Housing, art, stock markets all down; coins?
Trime
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Housing, art, stock markets all down; coins?
Each of thee markets were argued to be impervious to the usual cyclic forces.
The coin market is so bullish now that I have heard privately expressed concerns from only two of hundreds of my numismatic contacts.
As a contrarian this worries me. Are any of you a little concerned?
Have there been analytical studies coupling the coin market cycles to other financial markets as a predictive tool?
Each of thee markets were argued to be impervious to the usual cyclic forces.
The coin market is so bullish now that I have heard privately expressed concerns from only two of hundreds of my numismatic contacts.
As a contrarian this worries me. Are any of you a little concerned?
Have there been analytical studies coupling the coin market cycles to other financial markets as a predictive tool?
Trime
0
Comments
Says who?
The housing market is slow now because no one wants to buy in a falling market (and many sectors are overbuilt). Interest rate are coming down, but the housing slump won't reverse until banks loosen lending requirements - which will start the bubble all over again.
Is art slow now? I don't claim to know, but I doubt the wealthy buyers have halted buying one bit. It may even be considered a safer haven than other investments (again, I don't know where the art market is)
Stocks are near their all time high. It may be down short term, but it is pretty highly valued right now, at least in my opinon if you look from 2001 to today. Cycles. Give me a break. They are all cyclical.
As for coins, the market is very strong because there is a lot of confidence in the market. They are mostly very liquid right now and with gold up, there is more and more money coming into the market from outside. I am not concerned at all right now. Ask me again in 2009.
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CoinsAreFun Toned Silver Eagle Proof Album
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Gallery Mint Museum, Ron Landis& Joe Rust, The beginnings of the Golden Dollar
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More CoinsAreFun Pictorials NGC
Gotta agree with Rick on this one, brothers. The housing market keeps Mrs curly and I in biscuits and beans and the stock market just bought ol' curly a real nice set of matte proof Lincolns. No gripes about the stock and real estate markets here.
I am not a perenial bear, but I am also unwilling to ignore price, value, and timing.
I have no idea if the coin market will double or retreat significantly in the next 6-12 months.
Is it possible that in every market including coins that prices can outpace value and resources?
If coin prices double in the next 12 months will they continue to do so?
I am being somewhat provocative to encourage some discusion and thoughtfulness.
"Says who?
The housing market is slow now because no one wants to buy in a falling market (and many sectors are overbuilt). Interest rate are coming down, but the housing slump won't reverse until banks loosen lending requirements - which will start the bubble all over again. <<< Good call- Hope you catch the bottom soon>>>>>
Is art slow now? I don't claim to know, but I doubt the wealthy buyers have halted buying one bit. It may even be considered a safer haven than other investments (again, I don't know where the art market is) <<< You miss the point-markets don't reverse until they are over, over priced>>>>>>
Stocks are near their all time high. It may be down short term, but it is pretty highly valued right now, at least in my opinon if you look from 2001 to today. Cycles. Give me a break. They are all cyclical. <<< So you agree?>>>>
As for coins, the market is very strong because there is a lot of confidence in the market. They are mostly very liquid right now and with gold up, there is more and more money coming into the market from outside. I am not concerned at all right now. Ask me again in 2009. <<< I will bookmark your perspective and contact you in 13 months>>>>
The nice stuff does not go begging. So if any coin prices are ever ripe to fall it will be for more common stuff - the kind of coins you sell to buy that really neat coin when it comes along. For example, you would probably sell your AU/MS nearly complete Morgan & Peace dollar set to buy a 1909 VDB Matte Proof PR-65RD, right? The better stuff gets put way in the back of the safe deposit box in down markets.
Being in the business makes you more of a realist than biased.
In September, 2001 after the attacks, no one was buying coins. I cut my prices to the bone and offered a full 100% buyback after 1 year. I nearly sold out in a week! I needed to sell coins so I could buy more cheaper. The slump lasted until FUN 2002, and came roaring back like nothing happened. The only coin I bought back, I made $1,000 on.
In the early 1990's when sight unseen bids collapsed, most dealers just took their loss, adjusted their buy prices and continued on. Collectors really had little clue as to what was happening, I think. The dealers who tried to maintain their pricing kept that inventory for 5 years or more. Collectors can hold indefinitely, dealers can't.
Art: Picasso is dead, he can't paint his canvas anymore.
