on back room deals and confidentiality of pricing information. Sellers have no interest in taking a mere "reasonable" price for their coins, when anything can happen in a hot market. Why not toss your top coin in an auction, stir the pot a little, and see if you get that shocking price? Those holding nice coins right now hold the keys to the kingdom, for buyers abound. This is an indicator of a strong market in general.
<< <i>3. How long will dealer/dealer trading of marginal material be able to sustain things if collectors are unwilling to underwrite dealer profit with high prices for sub-standard coins??? >>
Again, I think you are referring to "grade pull." I think collectors are getting wiser and fussier, which will cause the sub-standard coins to fall in price (relative to their hawked grade/price). With the advent of internet collecting and a large increase in major auctions, I personally have been able to view a lot more coins than I used to. I'm simply exposed to more, and can better determine what a nice coin for the grade is. Buyers are becoming more discriminatory with their purchases. Years ago, if my local dealer got a matte proof lincoln in, it was a rare occaision, and I was thrilled to see it. Now I can go on-line and view dozens of pictures in various grades, and make a better decision about what standard of quality I am willing to accept. The bar has risen.
<< <i>4. How many average shows do the promoters have to endure before they start backing off somewhat?? >>
This is a good question. There may be too many shows with too much average material. Dealers (and therefore logically Promoters) may find it more profitable to keep their average coins in on-line auctions or on websites.
<< <i>5. How long will collectors continue to return to shows if they continue to see the bottom end of the material at the top end of the "Market" prices?? Won't there come a day when they'll realize it's time to stay home?? >>
This will be a function of #4 above.
More questions than answers for me, can you help??
Al H. >>
<< <i>the impression i get from his sale alone is that he doesn't want to be late for the party. >>
You mean late leaving the party. There seem to be quite a few of the smart players heading for the exits as of late.
Russ, NCNE
lies the value of the answers A+
Camelot
<< <i>number of "nice for the grade" coins in the market seem to be diminishing >>
Perhaps the nice ones are being held by collectors or have gone through the upgrade process and now are a grade higher but no longer PQ good deals at the higher grade.
<< <i>I think collectors are getting wiser and fussier, which will cause the sub-standard coins to fall in price (relative to their hawked grade/price). >>
Rising prices should make collectors fussier. If the price of a 65 today is what a 66 cost yesterday, you can expect buyers to want 66 quality or close to it for their money, assuming that they know what 66 quality is. As far as buyers getting wiser, I don't know. One of the savviest dealers on this board said a short while back that in chosing whether to send a coin to PCGS or NGC he sends it to the service that will maximize his profit since most buyers can't grade and don't know the difference.
CG
Al, I would like to respectfully disagree with that. If I were speaking from the perspective of someone who exclusively collects rare date gold, you would be correct. Dahlonega $5's in original VF/XF are scorching hot, and there are too many collectors chasing too few coins. However, I have also been working on my type set (under $300 for all but one coin) and have started collecting seated dimes, as well. Other than Morgans and high grade moderns, I think that I am operating in a pretty expansive space. Plus, my indicators sample the areas that I personally do not.
I do not care as much about coins with mintages less than 100 selling for 6 figures
but as long as rolls of nickels less than 3 years old keep trading for over $10, I feel the market is strong
<< <i>However, I have also been working on my type set (under $300 for all but one coin) and have started collecting seated dimes, as well. >>
Great, two areas I'm collecting. More competition.
DMWJR
Master Collector
Posts: 5633
Joined: Feb 2002
Tuesday October 25, 2005 10:40 AM (NEW!)
Lanlord, those statements were taken from other posters in other recent threads. I think keets is just trying to slam some other board members with this post.
-------------------------
Doug
very good insight. i've always wondered why collectors are anxious and excited about prices rising and rising and rising, much in the same way i'm puzzled by collectors who seem poised and ready to by gold/silver when the price rises.
<< <i>i would expect that an opinion of more average coins for the masses, coins which sell below $500 would be a better indicator for us to watch, but noone seems to be willing to offer an opinion on that segment. we hear of slow bourse traffic, lagging dealer sales and slowly replenished inventories, but those things don't seem to affect the buyers at the largest auctions for the most expensive coins(quite frequently, those buyers are dealers, not collectors) and probably never will. >>
Wow...where to start??
I believe that the $500.00 and below market remains constant. These are some of the true collectors, maybe not the most knowledgeable, but collectors that are filling holes and completeing sets. Collectors that attend and are regulars at small local shows. Market swings are not a concern to these collectors. They are there when it's good, they are there when it's bad.
