I think is it true that our coin picking abilities are better than our stock picking abilities—new W
Longacre
Posts: 16,717 ✭✭✭
I was reading the latest installment of the Doug Winter blog, and he continues to raise some interesting points, particularly in these troubled times. I would like to highlight a few of the items in the blog, and provide some comments for discussion:
(1) “…but I think the current economic slowdown should not preclude you from buying coins. In fact, I think it should encourage you, given the fact that your stock picking abilities are likely to be far inferior to your ability to by nice coins.” Ed.-- I think statement has some merit to most people. On these boards, there are a lot of people who know a lot of things about coins. I cannot say the same about stocks (except for maybe Saintguru, who is probably making money hand over fist in these markets). Perhaps now is the time to buy something that you understand and know, rather than having your money in a market that seems to have no direction.
(2) “As someone who has lived through any number of bad coin markets, this one feels like it may be different. I can recall markets where you literally could not get other dealers to look at your coins and you could literally beg clients to buy something because it “was such an incredible deal” and they would pass.” Ed.-- although I can just picture 291fifth salivating as he writes a response to this comment
, perhaps Winter has a point and this time it is different. If the dealers are still buying and tying up scarce capital in coins, maybe we, as collectors, should be a little more trusting and continue to make purchases.
(3) “…Even without any of the expected promotions that are likely to occur in the near future…” Ed.—I would like to be a fly on the wall when these market manipulators collude to move prices, even though the dealer community thinks it is their birthright to do so (and no one loves the coin dealers more than Longacre).
(4) “Perhaps I’m biased, but I’m focusing my energies on coins—the one market that I understand.” Ed.—see point #1 above. I think he has a point here.
*******************
October 13, 2008
If the Financial Crisis has proven anything, it’s that people seemed to have forgotten that stocks are volatile and that investing in the markets entails a degree of risk. Enough risk that you have to question the sagacity of middle-class people having the majority of their retirement funds tied-up in something as speculative as stocks.
Through all of this chaos, tangible assets such as precious metals and rare coins appear to have held up pretty well. As I mentioned in my last blog, the demand for bullion-related coins such as Liberty Head double eagles and Saints has been nothing short of incredible and after a few very slow weeks, I’ve noted on a personal level that collector coins are beginning to sell again; albeit on a scale that is certainly reduced from what I was seeing a couple of months ago.
One comment I’ve heard from a number of clients in the last few weeks is that they are looking at their collections from a much different perspective now than prior to 9/15. Before the stock market imploded, many high net worth individuals viewed their coins as a minor part of their overall portfolio and thought of numismatics as a sort of a plaything. Now, after these individuals have lost 20%, 30% or even more of their net worth, their coin collections are suddenly a much more significant portion of their assets. And I believe that this will cause them to regard coins in a more serious light than in the past.
As someone who has lived through any number of bad coin markets, this one feels like it may be different. I can recall markets where you literally could not get other dealers to look at your coins and you could literally beg clients to buy something because it “was such an incredible deal” and they would pass. At this point in time, dealers are still buying coins and serious collectors seem to still want to make purchases; just maybe not at the level they might have been before.
It’s going to be really interesting to see what the new levels on rare coins are going to be in the coming months. There is no doubt in my mind that certain coins are worth 10-30% less today than they were a few weeks ago. The question is, of course, which ones are and which ones aren’t. I’m not sure that even the most sophisticated experts know with certainty.
One thing I do know is that in spite of the substantial losses in the markets there is still a lot of cash in the world. I can’t imagine that Joe Investor is going to be hugely anxious to run back to Wall Street or to buy real estate. And returns on conservative investments are so bad right now that once people get over their fear and we see a few days of decent to good economic news (and we will see this sometime in the not-so-distant future) they will regain their sea legs and look for something that provides them with a hedge against inflation and that offers some future potential.
I’m not naïve enough to think that tens of thousands of Intel and Oracle investors are going to come running into the coin market. But is it so hard to think that a small number of investors are going to turn to coins? And I’ve got to think that the part of the market that will benefit most from this is gold.
To be more specific, I think an area that will see a real surge in demand in the coming months will be slightly better date large-sized coins in the $1,000-5,000 range. Even without any of the expected promotions that are likely to occur in the near future, the specific sort of coins that I think will see renewed interest are slightly better date Liberty Head eagles (I particularly like reasonably priced but attractive New Orleans eagles given their ability to be collected as a set), pre-Civil War era Type One double eagles and better date Saints with little or no (current) market premium factor.
I also have to think that really rare material is going to retain a good amount of its value in the long run. If you own a gold coin that is among the finest known of a popular issue or it is one of just 50 known in all grades combined, there is enough money left in the world for the demand level on these kinds of coins to remain high—and maybe even to become higher in the future.
