How Is Economic News Affecting The US Coin Market?
ricardouno
Posts: 244 ✭✭
Does anyone know how the present economic news is affecting the US coin market in general? Numismatically, that is, without relation to bullion related coins or products.
Thanks for any insight, observations..........
Thanks for any insight, observations..........
0
Comments
i might even sell one of my prized matty's for 3 jefferson nickels too
<< <i>This is an opportunity to sell bullion related coins before the price of PMs goes down again. >>
It's not just the price of the PMs that could decline. The premiums being paid over melt for things like common date slabbed MS62 $20s are very high right now. When/if things calm down those premiums will disappear very quickly. Fear is what is driving those premiums.
I have continued to buy coins over the past year, but have financed it mostly by selling off other parts of my collection. In other words, I am not putting very much new money into my collection because I don't have as much discretionary income as I did a couple of years ago before the enormous spike in gas (and related) prices.
If the economic news continues to sour, I can easily see myself eventually having to sell my collection in order to make ends meet on other fronts. On the other hand, I can always collect more coins when things improve.
I'm just speaking for myself, and not trying to make any sort of political statement.
-Randy Newman
<< <i>I doubt the economic news affects the coin market very much. Maybe bullion, but classic coins and key dates won't be terribily affected. >>
I think you are going to be in for a big surprise.
Hey, they've been thumping their chest in NYC about how they've been immune to the real estate slowdown and now it's starting to slowdown there. A mil for a 1 bedroom in the city? Cmon. Has to correct.
Pop goes the dollar.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>I think you are going to be in for a big surprise. >>
Nah. I won't be surprised one way or the other. I also don't care very much. I don't spend every cent I own on coins, so let 'em tank, that's fine. Let 'em go up, that's fine. Let 'em stay exactly the same, that's fine too. Every PM thread I've read speaks of gold hitting $500 or $1500 within a year and here we are...still basically the same. Nothing changes, everything fixes itself (or the government does it, whatever) and people just keep on rolling along. Half the people say things are going to plummet and half say things are going to sky rocket. Both groups are completely and totally wrong.
<< <i>I doubt the economic news affects the coin market very much. Maybe bullion, but classic coins and key dates won't be terribily affected. >>
I think the market for any discretionary item has to suffer in a down economy. I don't see people selling off their collections to pay the mortgage or buy food (unless things get REALLY bad), but spending on expensive hobbies is bound to slow.
Brothers, it's times like this that will test your mettle. I've been collecting since 1964 and I suppose I've known hundreds of dealers. If there is one thing that most dealers have in common it's that they can smell desperation. If you walk in there with just "product", you're gonna get a low ball offer. I would try to hold onto them if at all possible.
WASHINGTON - The world economy will slow sharply this year and next, with the United States likely sliding into recession reflecting mounting damage from the most dangerous financial jolt in more than a half-century.
International Monetary Fund, in a World Economic Outlook released Wednesday, slashed growth projections for the global economy and predicted the United States — the epicenter of the financial meltdown — will continue to lose traction.
"The world economy is now entering a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s," the IMF said in its report.
The IMF now projects that the global economy, which grew by a hardy 5 percent last year, will lose considerable speed, slowing to 3.9 percent this year. It is forecast to weaken even more — to just 3 percent — next year, marking the worst showing since 2002. In the past, the IMF has called global growth of 3 percent or less the equivalent to a global recession.
The IMF's projection was made before the Federal Reserve and other major central banks from around the world slashed interest rates Wednesday in an attempt to prevent a financial crisis from becoming a global economic meltdown.
The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent, while the European Central Bank sliced its rate to 3.75 percent.
Also cutting rates: The central banks of China, Canada, Sweden, and Switzerland. The Bank of Japan said it strongly supported the actions.
The IMF's chief economist, Olivier Blanchard, called the orchestrated rate cuts "clearly a step in the right direction." However, he warned that it is also clear that "there will be tough economic times ahead." Lower rates aren't a cure-all, he said. "By itself, it cannot solve the problem, but it is part of the solution."
Asked about the risk of the global economy getting stuck in a prolonged downturn, Blanchard responded: "I believe that the risk of a Great Depression is nearly nil.'
The financial crisis, which erupted in the United States in August 2007 and has quickly spread around the globe, entered a tumultuous new phase last month, badly shaking confidence in global financial institutions and markets, the IMF said. It has triggered a cascading series of bankruptcies, forced mergers and radical government interventions — such as the United States' unprecedented $700 billion financial bailout — to stem the fallout.
The new projections come before a gathering of the world's top economic powers on Friday and the weekend meetings of the IMF and the World Bank. The jarring financial crisis is likely to figure prominently in those discussions.
In the United States, the economy, which grew by 2 percent last year, is projected to slow to 1.6 percent this year. Growth would screech to a virtual halt in 2009, barely budging at just 0.1 percent. That would mark the worst showing since 1991, when the country was pulling out of a recession.
