Rare Coins & tough economy.

BrianKuszmar

I am curious if the economy has affected or will have an impact on ones decisions purchasing Rare Coins.

With Rare Coins still enjoying a sustained bull market do you believe that a poor economy will hurt or help the rare coin market?

Do you consider Rare Coins as a safe place to put money in tough economic times?

How do you feel the increase of Precious Metals affects the price of Rare Coins (non bullion related) ?

As a coin collector do you also buy bullion to hold/trade?

I am Interested in how Collectors feel about the economy and precious metals prices and how it's affecting there buying and/or selling.
Appreciate the input.

Much Regards to all

fc

average joe coins are already slipping in price if you ask me.
i collect gold and the only thing propping them up is the price of the metal.

i see less bidders on ebay and fewer people chasing coins to new highs.

there are always exceptions to the rule but many of the half eagles i watch
are simply bullion now days.

i expect the 500-2000 dollar coins to start slipping in price. i also expect to see
many of these coins coming back onto the market as the buyers need money
for other things.

my two cents.

Newcomp103

Until/unless my personal economic situation gets to the point to where I cannot afford to have a hobby... I will continue to buy what I like.

291fifth

The very top end of the market seems to be flush with cash. In addition, alternative investments with attractive rates of return seem very limited.

The middle of the market is where the "big hit" is likely to occur. How many of these folks have lost their jobs recently and/or are upside-down in their mortgages. More trouble coming as inflation eats away at their disposable income.

Low end of the market. Junk always seems to do well. Many older collectors here with low but stable pension income.It will take quite a few years for this segment of the market to die off because of all the early retirements.

dbldie55

there are probably a hundred threads that have already discussed this. Just search for them.

Unknown

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secondrepublic

I don't see how rare coin prices would rise in a recession. A decline seems far more likely.

BECOKA

In times like this the rich get richer and everyone else gets poorer.

High end coins will not see much of a drop. As fc notes the low end is already seeing a decline.

roadrunner

I don't see how rare coin prices would rise in a recession. A decline seems far more likely.

Look back to the recessionary period of 1973-1979 where rare coin prices (and commodities in general) increased strongly while stocks and other non-tangible assets floundered. The FED seems more than willing to continue to pump in liquidity so additional asset bubbles will be manufactured and inflated. I see no reason why "investment quality" (ie worthwhile, rare, colletible) coins could not continue to increase
in value in this environment.

roadrunner

ambro51

The next decade will be the period when the parents of all the baby boomers pass on. Its unfortunate, and painful but it is a fact. That will be a substantial transfer of wealth to the next generation. These baby boomers are the same folks who were the impressionable kids who spent hours and hours over their Whitman folders. As safe conventional investments become few and far between, look for these boomers to revive their latent coin collecting passions. I speak from experience.

jimmymac

IMO, rare and key-date coins are tangible assets that do well in recessionary periods - the upper crust investor will continue to look and invest in rare coins and the like - they need someplace to put their money - to hold value against a falling dollar and stock market - the PM run-up will continue to fuel the rare coin market and there is no end in sight that this run-up is losing steam - I believe for those who position themselves correctly by owning rare and key dates coins cannot lose in the long run.

LanLord

"I am curious if the economy has affected or will have an impact on ones decisions purchasing Rare Coins. "

Nope, not at all. Lack of money has affected my decisions to buy, but not this stupid economy!

gecko109

<< <i>I don't see how rare coin prices would rise in a recession. A decline seems far more likely.

Look back to the recessionary period of 1973-1979 where rare coin prices (and commodities in general) increased strongly while stocks and other non-tangible assets floundered. The FED seems more than willing to continue to pump in liquidity so additional asset bubbles will be manufactured and inflated. I see no reason why "investment quality" (ie worthwhile, rare, colletible) coins could not continue to increase
in value in this environment.

roadrunner >>



What do you define as "worthwhile" coins? Would an MS64 common date seated coin fall into that category, or are you talking about $10k coins?

BrianKuszmar

appreciate the feedback folks..

ambro51

What do you define as "worthwhile" coins?

I feel that if the only place you see "that" coin selling is Heritage, or Stacks etc....thats the worthwhile coin.

PerryHall

<< <i>In times like this the rich get richer and everyone else gets poorer. >>



Don't worry. Obama will reverse that trend.

Elcontador

If the economy turns south, the last thing the average collector will think about will be coins. For collectors, funds for purchases such as coins are discretionary. For example, when I first bought my house and then shortly afterward started my own business, coins were the last thing on my mind, as discretionary funds were few and far between.

