Are these huge auctions sucking all of the money out of the coin market?

BillJones

There has been a lot of talk about how dead the bourse floors are, and how so many coin series seem to be in doldrums. Back in 1980 the Garrett Collection sales set all kinds of price records, and many dealers thought they sucked a lot of money out of the coin market. The result was that there was huge market correction that did not revive for almost a decade.

Is that what we are seeing now with sales like Pogue and Gardner? It seems like it. Those sales take money out of the coin market, because the Pogue and Gardner are picking up their chips and leaving the table.

Baley

Isn't the money spent in those auctions "in" the coin market? I do see your point though, and it might very well be an effect.

Along with the decline in precious metals prices (we all "lost" money in bullionesque items the past few years) and the glut of new offerings, from worldwide country mints as well as the private minters, may be diluting the prices of everything else (except of course, the creme de la creme)

Personally, with millions of coins "out there" for sale, I just can't find anything I want to buy these days. If I can afford it, I already have one, and If I want it, I can't afford it. (or don't "want" to pay the asking prices)

BillJones

<< <i>Isn't the money spent in those auctions "in" the coin market? >>



No, it's not "in" the market if the people who collecting the proceeds are leaving the hobby. That's what dealers and collectors thought in 1980. The Garrett money when to Johns Hopkins University.

BillJones

<< <i>Isn't the money spent in those auctions "in" the coin market? I do see your point though, and it might very well be an effect.

Along with the decline in precious metals prices (we all "lost" money in bullionesque items the past few years) and the glut of new offerings, from worldwide country mints as well as the private minters, may be diluting the prices of everything else (except of course, the creme de la creme)

Personally, with millions of coins "out there" for sale, I just can't find anything I want to buy these days. If I can afford it, I already have one, and If I want it, I can't afford it. (or don't "want" to pay the asking prices) >>



I am kind of in the same boat. It's one of the reasons why I have moved on to British coinage. I've always liked the crude looking stuff and a lot of the medieval British hammered coins make the Chain Cents look modern.

Baley

No, it's not "in" the market if the people who collecting the proceeds are leaving the hobby

But what if the people buying the coins are generally bringing in the money from "outside" the coin market, for example from salary, stock market gains, real estate, etc?

BillJones

<< <i>No, it's not "in" the market if the people who collecting the proceeds are leaving the hobby

But what if the people buying the coins are generally bringing in the money from "outside" the coin market, for example from salary, stock market gains, real estate, etc? >>



That money is "in the market" for the big auction houses, but it's not "in the market" for the bourse dealers. They don't seem to have much to sell, and the bourse floors don't seem to be doing well. We heard this about the big ANA show and the recent Long Beach.

Bochiman

Some of the dealers that are complaining about how dead things are need to, imho, look at their prices and their inventory.
If things aren't moving, do they have the right items and the right prices? I have seen way too many that either overpay, themselves, and end up trying to make their customary margin and sit on an item for a long time, or buy things that aren't in vogue/that nice and try to get the higher margin as well.

I'm watching a national dealer with an overpriced, imo, colonial that I am interested in. Going by guide, going by recent auctions, etc, they are more than a bit overpriced. I have made an offer, at a point where they should still be able to make a profit and it would only be a "little" overpriced (so, in my mind, I would be meeting in the middle but still paying retail), but they barely want to budge. Their choice.
The coin has been sitting there for months now.

Maybe because they are so large, it doesn't hit their bottom line that much, and they are ok sitting on it, but, to me, it's kind of silly. They aren't a collector. They would still make a profit (less and less the longer they sit, I think). They could turn over their inventory quicker.

I bet they think something is wrong with the market....it's not. It really is just them.

Coinosaurus

I don't see how anything happening in Pogue impacts the guy who is plugging circulated coins into his states quarter album. Every different coin is a different market.

BAJJERFAN

It doesn't take a genius to figure that the proceeds from selling a significant collection probably aren't being plowed back into the market. At least not at the level that would affect the lower furcate of collectors. Most high rollers probably don't have to sell one coin in order to buy another.

