Options
What happens to coin prices during recessions?
Danye West
Posts: 193 ✭✭✭
Simple (though perhaps controversial) question: What happens to coin prices during recessions?
I could make a birth year registry set out of pocket change.
0
Comments
The hobby moves through it with dealers just having a lil less mustard on their shirts.
There is no clear answer to this question. If precious metal prices go up, coin prices can go up during slow economic times. If they don't, the dealers will have a slow period just like everyone else.
The coin market went crazy in 1979 and '80 despite the fact that unemployment was high. The driver was high metal prices and inflation.
If precious metal prices go up, coin prices can go up during slow economic times. If they don't, the dealers will have a slow period just like everyone else.
Only if the coin values are tied to metal?
Although you might not agree, most of the coin booms I have seen in my 55+ years of collecting have occurred along side significant interest in gold and silver prices.
The answer may depend on where you are on the economic ladder. Disposable income and feelings about future economic health guide purchases of collectibles.
Show me a recession and I'll find a coin that fits a collector, during it.
Coins that have been promoted during the previous boom, usually get hammered up to 30-90%. Collector-based coins that were never promoted tend to hold their ground (even if less liquid) or fall slightly in price (10-20%). From what I've seen, the decline is well correlated to the previous rise. Top quality coin prices went up as much as 15X from 1975-1980. The ensuring 2-3 yr correction took those same coins down by by 60-75%. The 1991-1995 correction decimated those types of coins by 50-90%. The 2009-2011 correction was good for 20-65%.
There will always be exceptions bucking that trend. Some out of the way areas might actually increase in price, sometimes dramatically. Circ better date seated coins didn't get decimated by the 1982 and 1995 corrections....as they didn't run up in price tremendously to begin with. But they suffered their first big price drop ever in 2009-2011 because they did advance in price by multiples from 2002-2008. I concur with Bill Jones that rare coin market moves up or down tend to correlate to advancing or declining bullion prices. The only recession of the past 50 years that seemed to "help" coin prices was the stag-flation "recession" of 1976-1980....though I suspect economists would call the recession of that period as 1973-1975....the entire decade of 1969-1979 was sort of a choppy/volatile mess....one long "recession."
The strength of the economy is only one of the forces that can impact the coin market. Depending on whatever the other forces happen to be at any point in time, the coin market can go either way in any economy.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
One of the effects is that market activity slows since collectors don't want to sell into a falling market. Of course, a few will eventually bail, it's not like everything just stops.
Eye appeal wins during recessions.
Before you can even begin to answer that question, you have to recognize that there is NO SINGLE coin market. What happens to common date Morgan $s is different than what happens to 1804 dollars is different than what happens to modern slabbed coins.
In general, the price of any commodity will not do better than the economy because there will be fewer dollars chasing the commodity.
Demographics have more influence on what disposable income is spent on than anything else.
I'm not optimistic about the interest level of the bulk of "millennials" who are now just starting to affect ALL markets.
Sure, "they" may be in line for healthy inheritances, but I don't think "they" spend much time studying monetary history as "they" don't seem to be concerned with economic trends.
And, yes this is a generalization but I'd not dismiss the effect they'll have.
I have purchased a few very nice coins when the stock market gets hit... mostly people needing cash to cover 'shorts'...at least that is what they told me .... I have those coins and they are considerably higher in value than my cost....Now, I am not wishing bad times on anyone, but a stock crash will have me looking...
Cheers, RickO