"With a recession now looking increasingly likely, the key questions are, how deep will the downturn be, when will a recovery get under way and how strong will it be?" the IMF asked. Much will hinge on how effective the United States' steps to stabilize financial markets and get credit flowing more freely again turn out to be. Another important factor is whether these and other actions turn around U.S. consumers, whose retrenchment is hurting the economy.
The IMF — and many private economists — believe the U.S. economy will probably contract in the final three months of this year and the first three months of next year, meeting a classic definition of a recession. The economy's last recession was in 2001.
The government's bailout package is aimed at thawing lending by buying bad mortgage-related debt from troubled financial institutions. The idea is that the banks' books would then be cleaner, putting them in a better position to lend and get the economy moving.
The IMF said this effort should help to stabilize markets but even so "the process of balance-sheet repair will be long and arduous." Credit availability is likely to remain constrained throughout 2009, the IMF said.
Fed Chairman Ben Bernanke warned in a speech Tuesday that the economy's outlook for this year has darkened and the pain could last for some time. His remarks were seen as foreshadowing Wednesday's rate cut.
Looking at other countries, Germany's growth will slow to 1.8 percent this year, down from 2.5 percent last year. France's growth will weaken to just 0.8 percent, compared with 2.2 percent in 2007. Britain's economy will see growth taper to 1 percent, down from 3 percent last year. Canada's growth will tail off to 0.7 percent this year, from 2.7 percent last year.
In Japan, growth will cool to just 0.7 percent, from 2.1 percent last year.
Global powerhouses China and India will see growth clock in this year at a robust 9.7 percent and 7.9 percent, respectively. Even if those projections prove correct, they would still mark downgrades from their blistering performances last year. Russia's economy should grow by a brisk 7 percent this year, down from 8.1 percent last year.
Inflation around the world remains high, driven up by surging energy and food prices through much of this year.
It will be tricky for Bernanke and his counterparts in other countries to navigate weak growth and inflation pressures, the IMF said.
"The immediate policy challenge is to stabilize financial conditions, while nursing economies through a period of slow activity and keeping inflation under control," it said.
-end
I'm still just selling a few coins so I can buy a few coins.
I have a feeling a lot of these corrections are going to be correcting for quite some time to come.
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)
I know I can't.
As soon as some fear subsides, some green overtakes the red on their portfolios, and we have a few days with less wild swings in the Dow, I expect things to come more or less back to normal.
Typically major upheavals are good for the coin market (see 1973, 1979, 1981, 1987, etc.). Part of this is that dealers become enriched with a rapid increase in PM prices and are thus emboldened to bid up the price of rare coins among themselves. In this particular instance, when dealers are having a hard time borrowing more money (and are seeing the stocks/real estate that they own and borrow against decrease in value), that might not happen. Further, there is no injection of institutional money that I know of that would be analogous to the increases of the late 80s.
With inflation already underreported and bound to increase (I wouldn't be surprised to see 10-12%), it might not be a bad time to buy coins. They sure beat money under the mattress. That stated, the kids can't wear them to school either.
As Dave Bowers told me during the recession of 2000-01, "don't worry. when the economy is good, people want to buy and sell coins. when the economy is bad, people want to buy and sell coins."
I'm glad I don't have a whole bunch of $50,000 coins in stock right now though ...
Betts medals, colonial coins, US Mint medals, foreign coins found in early America, and other numismatic Americana
With that decided, what does the future hold?
Buy and hold coins.
Sell the rest soon.
Dealers are having cash flow problems. Other dealers
as well as collectors are beginning to renege on debtsand promises,
as well as horrific losses in the stock market. Banks are
cutting back on lines of credit,. credit card limits as well as short
term business loans. Very soon, we will see dealers
cut back on purchases unless they have a for sure buyer for the coin.
Grading will tighten by at least 1/2 a point when it comes to buying.
Some TPG ( NOT PCGS) may try to compensate by over grading to get
big submitters an opportunity to auction off coins and get their money out
of it. Cash is now king and cash is becoming very tight indeed.
The second problem is collectors. As hours are cut back at work and layoffs
continue to increase, folks will become much more security conscious as to cash
reserves. Loses in home values, stock values , 40lKs, and a growing sense
of uncertainty and fear will soon have a sharp impact on purchases. Further, seasoned
and moderately experienced collectors will start to demand more coin for the money. Top
quality coins will really dry up as holders of the coins will put them back in the vault until
the next coin bull market. What we will soon be left with are fugly, over,graded ,stale coins.
This will lead to stale inventory and decreasing sales, as collectors hold back for better times and
better coins. To be sure, outstanding coins will still be snapped up, but at more modest premiums.
This is the normal ebb and flow of any industry as to prices. This too shall pass, given time, then,
the process will start again. If you have nice coins, hold for better times. If you need cash and
have no choice, it will be better to start selling sooner rather then later into this market.
Camelot
<< <i>Bear knows his den, that is for certain! >>
How can you tell? He posts in such an un-readable format.
Camelot
So everyone but me should have money to buy coins.
That said, I'm fairly insulated from the recent crisis, being free of debt of any kind and long in gold/cash for some time now. What's left in stocks has gotten hammered recently, but overall things haven't changed for me...Mike