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What are the most reliable signs that the coin market is about to crash?
RYK
Posts: 35,800 ✭✭✭✭✭
In 1980, I was 15 and already ditched my coins and cards for Grateful Dead bootlegs and other teenager stuff 
. I was not aware that the coin market was crashing.
For those who were active then and at other inflection points of the coin boom/bust cycle, what are the real signs that the market is about to collapse (and have we seen them yet)?
Coynclecter in another thread talks about his brother-in-law, who is not a collector, throwing $100,000 in the coin market as an investment. Sounds like a tell-tale sign to me.
(OT: My brother-in-law is urging me to buy property in Destin, Florida! Does anyone's brother-in-law ever come up with a good investment idea?)
. I was not aware that the coin market was crashing.For those who were active then and at other inflection points of the coin boom/bust cycle, what are the real signs that the market is about to collapse (and have we seen them yet)?
Coynclecter in another thread talks about his brother-in-law, who is not a collector, throwing $100,000 in the coin market as an investment. Sounds like a tell-tale sign to me.
(OT: My brother-in-law is urging me to buy property in Destin, Florida! Does anyone's brother-in-law ever come up with a good investment idea?)
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Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
If you perceive that a lot of collectors are going to the sidelines because they won't spend or can't afford to buy coins at the current prices, trouble could be ahead.
If the Coin Dealer Newsletter starts talking about "selective buying" and light code words for less than robust activity. The CDNL is usually a cheerleader for the industry and does not like to report bad news. When you sed their signs that things might be slowing down, take note. We've actually seen a bit of that already.
In general a lot of people will get caught with their pants down. This applies to dealers too. It often is a matter of were you find you can't sell anything at the current prices. By then it's usually too late.
<< <i>when collectors and/or dealers become reluctant to buy, except at huge discounts. >>
When that happens, the market isn't "about" to crash, it already has.
Some warning signs:
1. Increased employment mobility and hiring within the industry - already happening.
2. Coins as an "investment" become a hot topic outside the collector/dealer community - already happening.
3. Loads of long time smart money players selling their holdings - already happening.
4. Coin investment funds emerge - already happening.
5. Extreme price volatility in the mid value market - already happening.
Russ, NCNE
And hey, what are you trying to say aboud Grateful Dead bootlegs? Oh, alright, I just listen to that music because my toddler likes it. That's the ticket.
I wonder if the Noe scandal and subsequent liquidation of the $50 million coin fund could be a catalyst for events leading to a market downturn.
Perhaps we have hit a slow patch, perhaps something more. It certainly feels a lot different than it did a year ago. Of course, I could be dead wrong. I am in favor of any market (good or bad) that flushes out some of the coins that I would like to buy.
are large numbers of new collectors and the prices of the things these collectors buy are as sol-
id as ever. Indian cents, buffalo nickels, type coins, 20th century type and key date coins are
mostly solid or stronger. Ultra-moderns are doing well. Moderns may appear weak but the better
coins are as strong as ever.
Downturns happen when prices reach unsustainable levels. This can only happen if people are
buying coins for speculation. There simply doesn't appear to be a great deal of speculation in
any major market sectors so it seems likely that fundamentals will preclude a massive revalua-
tion at this time. It wouldn't be surprising to see the kind of retrenchment and cycling which can
happen in any market undergoing a lot of changes.
Start worrying when great coins aren't attracting bids or are accumulating in dealers' inventory.
Until this just stay in your comfort zone and don't raise your bids dramatically unless there are
good reasons. Try to stay away from the crowds because when they act it will be too late.
<< <i>
(OT: My brother-in-law is urging me to buy property in Destin, Florida! Does anyone's brother-in-law ever come up with a good investment idea?) >>
There was a board member here who sold real estate in Destin. She was big on it.
BillJones,
You are describing what I am seeing with Lincoln cents.
Jack
I sold some lincolns(ANACS) and modern commems(PCGS) last week on ebay. They brought about 60% of what they would have brought a couple of months ago. Going to try 4 morgans(PCGS) next week and see what happens.
I don't shill and do not put reserves on my coins. If these morgans(PCGS) are down, I will be convinced the market is on the slide.
