Collecting in the 21st Century

JCMhouston

Not wanting to hijack a thread I thought I would start a new one. As CoinKat mentioned previously we probably need to start rethinking rarity. The reason, the 21st Century is well upon us. While I appreciate the ability to find and buy coins that 20 years ago I would never have been able to get, the same technology when combined with a rising middle class in many previously 3rd world economies, may make todays prices seem quaint.

Witness the rise of Chinese coin prices in the market over the past 5-10 years, and to a slightly lesser extent Indian coin prices. Here you have two countries with large populations ,and an increasing middle class, that now has money for hobbies and scholarly pursuit. Coins that previously were only scarce in my mind, because 2-3 a year of them showed up in auction, may now become extremely rare and expensive. If you add 100 million Chinese citizens to the middle class, with money to spend even if only a small percentage become interested in coins in general, what happens to the prices of those coins?

pruebas

JCM, I agree with your theory (and it makes sense), but I've been hearing this about the Mexican coin market for 35 years and it hasn't really materialized. This was supposedly due to the rising Hispanic (mostly Mexican back then) population in the US and their entry into the middle class and their (theoretical) desire for coins of their heritage.

Yes the Mexican market is doing all right for the high-grade stuff, but that is not due to the country's collectors buying back their own coins. And low-grade Mexican rarities are just as dead as they ever were. Twentieth century Mexican coins are even deader, if that is possible.

HoledandCreative

I would like to know which country is next on the road to a much better economy. I wouldn't mind stocking up a bit before the coin prices escalate.

pruebas

<< <i>I would like to know which country is next on the road to a much better economy. I wouldn't mind stocking up a bit before the coin prices escalate. >>

Mexico. Or so I've heard.

Gazza

I'm struggling with the concept of a coin becoming rarer as more people try and collect it, surely rarity is an absolute usually initially set at the mint and then enhanced by survival rates. Surely availability of rarities is more due to the normal market churn as the absolute number is very nearly a constant. More collectors equal higher prices not less coins.

coinkat

JCM:

Your comments are spot on-

China is clearly the most obvious current example

And the issue of rarity sort of even goes beyond the rising middle class concept whereby a even a small percentage decide to buy. Some countries produced interesting coins and there has been minimal interest so real rarity was never really appreciated due to the lack of interest/specialization. I would suggest this is why certain countries had a price explosion as well- I think 18th and 19th century Poland was an example about 5-6 years ago.

The Cap and Rays 8R series was viewed as just too big to collect and that series is loaded with rarities, condition rarities, rare varieties and literally something for everyone- including circulation in the old west as well as in the orient so even the history and design is interesting. Over the past year, we have seen what has happened with these.

JCMhouston

Gazza, as you say the coins actual rarity does not increase or decrease, rather the problem now may be that you have many additional people able, and desiring, to buy that coin. So a coin that you or I may consider only scarce, lets say 100 examples known, is priced at $100 because only 99 people want one. But let's add 100,000,000 new middle class consumers (that's 10% of the Chinese population and ignores India/Brazil/Etc.), and say 0.1% of them decide to collect coins, that's 100,000 new collectors. And let's say 0.1% of those decide to collect in your area, that's 100 new collectors. Now instead of 99 people chasing 100 coins you have 199 people chasing 100 coins.

Now the price goes much higher than you and I are used to. I have run in to this myself and now find that coins I bought, even in this century, are selling for multiples of what I paid. In addition to the collecting population increase we have a problem with technology. Anyone, almost anywhere on earth, can bid on the same coins you and I are interested in. If you look back to the 80's when I started collecting somewhat seriously I had to subscribe to mailing lists, go to local shows whenever I could, and generally hunt pretty hard to find coins I wanted. Now I can view and bid on auctions anywhere int he world, and instantly see dealers stocks anywhere in the world. SO the local collector in the UK now is not just competing with other local collectors, he is competing with people around the world.

Zohar

I believe it is also a cultural issue. An example is Israeli coinage that based on this thesis - country GDP growth, income per capita should indicate increased demand - yet on the contrary, demand has dropped. The more "starved" the culture pre growth, the more demand- China, Russia and India are a good example.