Going back to something I mentioned earlier in this blog, I think it is important to regard your collection right now as an important asset in your overall financial portfolio. I’m not necessarily saying that coins should become a greater percentage of your net worth (the housing, stock and credit markets actually already did that for you, like it or not...) but I think the current economic slowdown should not preclude you from buying coins. In fact, I think it should encourage you, given the fact that your stock picking abilities are likely to be far inferior to your ability to by nice coins.
These next few weeks are going to be very interesting times in the markets. Perhaps I’m biased, but I’m focusing my energies on coins—the one market that I understand.
Doug Winter
10/13/08
www.raregoldcoins.com
For more information on United States gold coins, please feel free to contact me at dwn@ont.com.
(1) “…but I think the current economic slowdown should not preclude you from buying coins. In fact, I think it should encourage you, given the fact that your stock picking abilities are likely to be far inferior to your ability to by nice coins.” Ed.-- I think statement has some merit to most people. On these boards, there are a lot of people who know a lot of things about coins. I cannot say the same about stocks (except for maybe Saintguru, who is probably making money hand over fist in these markets). Perhaps now is the time to buy something that you understand and know, rather than having your money in a market that seems to have no direction.
(2) “As someone who has lived through any number of bad coin markets, this one feels like it may be different. I can recall markets where you literally could not get other dealers to look at your coins and you could literally beg clients to buy something because it “was such an incredible deal” and they would pass.” Ed.-- although I can just picture 291fifth salivating as he writes a response to this comment
, perhaps Winter has a point and this time it is different. If the dealers are still buying and tying up scarce capital in coins, maybe we, as collectors, should be a little more trusting and continue to make purchases.(3) “…Even without any of the expected promotions that are likely to occur in the near future…” Ed.—I would like to be a fly on the wall when these market manipulators collude to move prices, even though the dealer community thinks it is their birthright to do so (and no one loves the coin dealers more than Longacre).
(4) “Perhaps I’m biased, but I’m focusing my energies on coins—the one market that I understand.” Ed.—see point #1 above. I think he has a point here.
*******************
October 13, 2008
If the Financial Crisis has proven anything, it’s that people seemed to have forgotten that stocks are volatile and that investing in the markets entails a degree of risk. Enough risk that you have to question the sagacity of middle-class people having the majority of their retirement funds tied-up in something as speculative as stocks.
Through all of this chaos, tangible assets such as precious metals and rare coins appear to have held up pretty well. As I mentioned in my last blog, the demand for bullion-related coins such as Liberty Head double eagles and Saints has been nothing short of incredible and after a few very slow weeks, I’ve noted on a personal level that collector coins are beginning to sell again; albeit on a scale that is certainly reduced from what I was seeing a couple of months ago.
One comment I’ve heard from a number of clients in the last few weeks is that they are looking at their collections from a much different perspective now than prior to 9/15. Before the stock market imploded, many high net worth individuals viewed their coins as a minor part of their overall portfolio and thought of numismatics as a sort of a plaything. Now, after these individuals have lost 20%, 30% or even more of their net worth, their coin collections are suddenly a much more significant portion of their assets. And I believe that this will cause them to regard coins in a more serious light than in the past.
As someone who has lived through any number of bad coin markets, this one feels like it may be different. I can recall markets where you literally could not get other dealers to look at your coins and you could literally beg clients to buy something because it “was such an incredible deal” and they would pass. At this point in time, dealers are still buying coins and serious collectors seem to still want to make purchases; just maybe not at the level they might have been before.
It’s going to be really interesting to see what the new levels on rare coins are going to be in the coming months. There is no doubt in my mind that certain coins are worth 10-30% less today than they were a few weeks ago. The question is, of course, which ones are and which ones aren’t. I’m not sure that even the most sophisticated experts know with certainty.
One thing I do know is that in spite of the substantial losses in the markets there is still a lot of cash in the world. I can’t imagine that Joe Investor is going to be hugely anxious to run back to Wall Street or to buy real estate. And returns on conservative investments are so bad right now that once people get over their fear and we see a few days of decent to good economic news (and we will see this sometime in the not-so-distant future) they will regain their sea legs and look for something that provides them with a hedge against inflation and that offers some future potential.
I’m not naïve enough to think that tens of thousands of Intel and Oracle investors are going to come running into the coin market. But is it so hard to think that a small number of investors are going to turn to coins? And I’ve got to think that the part of the market that will benefit most from this is gold.
To be more specific, I think an area that will see a real surge in demand in the coming months will be slightly better date large-sized coins in the $1,000-5,000 range. Even without any of the expected promotions that are likely to occur in the near future, the specific sort of coins that I think will see renewed interest are slightly better date Liberty Head eagles (I particularly like reasonably priced but attractive New Orleans eagles given their ability to be collected as a set), pre-Civil War era Type One double eagles and better date Saints with little or no (current) market premium factor.