Then you have the advanced collector. The collector spending between $500 to $10,000.00 per coin. They are on a mission to find the best for the grade. Many know what is available in the series they collect and when the coin comes available they will spend what it takes to get that coin. Most seem to be upper middle class with good paying jobs or have just inherited some money and now have some extra money to spend. They are in it for the long haul and have no concern for market swings or any interest in selling because of a peak/top. Although they have used this up turn to upgrade current coins in their collections.
Slowing bourse traffic is more than likely due to technology, because a healthy market and declining attendance don't seem to correlate?
I haven't heard of any dealers with declining sales?
There is definitely a shortage of nice coins. You always hear the term "coins are in strong hands" I'm finding that to be true, coins are going into long term collections of what I would call younger collectors (40-55 yrs old). I've contacted many collectors that I sold coins to 2-3yrs ago, offering them large profits, sometimes 2-3 times what they paid and they have no interest in selling.
Some of the larger collections being sold might signify a top in the market, it might not. I think you have wealthy individuals who have spent decades building collections and they see an opportunity to take some serious gains. Most people never hear the reasons for why they are selling their collections? It could be estate planning, health issues, market timing, family reasons, business reasons, etc, etc, etc......
I know the reason for a few of the more recent large collections ($1,000,000.00 and up) being sold:
- it became to large of a percent of the collectors net worth.
- money was used in a business venture
- money was used in a business venture
- family reasons...didn't want to let the kids get it
- death
- market timing
- market timing (was originally assembled sticty as an investment)
- completed his goal
- completed his goal
- needed money
- charity
The market in general seems to be very healthy with some signs of weakness in certain areas. One area of weakness, that I know of, and one that has done virtually nothing other that top condition census pieces is middle and late date Half and Large Cents. Another area better date walkers in circulated condition, the sheets haven't moved at all. And like Laura mentions widgets. If there is a demand it will sell, if there is no demand it won't. People aren't buying coins just to buy. They have to have a reason to buy.
Obviously 90% and gold have been doing very well. Early type is unbelievable. Key date seated material is hot. Proof Morgans are heating up. There are also many new Early Quarter variety collectors entering the market.
Unedited so please be understanding.
For instance. Fund A is at a level and there is nothing really outstanding to buy. Fund B is in same boat. Managers of each call each other and sell to each other. Nothing is really gained or lost, but a perception of "good management" filters down to the stockholders. The problem comes when the liquidity dries up and the funds must go to the "open" market to find the last bagholders.
Coins are susceptible to the same manipulation only on a much smaller and more easily done manipulation.
Dealer A ....and..... Dealer B find business slowing. They call auction house C and arrange a sale in which each buys the other's coins and the prices become record but the inventory just moves. Or on lesser rarities, dealers can agree to move on a segment and drive it on the sheet. The reality that they may reject any offers doesn't affect the sheet in any way as it isn't known. I know as I inadvertently moved the sheet one time with one bid for 3 separate issues.
The auction houses can negotiate any commission at all and some of the coins may actually go to collector bidders. All in all, it's pretty simple.
But the main driver always has to be liquidity of the users. If economic forces change direction, the moves become real but there's really no way to detect it without being involved. ALL... coins are "widgets" to the successful dealer in coins.
If ...fresh.... money comes into any market, it will rise. If money leaves the market, it falls.
In my OPINION.
It's only relevant if you're looking to sell.
keep in mind that i'm not hoping to prove a point or be right about anything, just reporting what my perceptions are. without a large pool of observation it's hard to know with any certainty what's really happening overall. thanks for sharing.
That is not at all what mutual fund window dressing is and what you described is probably illegal. Window dressing is when MF managers, at or near the end of a reporting quarter, buy stocks that have gone up for the time period to make it appear as if they owned the stocks and captured the gain.
I doubt that there is anything analogous in coins
<< <i>One of the considerations has to always include the market manipulations. >>
There is always some manipulation of certain dates or issues.
You may have a person with the resources to push up the price. Examples would be, say....rolls of 1950-D Nickels, a certain issue of commem., High Reliefs, 95 Proof Morgans, 1911-D Quarter Eagles, certain year of Proof Sets or Mint Sets....you get the idea.
<< <i>That is not at all what mutual fund window dressing is and what you described is probably illegal. >>
Of course you're right. It ...is...illegal. Now who do they buy those shares .....from? And we know they wouldn't discuss it over martinis or anything because that also would be ...illegal.
And we know corporations are all model citizens.
As are we.