291fifth

If the bourse floors are "dead" then it is time for dealers to redo their business plan. The dealers who attend the large shows need to adapt and survive.

oih82w8

Some of the nicer stuff appears to be asking for "moon money". I have to sock away a little bit more it seems to get some "better than average" coins. I am trying to haggle a deal right now...the seller is not moving...yet. I'll check back later (a couple of weeks or months) and see if it is still in the inventory.

leothelyon

If Pogue and Gardner-like coins are not out there on the bourse floors.........how are those sales taking money from the coin market/coin shows? If Pogue and Gardner-like coins were on the bourse floors, they wouldn't be there for long as people have no patience. But OTOH, in the last 2 years most dealers are stuck on prices, there are no negotiations and people pass and move on. Whereas, an auction is a clearer value gauge for buying coins. Bourse dealers need to wake up, gold is not selling at $1900 and need to drop their coin prices by 30%. Oh my, I'm experiencing de-ja-vu!


Leo

leothelyon

<< <i>I really doubt it. Maybe the upper-echelon market, but the biggest factor suppressing the coin market these days is the death of the middle class. >>



This occurred to me the other day........stock market drops close to 3000 points and silver falls $3 since May. Why didn't it go up? My guess, people are strapped for money and paying their bills.

Wabbit2313

I went to ANA with the intent to buy some coins. More times than not, when asked why the coin was priced 20-50% higher than Heritage, I was told that they had more into the coin than that and they were not going to take a loss. How foolish is that? So if someone bought coins 50 years ago, are they going to sell them for about the same today? NO, they will sell them at the market price. If you are holding coins you bought a few years ago, you might need to take a loss if you actually want to sell coins. You might have to sell at market price.

For me, prices at coin shows should be less than eBay or auctions. I have to pay for gas, hotel, eating out, admission, whatever going to a show. It is a lot cheaper to buy those coins from my couch, watching football.

Edited to add: My local dealer usually blows the auctions away with the prices he gives me so I am not anti dealer at all. My half dime in the big auction Thursday was purchased from another dealer at a really nice price. Shows are what seem overpriced to me.

rhedden

It might be more accurate to say the big auction houses are sucking the premium quality inventory off the bourse floor, except when dealers are using the auction house as their main source of fresh material.

Coinosaurus

<< <i>I have to pay for gas, hotel, eating out, admission, whatever going to a show. >>



Dealer: Buyers should expect to pay more for coins at shows. We have to pay for gas, hotel, eating out, table fees, and evening entertainment. Not to mention that we have to buy all the good coins from auctions, competing with the couch-surfing ebay'ers, and then mark them up to make any money.

mercurydimeguy

The Internet has disrupted this hobby/business because the lines of B2B and B2C and C2C are now non-existent. Dealers and collectors are competing for the same coins in the same market, most of the time. Some have adjusted and have done very well! Others have not and will continue to do worse and eventually will be cannibalized by those who have adjusted.

TopographicOceans

Securities are evaporating wealth so I think that would have a bigger impact on the coin market than big auctions.

coinsarefun

I blame the internet



I just spend the largest amount of money I have in a very long time on an online auction in London.
Got some spectacular material that probably won't surface again for quite some time.

They were 18th century British tokens. I could here in the background a sizable crowd.

World collecting is just starting to come into the mainstream and the biggest reason is the internet........hold on to your shorts, the internet auction sites will be the leaders.



my 2cents

Longacre

The markets are efficient and they always find their equilibrium. Sometimes it takes more time than others.

coinhack

291fifth - "If the bourse floors are "dead" then it is time for dealers to redo their business plan. The dealers who attend the large shows need to adapt and survive."

You are right, of course. Dealers will adapt or they will be gone. I think this is going to take some time though. When a dealer comes to the realization that the market has dropped and that his inventory is over priced by that same percentage, he isn't likely to lop that much off his entire inventory for the next show. He will most likely cut the price on the lower end coins immediately and slowly trim prices on the better stuff hoping that the nicer stuff will sell without taking a full hit. In other words, I think it is going to take some time before the market stabilizes at lower prices. And this is likely to be painful for a lot of people.

FadeToBlack - "I really doubt it. Maybe the upper-echelon market, but the biggest factor suppressing the coin market these days is the death of the middle class."

I agree with you, too. Less people at the shows and less buying from the ones who are there. The economy is having a much larger effect on the overall market.

With all the mega collections being liquidated it probably is having an effect on the top 1%.

keyman64

No.

jcping

> They (dealers) don't seem to have much to sell, and the bourse floors don't seem to be doing well. We heard this about the big ANA show and the recent Long Beach.