The top end of the market won't be affected by this; strong money is always paid for the best of what's out there. But I don't think an okay but nothing special 1892 P Barber Half in a PC 5 holder will bring what is does now.

mrearlygold

<< <i>"I am curious if the economy has affected or will have an impact on ones decisions purchasing Rare Coins. "

Nope, not at all. Lack of money has affected my decisions to buy, but not this stupid economy! >>








It's going to be a great year.

Edscoin

<< <i>

<< <i>In times like this the rich get richer and everyone else gets poorer. >>



Don't worry. Obama will reverse that trend. >>


Your right. If Obama wins everone will get poorer

claychaser

I see the following as positive factors:

1. The Fed pushing interest rates lower, while inflation increases (energy, commodities, food, services, transportation)
2. Increasing precious metals prices, giving people who sell to lock in gains extra funds to buy coins
3. Doubtful prospects in traditional investment markets - stocks and real estate - and only needing a very tiny portion of those investment funds entering the coin market to drive up demand
4. The almost certain end of favorable cap gains tax rates on stocks and real estate, prompting tax selling, and funds generation, before Obama or Hillary get a chance to change the rules
5. The ability to buy assets for cash, with near total privacy.

There are also factors to the negative:
1. The lack of interest of younger people in history and collecting
2. The bad experience financial impact of all the "collecting" fads, from Beanie Babies, mass produced baseball cards, coins sold on TV, etc.
3. For classic gold, the competition for bullion related dollars with all the modern mint products (which hopefully a lot hit the smelter with high metals prices)
4. The lack being able to assemble worthwhile or interesting and fun collections from circulation
5. Personal security issues with owning and travelling with coins

OK posters - flame away!

mach19

<< <i>I see the following as positive factors:

1. The Fed pushing interest rates lower, while inflation increases (energy, commodities, food, services, transportation)
2. Increasing precious metals prices, giving people who sell to lock in gains extra funds to buy coins
3. Doubtful prospects in traditional investment markets - stocks and real estate - and only needing a very tiny portion of those investment funds entering the coin market to drive up demand
4. The almost certain end of favorable cap gains tax rates on stocks and real estate, prompting tax selling, and funds generation, before Obama or Hillary get a chance to change the rules
5. The ability to buy assets for cash, with near total privacy.

There are also factors to the negative:
1. The lack of interest of younger people in history and collecting
2. The bad experience financial impact of all the "collecting" fads, from Beanie Babies, mass produced baseball cards, coins sold on TV, etc.
3. For classic gold, the competition for bullion related dollars with all the modern mint products (which hopefully a lot hit the smelter with high metals prices)
4. The lack being able to assemble worthwhile or interesting and fun collections from circulation
5. Personal security issues with owning and travelling with coins

OK posters - flame away! >>






No Need to flame my friend. You are very much right on.

Edscoin

<< <i>I see the following as positive factors:

1. The Fed pushing interest rates lower, while inflation increases (energy, commodities, food, services, transportation)
2. Increasing precious metals prices, giving people who sell to lock in gains extra funds to buy coins
3. Doubtful prospects in traditional investment markets - stocks and real estate - and only needing a very tiny portion of those investment funds entering the coin market to drive up demand
4. The almost certain end of favorable cap gains tax rates on stocks and real estate, prompting tax selling, and funds generation, before Obama or Hillary get a chance to change the rules
5. The ability to buy assets for cash, with near total privacy.

There are also factors to the negative:
1. The lack of interest of younger people in history and collecting
2. The bad experience financial impact of all the "collecting" fads, from Beanie Babies, mass produced baseball cards, coins sold on TV, etc.
3. For classic gold, the competition for bullion related dollars with all the modern mint products (which hopefully a lot hit the smelter with high metals prices)
4. The lack being able to assemble worthwhile or interesting and fun collections from circulation
5. Personal security issues with owning and travelling with coins

OK posters - flame away! >>



No Flame, I Agree with everthing you said! and well said I might add.

MrEureka

do you believe that a poor economy will hurt or help the rare coin market?

IMHO, the US economy has not been "poor" since the 1930's, and I don't see that happening again in the foreseeable future.

However, there's no doubt that people spend less money on coins when they suffer personal financial setbacks, and/or when they perceive the overall economy to be worsening.