I also have to think that really rare material is going to retain a good amount of its value in the long run. If you own a gold coin that is among the finest known of a popular issue or it is one of just 50 known in all grades combined, there is enough money left in the world for the demand level on these kinds of coins to remain high—and maybe even to become higher in the future.
Going back to something I mentioned earlier in this blog, I think it is important to regard your collection right now as an important asset in your overall financial portfolio. I’m not necessarily saying that coins should become a greater percentage of your net worth (the housing, stock and credit markets actually already did that for you, like it or not...) but I think the current economic slowdown should not preclude you from buying coins. In fact, I think it should encourage you, given the fact that your stock picking abilities are likely to be far inferior to your ability to by nice coins.
These next few weeks are going to be very interesting times in the markets. Perhaps I’m biased, but I’m focusing my energies on coins—the one market that I understand.
Doug Winter
10/13/08
www.raregoldcoins.com
For more information on United States gold coins, please feel free to contact me at dwn@ont.com.
Always took candy from strangers
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)
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)
0
Comments
I have a GREAT one.
Doug Winter?
Heh.
After all, how do you get someone to buy a southern gold coin that has doubled/tripled
in price in the last five years unless you pump the "GREAT INVESTMENT" angle.
<< <i>I get turned off to these blogs when DW talks about the investing aspect of coins.
After all, how do you get someone to buy a southern gold coin that has doubled/tripled
in price in the last five years unless you pump the "GREAT INVESTMENT" angle. >>
Word.
It's an attitude that says to me "we're only in it for the money". I understand that is an oversimplification and I take my life in my hands criticizing a great like DW.
I am not blind to the fact that these things can appreciate and depreciate.
But that is not the main driver of my coin collecting...I get most of my pleasure from things that are not related to the financial aspect.
If I am an idiot on this one, at least I am a happy idiot.
<< <i>After all, how do you get someone to buy a southern gold coin that has doubled/tripled
in price in the last five years unless you pump the "GREAT INVESTMENT" angle. >>
Apparently, the same way you got people to buy homes in Florida, Phoenix and Vegas 2-3 years ago.
<< <i>I get turned off to these blogs when DW talks about the investing aspect of coins.
After all, how do you get someone to buy a southern gold coin that has doubled/tripled
in price in the last five years unless you pump the "GREAT INVESTMENT" angle. >>
In fairness to DW, very few southern gold coins have doubled, let alone tripled, in price in the last five years (and I have been excessively active in southern gold over that entire time period).
Oops! My bad. I own one that appears to have sextupled, last time I checked (my 61-O $20).
At any rate, most southern gold has been flat or has slightly increased in price over the last five years. The coins that have risen in price have been the New Orleans $20's, the one year types (1855-D gold dollar, 1838-C $5, etc.), and the sexy Civil War dates. Most garden variety southern gold stuff has been flat. Probably a good time to invest in those, eh?
<< <i>At any rate, most southern gold has been flat or has slightly increased in price over the last five years. The coins that have risen in price have been the New Orleans $20's, the one year types (1855-D gold dollar, 1838-C $5, etc.), and the sexy Civil War dates. Most garden variety southern gold stuff has been flat. Probably a good time to invest in those, eh?
Stop confusing the issue with a lot of facts and accurate information derived by actually buying, selling and studying coins in this area.
<< <i>
<< <i>At any rate, most southern gold has been flat or has slightly increased in price over the last five years. The coins that have risen in price have been the New Orleans $20's, the one year types (1855-D gold dollar, 1838-C $5, etc.), and the sexy Civil War dates. Most garden variety southern gold stuff has been flat. Probably a good time to invest in those, eh?
Stop confusing the issue with a lot of facts and accurate information derived by actually buying, selling and studying coins in this area. >>
My apologies. I have bought and sold southern gold in every category over the past five years. I thought I would share my experience. I will keep my trap shut next time.
<< <i>
<< <i>
<< <i>At any rate, most southern gold has been flat or has slightly increased in price over the last five years. The coins that have risen in price have been the New Orleans $20's, the one year types (1855-D gold dollar, 1838-C $5, etc.), and the sexy Civil War dates. Most garden variety southern gold stuff has been flat. Probably a good time to invest in those, eh?
Stop confusing the issue with a lot of facts and accurate information derived by actually buying, selling and studying coins in this area. >>
My apologies. I have bought and sold southern gold in every category over the past five years. I thought I would share my experience. I will keep my trap shut next time.
You have said so many times before that coin prices in southern gold half eagles has risen. Now you change your tune?
How simple you make it sound.
Do not forget that grade inflation hides the price changes. a nice XF45 could be a AU50. a PQ 50 probably now sits in a 53
holder and etc... To the point now that much southern gold is over graded. Stripped and dipped i think you use to call it repeatedly
over the years to get the upgrade. Or did you forget this?