...right after you go out on a limb and pay strong premiums to buy big money, key date pieces you need! No surer way to see prices drop by fifty percent or better. Thought you all knew that?
(Sorry, I couldn't help it)
No. Prices always overshoot sustainable levels. Since you can't know if if the market will peak at double the "sustainable level", or triple or more, you almost have to ignore prices if you're trying to call a market top or bottom. Instead, watch the big buyers and see if their new purchases are sticking around longer than usual. If that's happening, the end is nigh.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
1) Prices rising every week
2) Buyers being "less" picky on quality for the grade
3) People buying coins with borrowed $$$$$; this is a biggie, and one of the reasons for the extent of the downward spiral in the '89/'90 crash. Many people, including dealers were borrowing $$$$$$ to buy coins (not borrowing a little, I mean over extending themselves too much). When prices began to slip, people had to sell to make loan payments. As prices fell they needed to sell more coins (at a loss) to get money to pay the loan. As more coins entered the market, prices fell... Also, there were fewer buyers because some had to pay back their loans . As prices fell ... and the house of cards collapsed.
4) Buyers dumping big $$$$$ into the market that have no idea what they were doing- (e.g., brand new to collecting, non-collector speculators, etc.). Eventually this money stops, sometimes abruptly.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
jim
and it sets us apart from practitioners and consultants. Gregor
<< <i>I was not around when the last market crashed, too young, but when I read Bill Jones comments just now, I am thinking, I am beginning to see this now?????
jim >>
yes
--------T O M---------
-------------------------
<< <i>You guys are safe. I'm not heavily invested.
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I just had a friend ask for advice on buying gold coins TODAY. Had not heard that in 16 years.
I have long predicted a soft patch this summer. Then a big push upward at the end of the year.
<< <i>When everyone starts saying it's going to crash. Creates a self fulfilling prophecy. >>
One of the more simple and powerful statements made to this question yet. Think about it.
that are in tune with the market are giving a different perspective. And they keep shoving it, and keep "shoveling it"
......
Oh, they already are. Sorry.
This lead to the end of the 1980 coin market. The gold price fall preceded the fall in coin prices by about 1-2 months.
Any signs of a recession also tells the upcoming end of the coin market. However recessions are often called long after the fact.
And the definition of a "recession" seems to get harder to meet since no govt official wants to say one has occurred. Oreville's bump in the road would not by itself derail the market. A strong and lingering recession is what it takes. And trying to discern a soft patch from a full blown recessionary trend is difficult at best.
roadrunner
a combination of the above will never crash in the marketplace and will continue to increase in demand and of course there will be peaks and valleys but always on an upward sprial of demand fun and collecting desirability
When people pick up cents from the pavement.
When people are happy to accept 92 cents from a dollar bill changer just to have the coins.
When the US Mint charges $79.95 for a 50 dollar bag of nickels and has a waiting list for the bags.
I'm not so sure I buy this. The economy has not been doing very well (podding along at best) and the stock market mirrors that.
Govt infusion of funds and lots of credit are what has been keeping both alive....for now. The govt wants us to believe the economy is sound and recovering (sure it is!). As long as we continue to borrow money and spend it on homes and stocks everything will be fine. Now when that ends, what is going to happen????
roadrunner
<< <i>I have no clue, but have recently taken 80% off the table and paid off debt. There are alot of wannabes acting like day traders, just like at the top of the internet bubble. The internet bubble taught me alot about the risks of letting it ride. >>
Would a true collector sell off most of his collecton just because there may be a market correction?
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
I wouldn't sell my collection because I've been working on it for 12 years and I'm nowhere near complete. It will probably take me another 20 years to complete the set. So if I sold at every market top, completing the collection would become an impossible task.
On the other hand, if the set was complete, or if my collection was so poorly defined that I didn't really "need" anything, I'd certainly try to sell all I could near the cyclical market tops.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I think there are a bunch of us who regret not selling more stocks at the top of that market. If we thought the coin market was toppy we would certainly look to see if there were coins we could sell. Certainly duplicates but also things that don't quite fit.