Irrational exuberance and the coin market.
cladking
Posts: 28,702 ✭✭✭✭✭
There are rapidly increasing prices in many areas of the coin market and it touches
almost all series and eras. It extends beyond US coins to civil war tokens, so-called
dollars and numerous darkside coins. It is not limited to the great collectibles, highest
quality, or rarest coins.
Much of this is to be expected because there is a huge demand from millions of new
and returning collectors. They are demanding coins they couldn't afford when they
collected in the '60's as children and they are demanding coins that didn't exist in that
era. More and more coins are selling at retail prices at many venues from e-bay to
the TV shopping channels to many of the huge retailers with on-line and physical pres-
ences.
There is nothing wrong with paying retail prices but it appears that some of these
purchasers are doing it for speculative purposes and many buyers have profit as at
least part of their motivation.
It is very hazardous to pay triple bid or more for coins in which your primary interest is
resale. When the market quits growing it will be difficult to even get bid for such coins
and even in the interim quick sale might result in substantial loss.
There needs to be some way to reach out to these new buyers and educate them a-
bout what constitutes a reasonable price to pay. Every day I see damaged junk sell-
ing on e-bay as though it's nice material. I see common moderns selling at eight or ten
times bid on the TV shows, and typical avg circ buffs selling for several times the going
rate. There's nothing wrong with buying any of these coins but many are paying far
more than they'd need to pay at their corner shop or at the typical coin show.
So how do we get word to these buyers to expand their horizons? How do we get more
of these "newbies" into the mainstream or is the hobby going to be changed forever be-
cause they so greatly outnumber us?
almost all series and eras. It extends beyond US coins to civil war tokens, so-called
dollars and numerous darkside coins. It is not limited to the great collectibles, highest
quality, or rarest coins.
Much of this is to be expected because there is a huge demand from millions of new
and returning collectors. They are demanding coins they couldn't afford when they
collected in the '60's as children and they are demanding coins that didn't exist in that
era. More and more coins are selling at retail prices at many venues from e-bay to
the TV shopping channels to many of the huge retailers with on-line and physical pres-
ences.
There is nothing wrong with paying retail prices but it appears that some of these
purchasers are doing it for speculative purposes and many buyers have profit as at
least part of their motivation.
It is very hazardous to pay triple bid or more for coins in which your primary interest is
resale. When the market quits growing it will be difficult to even get bid for such coins
and even in the interim quick sale might result in substantial loss.
There needs to be some way to reach out to these new buyers and educate them a-
bout what constitutes a reasonable price to pay. Every day I see damaged junk sell-
ing on e-bay as though it's nice material. I see common moderns selling at eight or ten
times bid on the TV shows, and typical avg circ buffs selling for several times the going
rate. There's nothing wrong with buying any of these coins but many are paying far
more than they'd need to pay at their corner shop or at the typical coin show.
So how do we get word to these buyers to expand their horizons? How do we get more
of these "newbies" into the mainstream or is the hobby going to be changed forever be-
cause they so greatly outnumber us?
Tempus fugit.
0
Comments
business plan is specifically designed to take advantage of their ignorance and exuberance regarding their hobby.
There is nothing new about this.
The point being, who knows, maybe those deals that look bad today could actually be a pretty good deal a few years from now. I wish I would have loaded up on Carson City coins three years ago.
There's a lot of money out there, and this isn't like the mid-90's, where you could put the stock page on a dartboard, invest in the stock hit by the dart and make 20% per year for a number of years. Much of it is chasing yields, usually getting into and getting out of the "flavor of the month" too late.
I see prices skyrocketing for coins, most of which I could not afford, even before the current craziness set in. Ie, I'd like to own an Unc. Bust $ or an MS 65 Seated $, but only in my dreams.
In many areas of type, however, the market has not risen much, if any, but you still can't find nice coins. Try finding properly graded Barber and Capped Bust Halves in PC 5 holders. Hope you have a few years. Some areas have actually dropped quite a bit; I was able to pick up a nice Barber Quarter and Dime in PC 6 holders for much less than they would have been five years ago.
I remember the last few coin busts - the speculators normally perdem as bundas - and go adeus. I think registry sets and ego have a lot to do with it. Some registry sets of classic coins have been put together in only two or three years. Education of new people is a good idea, but it's always caveat emptor. You can't give someone something he / she wants, even though it's in his / her best interest.
Os cegos numca veém (the blind never see).
"Seu cabra da peste,
"Sou Mangueira......."
jonathan
Joe
Seriously though, even some early coins have gotten way too expensive. If it's damaged, not treat it like it's problem-free. A dealer won't when you try to sell it to him. And don't depend on TPGs to weed this stuff out. There are lots of net graded and overgraded coins for sale despite the fact that the services said that they don't net grade.
As the 1999 silver Proof sets, LOL. A local dealer I know was starting get antsy when the Gray Sheet bid price hit $340. He was willing to sell what he had for $325 and wasn't finding any takers. A lot of these sets have been broken for slabs, sets and by fools who just break cases or lose papers, but still $340? In five years or so we might see people shouting the line from "The Price is Right," "Thats TOO MUCH!"
Aside from just TV, radio, short wave there is now the internet where coin prices are determined almost hourly. With the popularity of such TV shows as the Antique Road Show, there are new collectors of just about everthing poping up every day. With coins, over the last 50 or so years, I've noticed a massive increase in dealers, coins selling stores, coin shows everywhere.