IloiloKano

<< <i>I'm struggling with the concept of a coin becoming rarer as more people try and collect it, surely rarity is an absolute usually initially set at the mint and then enhanced by survival rates. Surely availability of rarities is more due to the normal market churn as the absolute number is very nearly a constant. More collectors equal higher prices not less coins. >>


I believe the concept of rarity being applied is in regards to availability, price & demand.

For example:
A 1916D US Dime (mintage: 264,000) is seldom (relatively speaking) offered for sale when compared to availability of a 1928M US-PI 20 Centavos (mintage:100,000).
The 1916D Dime is priced around $18,000 in MS63, while the 1928M 20 Centavos is priced around $1,800 in MS63 (1/10th the price of the former).

Tending to reduce demand for the 1928M 20 Centavos...
The US has more than 3-1/4 times the population of the Philippines.
The US has a much higher standard of living than the Philippines overall.

Tending to increase demand for the 1928M 20 Centavos...
There are a significant number of citizens in developed countries (4 million in the US alone) who are Filipino.
Those of Filipino descent in developed countries tend to enjoy higher than that country's average standard of living, which I believe is at least partially due to a greater emphasis on education and familial relationships.

As a result, it is understandable that collectors consider the 1916D US Dime to be "rare", while the 1928M US-PI 20 Centavos is merely considered to be "scarce".

Note: A similar discrepancy is noted with the US-PI 1903S 20 Centavos having a mintage of 150,080 and a price of $1,750 in MS63, even though a large percentage of these were lost in the great silver melt of 1906.

SYRACUSIAN

Now the price goes much higher than you and I are used to. I have run in to this myself and now find that coins I bought, even in this century, are selling for multiples of what I paid. In addition to the collecting population increase we have a problem with technology. Anyone, almost anywhere on earth, can bid on the same coins you and I are interested in. If you look back to the 80's when I started collecting somewhat seriously I had to subscribe to mailing lists, go to local shows whenever I could, and generally hunt pretty hard to find coins I wanted. Now I can view and bid on auctions anywhere int he world, and instantly see dealers stocks anywhere in the world. SO the local collector in the UK now is not just competing with other local collectors, he is competing with people around the world


JCM, spot on as usual.

Yeah, I too remember the days before the internet, where anybody with the means to travel to international auctions and knowledge on coins, could build up unbuildable collections in the world of today, even if one spends ten times as much. I remember in my first days browsing the net, I've met an accountant from the Seattle area. He couldn't grade or had anything to do with coins before, but he had just started buying US gold certified coins wholesale and he was selling them on yahoo and ebay no reserve. At the time he was doing it as a second job, until he resigned from his company, totally devoting himself in buying NGC - PCGS certified US gold. Never learned to grade or anything, but business went well for a while. The other day (7-8 months ago), I was looking to buy a Saint in 64, so I thought about him. I typed his webpage url, nothing, wrong page. I looked for him on ebay with his username, nothing. Finally I located him through Linkedin, he had closed the coin business 3 years ago, and in his CV there was no mention of it, just an 8 years long blank.

That was a bit OT but an interesting one. I wish that technology hadn't made those huge steps and things were simpler for those willing to locate nice coins without paying so much that they risk to go to prison for debts, now that everybody else is competing against each other from everywhere around the globe and they all drive the prices in crazy levels. I don't know which is the next country to collect before the prices skyrocket, but I could easily give you a list of several THAT close to go bankrupt, besides the three in Europe already.Maybe their current coinage will become collectable. Maybe the three already bankrupt will be the start of the collapse of the euro, wow, more collectables.

Remember the Hungarian PM who was playing bully to the IMF to win the elections? He had hedged on an international recovery that never came and now Hungarians are going to pay the price of this arrogant PM, but then again countries have the leaders that they deserve. He was elected not appointed. Maybe Nostradamus was right. Maybe the world will indeed collapse in 2012.

Zohar

Dimitri - spot on.

I guess the winners are computer manufacturers, search engines, online advertisers, Ebay/paypal, and those who have very good access to quality supply at a low sourcing cost.

Z

SYRACUSIAN

South Africa ZAR: ON FIRE!

bidask

<< <i>South Africa ZAR: ON FIRE! >>

Wowee!

theboz11

That is a heck of a price