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Are we in a Statehood Quarter Economic "Bubble"?
WoodenJefferson
Posts: 6,491 ✭✭✭✭
Is there a “artificial bubble” in the value of raw/graded/mint set/proof set collectable coins due to the recent (1999) mintages of the very popular Statehood Quarter Program? If a bubble does exist, will it then begin to burst in 2008 when the last quarter depicting Hawaii is released.
Since 1999 I have noticed:
a significant jump in the number of coins listed in auction houses (e-bay has gone off the Richter Scale)
major increases advertisement budgets
lots of new Dealers with physical addresses entering the market (Internet Dealers is also off the chart)
more and more space on retailers book shelves devoted to numismatics
scads more collectors than there ever where before 1999
dwindling supply/higher demand…equates to higher buy-in prices
even the US Mint has gone bananas trying to keep up
The list goes on and on. Not this is a bad thing for the hobby, but based as an investment only question, will those who have amassed their coins/currency be able to liquidated their collection for profit in the long stretch?
Note: I think gold/platinum should be excluded from this question due to it being part of the base for most economies. History has already dictated that buying these precious metals has just about always proven positive.
Since 1999 I have noticed:
a significant jump in the number of coins listed in auction houses (e-bay has gone off the Richter Scale)
major increases advertisement budgets
lots of new Dealers with physical addresses entering the market (Internet Dealers is also off the chart)
more and more space on retailers book shelves devoted to numismatics
scads more collectors than there ever where before 1999
dwindling supply/higher demand…equates to higher buy-in prices
even the US Mint has gone bananas trying to keep up
The list goes on and on. Not this is a bad thing for the hobby, but based as an investment only question, will those who have amassed their coins/currency be able to liquidated their collection for profit in the long stretch?
Note: I think gold/platinum should be excluded from this question due to it being part of the base for most economies. History has already dictated that buying these precious metals has just about always proven positive.
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Those who bought wisely likely will profit. Those who bought the coins before the books will likely lose. It usually ends up that way.
Do you include those who speculate on fads in the secondary market as "investors"?
Obscurum per obscurius
<< <i>: Are we in a Statehood Quarter Economic "Bubble"?
>>
No. And yes.
The market is being driven higher by a multiplicity of factors. Not least of which is the tremendous
infusion of new blood attracted by the states quarters. Most of the increases across the board are
being caused by the large number of baby boomers returning to collecting after being "reminded" of
coins by all the new issues. These "old" collectors are mostly buying the types of coins they wanted
as children but couldn't afford. Many are quickly becoming more sophisticated and moving into the
early issues and some into moderns or ultra-moderns. Some of the demand is coming from the most
advanced newbies who go into the classics mostly.
There are also macroeconomic factors which are driving demand higher. The stagnating stock market
and robust metals markets direct attention away from financial instruments and toward "real" assets.
This does not necessarily imply there is a bubble however. These trends won't reverse suddenly in
all probability and the boomers won't all retire at once. The newbies will be straggl;ing in to what trad-
ditionalists regard as "real" coins for decades. Many will stick with moderns or ultra-moderns for a long
time but many will eventually find there way into ALL aspects of numismatics. A bubble is formed by
speculative buying and for the main part there isn't a great deal of this in most areas of the market.
"Keep your malarkey filter in good operating order" -Walter Breen
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Back in 1999 when the quarters first started coming out, after each new state was released I would pick up a roll or two at the next show. They were easy to find, probably half of the dealers would have them at $13 - $15 each. After a couple years the number of dealers with rolls at the shows had declined greatly and the prices had declined to the $12 level. About a year and a half ago I had to give up buying the rolls because it was becoming impossible to get them. Prices had dropped to $11 a roll and no one wanted to bother carrying these heavy low profit items around. Often I couldn't find a single roll at a show. A great deal of the interest in them has dried up. People are no longer buying them in bulk like they used to, and I strongly suspect what demand we have now is from people who started putting together sets and are simply hanging on just to finish the dang thing which they will then either just put away or try and sell because they have been convinced that a full set will be valuable. And then they plan to put this whole coin collecting thing behind them.
<< <i>My one observation on this:
Back in 1999 when the quarters first started coming out, after each new state was released I would pick up a roll or two at the next show. They were easy to find, probably half of the dealers would have them at $13 - $15 each. After a couple years the number of dealers with rolls at the shows had declined greatly and the prices had declined to the $12 level. About a year and a half ago I had to give up buying the rolls because it was becoming impossible to get them. Prices had dropped to $11 a roll and no one wanted to bother carrying these heavy low profit items around. Often I couldn't find a single roll at a show. A great deal of the interest in them has dried up. People are no longer buying them in bulk like they used to, and I strongly suspect what demand we have now is from people who started putting together sets and are simply hanging on just to finish the dang thing which they will then either just put away or try and sell because they have been convinced that a full set will be valuable. And then they plan to put this whole coin collecting thing behind them. >>
The dynamism of most participants has seemed to wane, but for a few it's
stronger than ever and many will perk up when they realize it's rapidly wind-
ing down. It's entirely possible some of these coins recently have been set
aside in pretty small numbers and higher prices could well wake these coins.
Collectors have been told that the coins are common since day one and will
always be common but by the end of next year the oldest ones will be approach-
ing ten years and nice specimens in pocket change will be getting noticeably
hard to find. I already do a double take when I see a nice AU PA or DE.
Many of these people have gotten in the habit of checking quarters. If there
areb't any new states coins they'll probably be looking for whatever replaces
them and probably what preceded them. Collectors often take years to get
hooked pretty well. There will also be the new dollar coin coming out though
these won't be seen unless the dollar bill AND penny are eliminated, probably.
Even if these newbies do lose some interest, the coins will still be in circulation
to entice people for many years.
2007 - Montana, Washington, Idaho, Wyoming, Utah
2008 - Oklahoma, New Mexico, Arizona, Alaska, Hawaii
This is purely theory on my part, but I wonder if the "bubble" has something to do with the population of the states as their quarter is released. What I mean is that higher population makes it more likely that more new collectors will jump into the program through a casual interest in collecting coupled with home state pride. Most quarters for high population states are already out there, so perhaps we are over the peak of popularity for the program. So I am saying that the bubble's slow leak has already begun.
New collector "population" might account for things like the 1999 Proof sets continually rise in value, as new collectors decide to go higher end with their quarters rather than putting pocket change into a coin folder. Current collectors want to see the set through completion. I agree with those that think we will see a major dumping of sets once the program ends (proof sets, certified coins, etc..). And therefore values will drop way down. Circulated sets in folders are fun but will likely never be worth more than face. If my theory holds true, items like the 1999 sets should start dropping in value slowly already. I'm not sure if it has though.
The Mint is obviously trying to keep public interest by releasing Presidential Dollars in cross-over with the State Quarter program. While it may interest some collectors I personally do not think the public will latch onto it nearly as well as they did with quarters, especially since we don't actually USE dollar coins. I don't think the cross-over will keep the bubble inflated.
collections: Maryland related coins & exonumia, 7070 Type set, and Video Arcade Tokens.
The Low Budget Y2K Registry Set