When a collector wants to sell coins, if he/she can get a better price from an auction house, give me a good reason that he/she has to sell for less to coin dealers. Many auction houses provide cash advance, too.
If coin dealers' buying prices are competitive, these dealers shouldn't have any problem to get fresh material. The problems are "where are these dealers?"
When collectors can't find this type of dealers, collector will try auction houses. Nothing wrong in this picture.

If you walk around major coin shows, there are many types of coins that you simply can't find them on floor. They only show up in coin auctions. There must be good reasons behind it.

MrEureka

There has been a lot of talk about how dead the bourse floors are, and how so many coin series seem to be in doldrums. Back in 1980 the Garrett Collection sales set all kinds of price records, and many dealers thought they sucked a lot of money out of the coin market. The result was that there was huge market correction that did not revive for almost a decade.

Is that what we are seeing now with sales like Pogue and Gardner? It seems like it. Those sales take money out of the coin market, because the Pogue and Gardner are picking up their chips and leaving the table.


Garrett took $25 million off the market in four sales over the course of two years. (Without looking it up, I'd guess that the March 1980 sale brought less than $10 million.) Maybe the bills coming due in April 1980 - the month the market tanked - put some pressure on some people, but the amount of money they owed was a drop in the bucket compared to Uncle Sam's take from coin dealers in the same month. (1979 was a VERY good year for coin dealers.)

As for the money that Pogue and Gardner and Newman have sucked out of the market, of course it has had some effect. But as in 1980, it would be a mistake to blame the soft market on the auctions. There are far bigger forces at play.

Justacommeman

No.

mark

Kove

Simple logic can show whether or not money is leaving the coin market due to these auctions.

If a collector sells their coins at auction and uses the money to start another set (like Simpson), then there isn't much net money leaving the market.

If a collector sells their coins at auction and puts the money elsewhere (Eric P. Newman? Gardner? Pogue?), then there is certainly less net money in the hobby than there was before; money has been moved elsewhere. The net capitalization of the coin market is going down, unless there are suddenly large amounts of new collectors and money coming into the market to make up for the whales that are leaving (and I don't believe there are a bunch of new whales coming in right now).

While the effect of these sales is less the further down the market you go, everything trickles down.

I certainly don't think the millions and millions of dollars leaving the coin market through these mega auctions, and going elsewhere, is helping the value of my collection.

mrearlygold

To survive the future one will have to make changes

SkyMan

A lot of the prices on the bourse floor FOR THE COINS IN QUESTION are ridiculous. It's easy to walk away from them.

If something becomes too expensive you either buy less or substitute something else. I'm doing both...

roadrunner

<< <i>There has been a lot of talk about how dead the bourse floors are, and how so many coin series seem to be in doldrums. Back in 1980 the Garrett Collection sales set all kinds of price records, and many dealers thought they sucked a lot of money out of the coin market. The result was that there was huge market correction that did not revive for almost a decade.

Is that what we are seeing now with sales like Pogue and Gardner? It seems like it. Those sales take money out of the coin market, because the Pogue and Gardner are picking up their chips and leaving the table. >>



You can't blame Garrett for the stagflation that ran from 1971-1980, the Hunt Brothers, the relaxation of the 1934 Gold Reserve Act in 1974, the closing of the gold window in 1971, the 1961-1968 London Gold Pool manipulations, and a host of other issues that occurred during the 1962-1980 commodities, precious metals and coin bull market. Garret just happened to sell within a year either side of silver and gold going parabolic. The market needed to tank from 1980-1982 after such an amazing 18 year run. It would take another 18 or more years to unwind it all. My recollections of the post Garrett coin market was that things started picking up again quite nicely in 1983 and 1984. There were some really good sales in those years from Benton Emery Barber coinage to the Apostrophe sales of 1983-1986.