DRUNNER

I collect for the history, the sense of 'completeness', the challenge, and the education. Couple that with the opportunity to use some of the best pieces in my classroom for examples and I have no problems with this economy. I feel that I may have a buying oportunity soon as some pieces I want may drift lower.

I love key dates though . . . and to answer the OP, I think the keys are where the money can be spent if you are looking for the long term and investment aspect of collecting.

Drunner

Unknown

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secondrepublic

<< <i>OK guys it appears the majority believe that coin values/prices cannot fall and can only really rise. So my only question if that is true then why did coin values/prices drop previously? >>



It is impossible for coin prices to reach a bubble peak unless enough people think prices can never go down. Thinking prices can never go down is an essential element (and precondition) of a bubble.

Coins are like other assets. During times of recession, prices usually fall because there is less demand. Even the mega-rich buyers will feel something of a pinch if the stock market drops another 15% and real estate prices continue their decline. I don't see how prices can remain at this high level, much less increase, under those circumstances.

secondrepublic

<< <i>I don't see how rare coin prices would rise in a recession. A decline seems far more likely.

Look back to the recessionary period of 1973-1979 where rare coin prices (and commodities in general) increased strongly while stocks and other non-tangible assets floundered. The FED seems more than willing to continue to pump in liquidity so additional asset bubbles will be manufactured and inflated. I see no reason why "investment quality" (ie worthwhile, rare, colletible) coins could not continue to increase
in value in this environment.

roadrunner >>



Roadrunner, I don't see much inflation in our near future. Rising prices for oil and commodities don't signal inflation - by my definition (and that of many economists) inflation is purely a phenomenon of the total money supply. Money is 5% coins and paper notes and 95% credit. Right now our economy is destroying credit at an unprecedented rate (all those write-downs you've been hearing about) and less new credit is being created (the so-called credit squeeze and unwillingness to lend). That shrinkage of the money supply will eventually wallop the price of commodities as well as other asset prices.

Mark my words, our bigger concern is deflation like that seen in Japan after their property bubble burst in the 1980s, not inflation.

BECOKA

<< <i>

<< <i>In times like this the rich get richer and everyone else gets poorer. >>



Don't worry. Obama will reverse that trend. >>



I doubt it, if you tax the rich they still make more money than anyone else.

roadrunner

Roadrunner, I don't see much inflation in our near future. Rising prices for oil and commodities don't signal inflation - by my definition (and that of many economists) inflation is purely a phenomenon of the total money supply. Money is 5% coins and paper notes and 95% credit. Right now our economy is destroying credit at an unprecedented rate (all those write-downs you've been hearing about) and less new credit is being created (the so-called credit squeeze and unwillingness to lend). That shrinkage of the money supply will eventually wallop the price of commodities as well as other asset prices.

Mark my words, our bigger concern is deflation like that seen in Japan after their property bubble burst in the 1980s, not inflation.

The FED will not allow deflation so they will pump liquidity into the system at mind-boggling rates if that's what it takes to rescue the banks from the credit liquidity and derivatives issues. Considering we've been increasing M3 at 10-15% per year for over 10 years, that will show up somewhere in increased prices. Our inflation has been conveniently exported overseas from 1996-2006. It's now coming home to roost. What shrinkage in money supply. Russia was increasing their M3 at 40+% last year. Most major nations were in the 10-20% range. This is world wide inflation that is now showing up in metals, grains, etc.

Truth - monetary inflation ALWAYS will show itself in price inflation, it's only a matter of time. The US has just been a master of keeping it at bay overseas for quite some time. But not any longer. It's back and in a big way. The price of appliances, computers, and cars won't be going up, but everyday services, health care, foods, energy, utilities, etc will be heading much higher.

We still have over $500 TRILLION left in credit to be "killed." The first few trillion lost so far is a drop in the bucket. Credit Default swaps alone are valued at $45 TRILLION and they just started to get some unwanted exposure. Mortgages, credit cards, and auto loans are each much smaller than the CDS but have already had a huge effect. Such is the price for the banks playing with 50 to 1 leverage and losing the bet. This stuff will be unwinding for at least another 3 years. While actually currency in circulation has been decreasing the past few years, the total amount of liquidity/credit has been rapidly increasing. I believe total derivatives increased at around 45% in 2007 (on the order of $150 TRILL). That's astonishing considering the mess we were already in. It just makes the hole deeper. Goal #1 is for the FED to save its banking buddies. The economy and its citizens is not a top priority for them.

Coin prices will eventually fall. But not until the credit mess is fully unwound, and the liquidity pumping ceases.

roadrunner