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How will the turmoil in Europe change the coin market?
ormandh
Posts: 3,111 ✭✭✭
I was wondering if anyone thinks that the problems in Europe will have an effect on numismatics and selling coins to the European market. I have had a good run selling Irish currency in the past few months, but I was not aware of the problems that they faced until today. Any insight from any of you Irishmen? -Dan
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<< <i>I believe this is a global question given the economic turmoil. I believe that high end coins will remain in demand yet average coin value will drop. I see this in the US as well as European coinage. >>
I've also noticed this. Many more average coins are not selling.
The middle will likely get hammered as these are the preserve of the average collector who has limited disposable income and not a great deal to fall back on when times get hard. When it comes to buying assets, the majority of the population turn up late to the party and don't leave when they should. I can't see coins being any different.
I don't think the bottom will be greatly affected. Coins selling at little over scrap value will always be underpinned by the metal price, and they will not rise to stratospheric levels either. Most low end collectors will continue spending a few pounds or dollars in the same way that they always did.
Just my opinion of course.
I'm with you on the middle tier hobbyist bit though. I've never been too into the well-studied, I guess you could say "respectable" areas of collecting. British, Swiss, talers, shooting medals and such. Those have strong followings and are generally thought of when we talk about high end. But fractional talers or minors or gem material from, say, Liberia - or your area of expertise, aluminum - can have all the same dynamics of condition rarity and overall rarity, but still little relative demand. I think that's the crux and always has been for us middle area collectors of the forgotten and esoteric stuff. While folks like you and I pursue that esoteric stuff with all the passion of a collector in those more prominent areas, for most people these areas are a side show. Most collectors might drop money on a pretty gem from here or there if they can afford it, but may not seek it out - and likely won't put that money on a pretty type found in XF no matter the scarcity or even how low the price is. Then there's auction house bias - crowns and gold abound in the catalogs, but rarely do you see gem minors outside of a few rarities from a headline collection.
I don't mean to make this sound like numismatic tribalism.. folks just have different interests. But some areas are more affected than others when the market changes. That's largely a matter of popularity. But it's certainly not a contest.
My wantlist & references
<< <i>It is presumptuous of anyone to assume that everyone buying a coin is only the high-end buyer, and that the collector base is solely in the upper tier. That really bothers me that the middle seems to be discounted because of the grade in which they collect. >>
Dan, I don't think anyone has disparaged the vast middle tier of collectors at all. What I meant, and I assume what others meant as well, is that there appears to be a visible slowdown in the middle tier of collecting. It is visible precisely because of its size. (I use the word "tier" so as not to confuse it with grade. I believe tiers are defined more by price, just as automobiles are. The middle tier being, perhaps, $100 to $5000 coins. High-grade coins or low-grade coins can exist in any tier.)
Personally I have seen little slowdown among collectors of higher tier material. True, they are getting more picky, but that is true of all collectors now. But the upper tier of collecting, meaning the higher priced and thus rarer material doesn't seem to be declining in price very much. I believe this is because, as someone previously stated, that they are faring better in this economy.
The middle tier, since it is so large, does seem to be declining and probably because it is so large, it needs many collectors to keep prices up. If some percentage of collectors can no longer afford to collect due to economic conditions, there are fewer collectors in that tier and prices decline to meet demand.
As for the BRIC countries, it remains to be seen if collecting increases due to wealth. There are many factors influencing the number of collectors, only one being wealth (same as in the US). The previous mention of many Russians buying has, in my opinion, more to do with investing than collecting. This is very evident on the auction floor if you pay attention.
I liken it to the days of deposit bottles, where you paid an extra 5c for each bottle and then got the money back when you returned the empty bottle to the store. Upgrades cost the full price, and the only thing one gets back for the coin that is rotated out is the equivalent of the value of the empty bottle.