I consider the 1983-1986 period a rebirth of the coin market. There were very steady gains made and nice coins coming back on to the market. While it did take until 1989 for a lot of coins to reach their 1980 highs again. The coin market depression of 1980-1982 was so severe, it was a wonder that so many of us were ready and willing to jump right back into things in 1983. The stock market put in its last deep bottom in 1982 and from there liquidity was flowing into markets again....coins included. 1983 was the year Jim Halperin left NERCG and joined up with Steve Ivy to form the modern Heritage. That was more than just lucky timing. Those guys knew what was coming. It certainly didn't take a decade to revive the interest in rare coins after Garrett. Norweb sold into the coin market of 1987/1988 and helped to ignite the final boom into 1988/1989. Then there was Pittman and Eliasberg in 1996-1998 that in essence ignited the next coin boom (1998-2008). I would think it's more luck of the draw when any major collection decides to sell....and if they help or hurt the coin market at that precise time. The James Stack heirs did their selling over a 30 year period. If Poque and Gardner were really into just market timing and profits they'd have both probably cashed in during the 2006-2008 market.

Coinosaurus

<< <i>There are too many dealers on the bourse.
Majority of the dealers have to be terrible business people. >>



That's a bit harsh. I see the same guys (and gals) for years. They wouldn't be there if they weren't making money.

ARCO

<< <i>There has been a lot of talk about how dead the bourse floors are, and how so many coin series seem to be in doldrums. Back in 1980 the Garrett Collection sales set all kinds of price records, and many dealers thought they sucked a lot of money out of the coin market. The result was that there was huge market correction that did not revive for almost a decade.

Is that what we are seeing now with sales like Pogue and Gardner? It seems like it. Those sales take money out of the coin market, because the Pogue and Gardner are picking up their chips and leaving the table. >>



Hmmm, do buyers of hundred thousand to million dollar coins really buy Morgans, walkers and other numismatic riff-raff found at coin shows?

Tyler

ARCO

<< <i>I went to ANA with the intent to buy some coins. More times than not, when asked why the coin was priced 20-50% higher than Heritage, I was told that they had more into the coin than that and they were not going to take a loss. How foolish is that? So if someone bought coins 50 years ago, are they going to sell them for about the same today? NO, they will sell them at the market price. If you are holding coins you bought a few years ago, you might need to take a loss if you actually want to sell coins. You might have to sell at market price.

For me, prices at coin shows should be less than eBay or auctions. I have to pay for gas, hotel, eating out, admission, whatever going to a show. It is a lot cheaper to buy those coins from my couch, watching football.

Edited to add: My local dealer usually blows the auctions away with the prices he gives me so I am not anti dealer at all. My half dime in the big auction Thursday was purchased from another dealer at a really nice price. Shows are what seem overpriced to me. >>



This is the problem I see now. Coins are overpriced everywhere except when you can buy them at auction. Heritage prices are better than Ebay, better than any dealer and definitely better than overpriced (usually pure shat) coins at coin shows.

Tyler

roadrunner

<< <i>Hmmm, do buyers of hundred thousand to million dollar coins really buy Morgans, walkers and other numismatic riff-raff found at coin shows?

Tyler >>




No they don't. But if that riff-raff which accounts for probably 65-80% of the entire rare coin market were no longer there, you can bet that the Pogues and Gardners wouldn't be collecting....there would be no real reason to. There's no Richy Rich without the Riffy-Raff.

bolivarshagnasty

<< <i>I really doubt it. Maybe the upper-echelon market, but the biggest factor suppressing the coin market these days is the death of the middle class. >>



If the middle class is dead, you couldn't tell it by the number of restaurants that stay full in my small community. I think they have chosen to spend their money on something besides the VERY speculative coin market.

OldIndianNutKase

I think that every dollar spent by a collector to buy a coin at auction is one less dollar that is available to the market that a dealer services. But dealers continue to exist because they still represent great coins and provide their expertise that is not available in an auction catalog. But the auction house price realized (with buyers premium) will tend to set the market price. Dealers have to be able to buy inventory at a price that provides sufficient margin. To me this seems to translate that a dealer has to buy at market price less buyer's premium of say 17.5%........?

To my thinking this does not bode well for B&M dealers.

OINK

ricko

In the current economy, discretionary funds are tight. It has nothing to do with the major auction/collections.....the wealthy have deeper pockets and will exercise such for the coins they want. Coin collecting is NOT a necessity, it is a luxury - and as such, commands only the 'extra' funds in a budget. We are in a 'down' economy and coins - as other hobbies - is seeing the effects. Cheers, RickO

ambro51

They are egocentric robbers who have remade a hobby into a fee ridden near monopoly that sells "product".