When I was much, much younger I didn't even know there were coin shows and now there is at least one a week in this area. We have people jumping on the band wagon with the production of books on just about every type coin imaginable. At one of our many flea markets I noticed last Sunday there were 5 coin dealers where not long ago there was only one. I've seen the famous 55DD Lincoln Cent climb in price to almost double in the last year.
The recent Mints production of those Quarters and now Nickels are also stimulating coin collecting.
As more and more individuals realize the limited quantity of coins and the increasing amount of collectors, the prices will become out of control.
Unlike cloths, cars, food, etc we must all remember there is no compition in the priduction of coins. What we have is what we have and there is no one that says it must sell for this or that. Sort of like when you take a car in for repairs. A mecanic can charge what he wants. Same with coins.
I remeber that my uncle was a vest pocket dealer in NC back in the 60's, he had my Dad go to the bank and pick up all of the 1968-S Lincoln rolls he could. He was getting a premium of $4-5/ roll, as I remember. And now?
IMHO, coins are like any other scarce product - irrational exuberence can creep into the market at any time. What sucks is the incredible deflation that happens when enough people leave the market; someone always gets left holding the bag.
I know quite a few people with $10+ silver - and that's $10 in 1980 dollars...
Check out my current listings: https://ebay.com/sch/khunt/m.html?_ipg=200&_sop=12&_rdc=1
that you get in on the wrong side of the market whether you're buying bust coins or high grade
moderns. Sure, there is very little risk with the great rarities but how many of us are buying such
coins?
It's those who are paying far too much for the CURRENT market which is of greater concern. Even
if one is on the right side of the market he can get hurt badly.
There are always going to be overcharging and those who will rip off the unknowledgeable as well
but this isn't the problem it has been in the past when coins were hot. In the '60's shysters were
selling washers in BU rolls and sealed sets and whizzed coins as singles.
Today the problem is some counterfeit coins but more than anything many of the coins being sold
are being sold at prices that are two or three times bid while the buyer thinks he's getting a good
deal because the seller purports it to be or because the coins are in third tier holders.
Again, I like to see a retail market, but buyers should know they're paying retail. They should know
that problem coins have had very limited markets in the past and are likely to in the future. And, yes,
they should be aware that there's market risk with the '99 proof set because of high mintages or
old key dates because of possibly collapsing demand in the future. So long as people are collecting
coins rather than "investing" in them, market risk is of relatively little concern to most.
I also believe such a statement should be included in the ANA and PNG constitutions, that their members would help educate the public as much as possible. If they haven't already done so and I believe many seminars on this subject have been given at many of the larger coin shows.
I believe the TGS give free advice at the major shows were they attend, But I would like to see an impartial group with a few tables on the bourse floor to help the public in buying coins.
A few years back while I was trying to decide if I would be overpaying for a possible overgraded coin, the dealer would not accept a return after I had ANACS have a look at the coin, at a coin show. Needless to say, I didn't buy it.
Finding the bestway to get the right message out to everyone who buys coins or stamps and so on, would be the goal but it really boils down to how well each collector does his homework before buying coins.
Leo
The more qualities observed in a coin, the more desirable that coin becomes!
My Jefferson Nickel Collection
How does this sound?
Buyers Beware! Don't buy that coin unless you know what the %#&@ you're doing!
Leo
The more qualities observed in a coin, the more desirable that coin becomes!
My Jefferson Nickel Collection
<< <i>Anybody remember the 1950D Jefferson Nickel? And now?
I remeber that my uncle was a vest pocket dealer in NC back in the 60's, he had my Dad go to the bank and pick up all of the 1968-S Lincoln rolls he could. He was getting a premium of $4-5/ roll, as I remember. And now?
IMHO, coins are like any other scarce product - irrational exuberence can creep into the market at any time. What sucks is the incredible deflation that happens when enough people leave the market; someone always gets left holding the bag.
I know quite a few people with $10+ silver - and that's $10 in 1980 dollars... >>
I think I still have a roll of 1968-S Lincolns--hah!
There is plenty of risk in all segments of the market. Things change, and when change comes it comes quick. For example, a high number of near-perfect forgeries discovered in TPG slabs could devastate the key date market, and the entire hobby. The analogy would be the high percentage of high quality fake key dates on the market before TPGs. Don't say it can't happen. The advances in technology over the next 20 years may be nothing, or they may startle and amaze.
<< <i>
There is plenty of risk in all segments of the market. Things change, and when change comes it comes quick. For example, a high number of near-perfect forgeries discovered in TPG slabs could devastate the key date market, and the entire hobby. The analogy would be the high percentage of high quality fake key dates on the market before TPGs. Don't say it can't happen. The advances in technology over the next 20 years may be nothing, or they may startle and amaze. >>
That said, I think there is tremendous upside, much more upside than downside. Many coins have not returned to their previous highs. Most people that find a 19th century coin think it must be worth much more than it usually is. TV and other mass market coin merchants are able to sell most coins for double to quadruple what they typically retail for at a show. Unfortunately, those folks will never be made whole.
Overall, I think we will again at some point see a secular bull market in coins and bullion. Today may not be that day, but I am sure it will come. When it does, most coins will triple again in price, and the better performers will be 10x or 20x higher. Would it really be so absurd to see common Indian cents in G or VG sell for $5? Again, most people that find one in a drawer think that it must be worth at least that much. Take that price multiplier across the entire market and that is what I see coming. Again, maybe not tomorrow or next year but the day will come.