<< <i>You definitely make a great point, RobP, especially considering the middle or average grade coinage. I do, however, want to argue the fact that when you say high grade, you actually mean high grade and that could be a very small area. That does not include lower grade rarities, that are just that, lower grade rarities. I, myself, do not buy premium coins in any one area, but do focus on rarities. My main question though, without any focus intended, does really mean the collector in general. In order to have a coin market you have to have buyers and/or sellers. It is presumptuous of anyone to assume that everyone buying a coin is only the high-end buyer, and that the collector base is solely in the upper tier. That really bothers me that the middle seems to be discounted because of the grade in which they collect. You do have to assume that every collector starts somewhere and with any kind of economic turmoil, there will be the loss of interest in any series it happens to hit. The US coin market is one that I remember most when I collected US in the 70's and 80's. Although, there were series that did fine, most were less than stellar. I do agree that high end coins will always do well, but I disagree that all high end coins, in general, will do well in this market. JMHO -Dan >>
High end is a relative thing. It can be both choice and expensive or dire and expensive, but the common factor is a relatively greater outlay than you would need to make if you just wanted a type example. I also buy items that are lower grade and rare simply because that may be all that is available. As a rule, the top end person is an experienced collector who feels comfortable making large or small purchases as long as it is affordable and represents reasonable value, or maybe it's just Hobson's Choice. The middle and bottom groups are filled with a mixture of novices, less affluent experienced collectors and above all a greater proportion of relatively uninformed collectors who don't spend money on reference books or other literature where much useful information lies hidden due to the apparent extravagance of spending a tenner on a book while a coin only costs a fiver or less. A collector making a four or five figure purchase will typically have a very good insight into the number of examples available and grade vs. rarity. A six figure purchaser will probably go even further and consult a favoured dealer or dealers as to the suitability of such a purchase. The bottom end of the market tends to do little if any research due to the low value of individual purchases. Any lack of knowledge will always be exploited by some sellers, be it eBay or at a coin fair/dealer. When times get tough and the inexperienced feel they have to sell, it comes as a nasty shock to find their eBay UNC is not what they thought. This tier also has many constituents who feed off their own insecurity due to inexperience and a consequent lack of confidence in their own ability as well as restricted funds etc as well as seeing what they want to see usually resulting in costly purchases whose resale at less than cost discourages further collecting. For those that continue collecting in this tier, bargains are there to be had when the market falls.
<< <i>Let's look at it from the macro-economic angle - If Europe and America were the focal point of numismatics we see a new breed on collectors/investors - Chinese, Russian, Indian (emerging market) wealth that has the same passion for the coins. If we measure recent Heritage auctions, I see demand picking up. In the NYC show I saw many Russian buyers, paying cash for top coin. I believe that the shift in wealth will leave to a shift in appetite - US coins will diminish in appetite, world coins will appreciate as world investors invest in world coins while US coin have served mostly a domestic collector base.
Just my opinion of course. >>
I agree 100% with this. The demand for collector coins is directly related to how much discretionary income/spare cash is sloshing around a market. Look around the globe and see which countries have large trade surpluses and growing economies. Russia's trade surplus doubled from 2009-2010 and China, India, Germany all have a lot more money coming into their economies than going out. That's where you should look to find strong numismatic markets. Countries where cash is tight and consumers and businesses are worried are bad places to put your money — unless you foresee a brighter future on the horizon and are positioning yourself for that. Just my opinion, too, of course.
Best wishes,
Peter Anthony
http://www.pandacollector.com
DPOTD-3
'Emancipate yourselves from mental slavery'
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Don
There is another factor. ebay has a promo for sellers who don't run stores that allows them to have as many as 100 auctions per month at any starting price without a listing fee. It makes sense that there are less $0.99 starts. A starting price is driven by the tradeoff between listing fee and the desire to protect an asset's value. The tradeoff was wiped out in September when the promo started and will not return until Januaury. Of course, starting coins at $0.99 today is a bigger risk than it was one year ago.