SullivanNumismatics

There is a lot of money to go around, and I don't think the auctions are sucking the money out of the hobby. If I buy a collection from a collector's estate, and the money went to the collector's heirs who are not going to spend it in the coin hobby, that shouldn't really matter. As a dealer, I'm just happy to have the coins to offer to my customers, and my customers will then give me their cash in exchange for the new coins I have. I think the same is true, except on a much larger scale, for collections like Pogue, Newman, etc. Having fresh coins is good for the hobby, and cash is more common than good coins.

The only thing sucking money out of the hobby is our government. They pull lots of money out of dealers and collectors pockets, but don't give anything in exchange. High taxes will hurt the hobby.

BillJones

<< <i>High taxes will hurt the hobby. >>



High taxes hurt everything. They are a drag on prosperity. Even Keyens said that, and he was believer in big government.

Nysoto

The big auctions of great coins have always brought new money in and created excitement in the coin world. The PR's set new benchmarks for the finest coins, bring in new players into the market, and also help to inspire the second tier and mid-markets. The truly great auctions have long term numismatic benefits.

MrEureka

In the current economy, discretionary funds are tight. It has nothing to do with the major auction/collections.....the wealthy have deeper pockets and will exercise such for the coins they want. Coin collecting is NOT a necessity, it is a luxury - and as such, commands only the 'extra' funds in a budget. We are in a 'down' economy and coins - as other hobbies - is seeing the effects.

First of all, the economy isn't that bad.

Second, the world coin market is still doing very well. (Yes, there are exceptions. For example, Russian coins are very soft because their economy is very shaky, and their currency has depreciated dramatically.)

The problems we're discussing are limited to US coins, and for obvious reasons that have nothing to do with the economy.

TwoSides2aCoin

I don't see how a huge auction sucks money out of the market when it injects so much money into the hobby.
It seems to me , we are in the most glorious times. Seeing what's come out of the closet after all these years is quite exciting, even if it's not affordable.

roadrunner

<< <i>I think that every dollar spent by a collector to buy a coin at auction is one less dollar that is available to the market that a dealer services. But dealers continue to exist because they still represent great coins and provide their expertise that is not available in an auction catalog. But the auction house price realized (with buyers premium) will tend to set the market price. Dealers have to be able to buy inventory at a price that provides sufficient margin. To me this seems to translate that a dealer has to buy at market price less buyer's premium of say 17.5%........?

To my thinking this does not bode well for B&M dealers.

OINK >>



The "buyer's" premium really has nothing to do with anything. It's a contrived "Peter from Paul" fee meant more to confuse and therefore bring in a little more money to the auction house that they might not otherwise get. With this logic dealer's bought at FMV in the 1970's before buyer's fees even existed.

bidask

<< <i>In the current economy, discretionary funds are tight. It has nothing to do with the major auction/collections.....the wealthy have deeper pockets and will exercise such for the coins they want. Coin collecting is NOT a necessity, it is a luxury - and as such, commands only the 'extra' funds in a budget. We are in a 'down' economy and coins - as other hobbies - is seeing the effects.

First of all, the economy isn't that bad.

Second, the world coin market is still doing very well. (Yes, there are exceptions. For example, Russian coins are very soft because their economy is very shaky, and their currency has depreciated dramatically.)

The problems we're discussing are limited to US coins, and for obvious reasons that have nothing to do with the economy. >>

That's true as I just sold 2 of my best world coins that I owned for almost a decade and made decent money.....except now I have remorse.

leothelyon

<< <i>The Internet has disrupted this hobby/business because the lines of B2B and B2C and C2C are now non-existent. Dealers and collectors are competing for the same coins in the same market, most of the time. Some have adjusted and have done very well! Others have not and will continue to do worse and eventually will be cannibalized by those who have adjusted. >>



I agree, those dealers don't wake up and get with the times, collectors will simply buy elsewhere.


Leo

pennyannie

<< <i>

<< <i>I really doubt it. Maybe the upper-echelon market, but the biggest factor suppressing the coin market these days is the death of the middle class. >>



If the middle class is dead, you couldn't tell it by the number of restaurants that stay full in my small community. I think they have chosen to spend their money on something besides the VERY speculative coin market. >>



Looks like people like to eat judging by how large they are getting. restaurants are full where I live but there are a few million people around a small group can keep them full.