Coins: The material with low mintage and/or survival rates in popular, persuable series is a finite resource, as the above example of the 1909 Lincoln Proff cent illustrates.
There is a common thread in this and as long as we are a civilized society allowed to persue these luxuries money will always follow quality and scarcity. Cycles will come to pass, but they will pass.
Realtone, I respect your thoughts. However, I think you just proved Rick's point. Us collectors with nice material, esp those that don't have to liquidate in a down market, will simply hold on till the market turns around. If we are not forced to liquidate, why would us collectors be interested in selling. I agree with Rick on this one.
Rick, if I was you I wouldn't be offering a 100% buyback in a year. It's great for business and you would probably do alright in many cycles, but there will be a cycle that you're going to get hurt on. Money will already be tight in a down market, the last thing you need are a bunch of collectors knocking on your door. I sure as heck would not want to be your Banker. My hats off to you though for doing it after 911, my butt puckered up so tight I didn't do anything but the most conservative of plays.
I only did that at that time because I knew that the 9/11 had stalled the market temporarily. Being on the inside, so to speak, I felt it was a very safe bet at the time. It was a one time deal. It sure kick-started sales!
<< <i>Each of thee markets were argued to be impervious to the usual cyclic forces.
Says who?
The housing market is slow now because no one wants to buy in a falling market (and many sectors are overbuilt). Interest rate are coming down, but the housing slump won't reverse until banks loosen lending requirements - which will start the bubble all over again.
Is art slow now? I don't claim to know, but I doubt the wealthy buyers have halted buying one bit. It may even be considered a safer haven than other investments (again, I don't know where the art market is)
Stocks are near their all time high. It may be down short term, but it is pretty highly valued right now, at least in my opinon if you look from 2001 to today. Cycles. Give me a break. They are all cyclical.
As for coins, the market is very strong because there is a lot of confidence in the market. They are mostly very liquid right now and with gold up, there is more and more money coming into the market from outside. I am not concerned at all right now. Ask me again in 2009. >>
Ahh, its good to hear that your buy prices are as strong as ever.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Let me answer that here, probably never, so one cannot rely on anybody who makes a living off of the coin market because they are obviously biased, she should really just stay silent during these questions because they surely won't be fair."
So when you need help with your money management, do you go down to the local coffee shop to get your money manager and advice? I doubt that you do. I'm sure you select an experienced financial advisor of some sort. But, by your reasoning, that person could not be trusted.... after all, they will be making money from you.
When you have a serious medical condition.... do you go to McDonalds and ask someone at a random table on what should be your treatment? I'm sure not.... you will find the most experienced individuals in the field to diagnose and treat the condition. Again.... by your reasoning.....
When you think you want to set up a home security system at your home.... again who will you call?
This list could go on forever. So why pick on coin dealers?? They are no different that any other business.... sure they have an obvious interest in the market. But they are the ones also in the know (if they don't, they won't stay in business long). Yes, some will not be straight forward with you. But there are many who will and are well known for it. Reading this board, you will get some good ideas who some of the top notch ones are. And also who some of the not so top notch are. Unfortunaltely, there are some of the very straight forward and honest ones that have been.... removed from this board.... at times they were just a little too straight forward for this forum.
Bottom line, I do not agree with your generalization. I talk to and listen to many dealers.... and get many answers. It is up to me to make my decisions based on the opinions from many sources.
Edited to add: Happy Thanksgiving to all!
If we factor into the weakening of the US Dollar index from it's cyclic high in 2001 (120) to what it is today (75), you realize that any increase in the stock market (denominated in US dollars) is more than overcome by the 38% loss in the dollar. Using 120 as a baseline, today's DOW is worth 8750......and that ain't no bull.
Most if not all markets are cyclical. Housing has had several good down spells since 1929, so have stocks and coins. I agree that as long as gold and silver are hanging in there, coins have an edge on the other markets. But in the past 45 years, I cannot recall when art and other basic tangible/collectible markets did not follow what coins were doing. I don't buy that quality art is now on the skids.
I don't yet believe we'll have a coin market crash with gold seeking new long term highs.
Heritage is diversifying into many areas of the art and collectibles markets. Those guys know what they are doing.
They also know that even in down markets, they will make their 10-20%.
roadrunner
Do not feel bad about your 1 year money back guarantee. LOL.
Jonathan Kern was offering a 2 year full money back guarantee on his coin sales to me in 2001!
I give away money. I collect money.
I don’t love money . I do love the Lord God.
