Are the investors back...and influencing the market?

291fifth

By "investors" I mean wealthy individuals who know little or nothing about rare coins, but who want to drop a lot of money on them because they have heard they are good investments.

Several threads lead me to believe that they are back in a big way and are influencing dealer conduct. Here are some hints:

Dealers at large shows are only interested in dealing with other dealers.

Regular collectors, who are knowledgable about coins and prices, have become a bother because they know too much. They won't overpay. They don't spend enough.

Where have all the good coins gone. Into investment portfolios, everyone. (You can sing this one if you like.)

What is left for the real collectors is swill, and they don't want it.

Fletcher

<< <i>wealthy individuals who know little or nothing about rare coins >>



Why not just mention me by name

Coinosaurus

<< <i>

Dealers at large shows are only interested in dealing with other dealers.

>>



This is a new trend??

roadrunner

Those types of buyers have been back for several years.....and more coming each month. Another set of investors, who also know a little about coins came back in the 1999-2002 era. I was one of those "investors." Every collectable is also an investment imo.

As far as dealers dealing with dealers. When I set up at local shows I am lucky if I sell 1 coin out of 100 to a collector. Dealers buy 99% of what I offer. I could not convince a collector to buy a great coin if it killed me...or them. Lots of tire kicking but little buying. It really doesn't matter to me. Selling nice coins to other dealers is easy and you get more money as well and no buyer's remorse. I've always seen shows as a venue for dealer to dealer wholesale...since that's what mostly transpires.

roadrunner

BillJones

Interesting roadrunner. This is much the same thing that I see at the shows although maybe 30% of my sales are to collectors.

What do I see collectors buying? Far too many of them look for the lowest price and buy problem coins to fill the holes in their albums. Then when they bring the coins in to sell a few years down the line, they get poor offers from the dealers. Those dealers are all "crooks" of course because they won't pay "fair prices."

Listen up collectors. If you buy junk today it will be junk tomorrow. Even if you buy the "right coins" (date and mint mark combinations that happen to go up in price), you buy problem coins, you will get very little if any of the benefits from having bought those coins.

Buy the best coins you can afford (within reason - paying very high premiums for super high grades is not a great strategy either IMO), and don't try to build your collection in a day. It takes years for a middle class person to build a great collection.

People say to me, "Where did you get those coins?" The answer is I did it over a 40 year period and bought the best coins I could afford when I purchased them. That's the long and short of it.

roadrunner

Bill, your 30% rate is probably more in line with what I see New England dealers do. Since I like to sell play with either generic gold or high end silver type, it limits what the available buyers. I also realize that when the proverbial market goes bust, I won't have a pack of angry sellers wondering why I won't take back the stuff I sold to them......all at once. I wonder how the bigger retailers felt when this happened to them from 1980-1982 and 1990-1994.
My guess is they didn't feel much and just went on their way.
How about all those guaranteed 90% buybacks that Allstate Coin offered at that time? It was clear that at some point in time that was gonna backfire bigtime.

But the investors are back and continuing to flow in. At this point I'd say THEY are in control of the market...along with the usual dealer manipulations via their "clients."

roadrunner

Bear

The surge in dealer to dealer activity at shows, at

the expense of the retail customer, means only one thing.

When the music stops, dealers are gonna be left holding

a bag of questionable coins at inflated prices, that we collectors will not

purchase. Arrogance will turn to fear, and the hunt for the

poor old retail customer will increase in despiration. The big money

investors will move on to another game to play, dealers will stop paying

other dealers big bucks for questionable coins and the game starts all over.

Fletcher

<< <i>Arrogance will turn to fear, and the hunt for the poor old retail customer will increase in despiration. >>



I couldn't agree more. And I have a great big list of a$$e$ that I will never buy anything from and a tiny little list of good dealers that will continue to get my business when that happens

morgannut2

By investers I think some of the obvious new money is from Wall Street investments that have been sold. There's nowhere now to put the money. The problem is once these newbees see something--often a nice coin a dealer recommends at auction--they are clueless as to when to stop bidding against another clueless newbee. At least they seem to go after super high end coins, and will enjoy them, even if they're buried value-wise.

291fifth

I think I just heard the market peaking.

roadrunner

Not even close to peaking. Gem Barber halves going begging at $3K or gem Barber quarters lagging at $1050? You'll need double those levels until we've reached the end of the current up cycle.

roadrunner

morgannut2

But I see the 95% of the ordinary "stuff" out there as peaking because those types of collectors/bidders are starting to feel the pain. It's from higher costs of health insurance, local taxes, interest rates on variable loans/credit cards and this month stcker shock at the gas pump. Top-top coins are still going to rise from new money people-- unaffected by these types of factors.