Then why does heritage show such large increases since 200X until now? Five years was
probably too small a time frame. I picked it to make my point.
I will randomly pick a date (1845) for D half eagles and pick a common grade for them. PCGS XF45.
Of course coins vary in quality but to say things have doubled is rather accurate.
I could have easily found more information to make my case but this will do nicely to show
the obvious trend upwards. Anything slightly interesting had an even better increase.
Auction 129, Lot 727 Friday, February 3, 1995 45 PCGS $1,155.00
Auction 175, Lot 7637 Saturday, August 2, 1997 45 PCGS $1,322.50
Auction 228, Lot 441 Wednesday, June 7, 2000 45 PCGS $1,840.00
Auction 22022, Lot13583 Tuesday, February 12, 2002 45 PCGS $1,150.00
Auction 370, Lot 61636 Friday, November 30, 2007 45 PCGS $2,300.00
Auction 450, Lot 1707 Tuesday, April 10, 2007 45 PCGS $2,760.00
Auction 430, Lot 4535 Saturday, February 17, 2007 45 PCGS $2,990.00
Auction 1102, Lot 1468 Friday, March 7, 2008 45 PCGS $2,300.00
So, what used to be a 1000-1200 dollar coin 10 years ago has EASILY doubled to 2000-2400.
The "good looking" ones approach 2700+.
I will allow readers to determine who is more accurate. Even RYK himself stated the more interesting
and rare ones have gone above and beyond doubling and tripling.
Oh, the last 7 years has not been a bull market in coins and the prices stayed stagnant? Is that what
you are trying to say?
oh dear. i just found this out now. my my.
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)
My opinion, for what little it is worth, is that coin prices are still "high" even with the
latest correction. I would not be in any hurry to buy anything that is not top quality
at the moment.
Doug Winter is a coin dealer, albeit a highly reputable and respected one. Part of his
job is to put coin collecting/investing into a favorable light, no matter what the current
market conditions might be.
I have purchased and sold numerous common date XF and AU Dahlonega $5's, holding some for 3-5 years, and overall lost money on them. As an investment, I would have been better off in CDs (in some cases, much better). What kept me from losing my rear was buying some of the better date coins and one-year type coins, and these allowed me to break even. I did not buy these coins with the intention of profiting from them, so I was not terribly disappointed. That said, I would not recommend these as investments. Collect them, if you like 'em--that's what I did. Some day, I might complete a Dahlonega type set (like FatMan's) which is a nice mix of better dates and one year types and more common dates.
I am not trying to argue with fc, but this has been my experience. I wish I could come here and say that I made a fortune buying and selling southrn gold, but nothing can be further from the truth. I do not believe that I ever claimed this was the case ("You have said so many times before that coin prices in southern gold half eagles has risen. Now you change your tune?"), but if I did, please show me where I did, and I will retract my statement.
The broader lesson for me is that over time, the better and more interesting dates seem to fare better financially than the boring dates, at least in the rare date gold arena. I expect that this lesson translates into other collecting areas, especially when collecting relatively scarce and circulated material.
I would not be any hurry to buy, just because some coins appear to be on sale cheap. As the stock market decline has shown (again, this applies to all markets not just stocks or coins), oversold can become oversold-er. If the price chart becomes a waterfall decline, any price that seems "cheap" might be an illusion.
What happened to real estate and stocks can happen to coins. Thinking otherwise is magical thinking. Unless a person has a genie at their command, there is no way of knowing for certain. Markets all over are governed by fear and greed. The coin market is not all that different and is governed by the same human factors.
What can drive coin prices lower is higher unemployment eventually driving many coin dealers out of the business. Their inventory will have no where to go, and may have to be sold at any price. This hasn't even started rolling yet (if it is, mention the major dealers that went into forced liquidation?). I think it is way to early to be talking about a "bad" coin market. The published price charts are still mostly moving up or flat or with very shallow declines. If this turns out to be a coin bear market, it is first or 2nd inning.
Be careful out there.
<< <i>Average date D-mint $5's in XF were moribund for many years, and this was not helped by the avalanche of coins sold in the Bass sales of the late 90's. In late 2002/early 2003, by the time of the January Long Beach sale, there was an uptick in published and realized prizes to the current level. It was very sudden. The $1200 XF was now worth $2000-2200. Prices have remained in that area for quite some time. >>
The same can be said for the C mint too. I've been watching and buying XF Charlotte half eagles for the past 3 years. I've also looked back to see what I've missed in terms of a discount. I was surprised to find that $2500 was a solid retail price for a 45* "common date" Charlotte half eagle over the past 5 years - give or take.
*By 45 I mean a "properly" graded 45 by today's standards.
-D
-Aristotle
Dum loquimur fugerit invida aetas. Carpe diem quam minimum credula postero.
-Horace
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
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