CalGold

Why should coins like gem barber and seated quarters run up in price? Who is going to chase them to the top? They are too expensive at current levels for middle class folks, especially since they are part of a long series, and they are not sexy enough for the trophy hunters.

There is a lot of talk about shows becoming dealer to dealer trade with poor public attendance. Yet the deales are talking about selling out their stock. Why are dealers buying out other dealers? Got to be meeting demand from a collector base I would think or they are placing coins with would be "investors" who are relying on dealers to build "portfolios." Good luck to those guys. They will be moaning how they should have sold when the market was up.


CG

MrEureka

The surge in dealer to dealer activity at shows, at

the expense of the retail customer, means only one thing...


Don't be so quick to accept 291's premise. In fact, bourse dealers are today no more or less responsive to collectors than they have been for many, many years.

As for investors flocking to coins, yes, that is the trend, and it certainly impacts the market.

RoelSports

A lot of coin collectors are getting back into the hobby after several years of family, career, etc. (I'm one), and we now have more disposable income to purchase nicer coins than we were able to in our fledgling years. The ability to "pull the trigger" when you find a nice piece is, in part, the reason that this market is hot. It will only get hotter as the "baby boomers" retire and re-kindle their passion with coins.

MrEureka

A lot of coin collectors are getting back into the hobby after several years of family, career, etc. (I'm one), and we now have more disposable income to purchase nicer coins than we were able to in our fledgling years. The ability to "pull the trigger" when you find a nice piece is, in part, the reason that this market is hot. It will only get hotter as the "baby boomers" retire and re-kindle their passion with coins.

Many thousands of investors also recognize this trend. They invest accordingly.

RYK

Many thousands of investors also recognize this trend. They invest accordingly.

Aren't dealers, in many ways, also investors?

BillJones

<< <i>Many thousands of investors also recognize this trend. They invest accordingly.

Aren't dealers, in many ways, also investors? >>



Not really. Most dealers are looking for a quick turnover at a modest to moderate mark-up. Any investor, who is worth his salt, should be prepared to hold their investment for at least a year or better still three to five years or more. If an investor is looking to "churn" all the time they are like amateur day traders in the stock market. In a crazy, over heated market, where almost everything is on the up swing, they might make a little money and think they are doing great. But when things show down they find out that they have a portfolio full of slush and are on the road to losing whatever grains they have made and probably their principle to boot.

As Dave Bowers wrote years ago, investing in coins is a long-term proposition (at least three to five years) and collectors are the ones who do the best because they spend the time to learn a lot about what they are buying.

roadrunner

Don't forget Oreville's theory of hundreds of millions in inheritances coming along as one generation passes on to the next. That money has to continue to go somewhere. And less and less is going into real estate, bonds, and stocks. So what are some other options?
Hmmmmm?

Whether the "I" word is a 4 letter word or not remains to be seen.
But as Andy alluded to, it happend from 1977-1980 and then 1988-1990, and it is happening again from 2005-???. We don't make the rules......we just have to play by them for the time being. Or one can leave and came back when the dust has settled in 3-10 years.

roadrunner

jdsinva

I think the term you are describing is speculator, not investor. . .

TheRaven

I think they are indeed flowing into the market.....

As far as Mint State Barber coins, they will continue to be flat price wise, because the prices are so high.....

oreville

Are the investors bacK?

Yes, they started coming back about a year ago.


Are the investors influencing the market?

In certain areas; yes and then only in the commodity markets and the auctions in which nice coins are selling into stratosphere prices.


Are the investors controlling the market?

Not yet. Collectors are still running the show in most areas but investors are getting more intertwined in things.


Are the investors the warning sign in which the market is peaking?

Only when the investors then speculators start controlling the market and when you see a large increase in new dealers serving the coin market. That is not yet happened. We are probably a year away from seeing signs of this.

LEAP269

roadrunner is wiser then he looks- a huge amount of money is transferring from an older generation to the next. some of this money already is ending up in coins/bullion. i see this in my practice as clients decide to buy some gold and silver american eagles or bars instead of immediatly investing the inheritance. this wealth transfer is just starting. it also should be a great time for a dealer in a brick and mortar to be presented with grandmother's old coins for cash. this trend may not be enough to prop up the coin market, but that certainly is where some of the new money is going.

relayer

No

mhammerman

"If you buy junk today it will be junk tomorrow. Even if you buy the "right coins" (date and mint mark combinations that happen to go up in price), you buy problem coins, you will get very little if any of the benefits from having bought those coins."

Nicely put Mr. Jones...