I have pointed out that the key date and early type coin market have been in a bubble phase that has a chance at bursting, hurting many dealers and collectors. When prices have gone up year after year for six straight years, and sentiment is 95% bullish, I don't care if it stocks, real estate, pork bellies, beanie babies, or rare coins, that market has a shot at a crash. There are many newer dealers in the business that have only seen the "one-way" market and have no clue that the market can turn violently.
Again, I am not calling top, and doing so is rarely a profitable game, though it can be entertaining. I am surprised Bear hasnt' replied to the thread, perhaps he is feasting on this holiday. I will say, those that are betting the ranch on a continued strong bull market and think their key date coins can only go up in price, or hold steady, may be in a for a rude awakening. There are a number of dealers who own their inventory on borrowed money. Quite a few collectors may face the choice of selling coins to pay bills. So far unemployment remains low, if layoffs increase all over the country, the coin market will suffer.
The 1990 period mentioned was a relatively shallow coin market dip for the better coins, down maybe 10% and then a long period of steady prices. Because of this many old timers think they can find shelter if there is a another storm. The difference today, is a lot more air under the prices and a lot more room to fall. The majority of coin dealers in business today, have never seen a prolonged decline in prices, and many will be unprepared for it, if it occurs. The 100% buy back worked well considering the price action. If the price action had continued down, the story might have ended very differently. A 10% decline in a year, is very different from a 50% decline that extends over several years.
Again, I make no predictions. I do caution the readers, especially the newbies, that there are no "one-way" markets. What goes up in price, can often come down twice as quickly. Coins are only a little bit different from other markets. All markets are mostly governed by supply, demand, mass psychology, herd mentality. Weaker prices beget weaker prices. Collectors looking for an expensive coin, learn to wait because next year the price will be 10% or 20% lower, instead of what has been happening.
I for one would love to see the coin market drop sharply but I'm not holding my breath. It's the current high valuations that have me mostly on the sidelines. A nice 25-50% pullback would give me a lot of targets to shoot at.
The bottom line is that there is an inordinate amount of money chasing the limited supply of really nice coins right now. The wealthy in this country tend to be insulated against the falling dollar and thus are rolling in cash. It's got to go somewhere. Any appearance of falling prices at the top end of the coin market is due to limited supply, not demand.
I also believe that most great coins are in strong hands and do not need to sell in bear markets .
I know I would not and in fact would be preying to buy more great coins.
Diversification is everything.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Having lived through the 1990 downdraft I can assure you that a "mere" 10% drop was only reserved for more common coins, circs, key dates, and moderns. If you collected gem type, MS/PF coins from 1850 to 1930, choice bu gold, gem classic commems, unc Morgans, you got your a$$ handed to you. Prices fell 50-80% and stayed down until things started to turn around in 1997-1999.
The finest known 1794 dollar (now SP66) went from $1 MILL to $300K. This was no ordinary 10% correction. My own pop 1 (finest by 4 pts) MS67 1867-s quarter fell from $50K in 1990 to about $25K in 1997. A mere 50% fall for an irreplaceable/unique coin. In short, the high end of the coin market got blasted. That said, one should expect a similar drubbing on the next major down draft. And I too expect key dates, and rarities to take part. If you selected coins properly in 1989-1990 by finding undervalued issues, you could have
weathered that storm well. I remember selling my pop 1 1858-0 quarter for $22,500 in 1990. That coin is still the finest known today
(it was not well understood back then though) and probably worth 2X the 1990 price, never really having fallen in value. Yet the same day I sold that 1858-0 25c, I also sold an 1856-0 in MS65 (also pop 1 at the time) for $20,000. Today the 1856-0 is worth only $10,000 or so because more have been graded and it's eye appeal is limited due to being somewhat deeply toned. An interesting turn where 2 nearly identical coins in 1990 are now 4X to 5X apart in value. One was a winner and one became a loser.
Key dates, Lincolns, circ federal type, and pretty much all circ type did not really participate in the 1987-1990 bull market, so those types did not lose any real value during the crash. One could say that circ bust dollars and the like were extremely underpriced because they were not being promoted to Wall Street. Personally I've felt that gem 1815-1930 type has not participated as well in today's market mainly because there was no competition in the REG set arena. Maybe that is finally changing.
But I agree with the idea that a major correction is coming for this market once gold fever passes. But promoted modern and classic rarities, as well as overgraded junk, will fall by the wayside much sooner.
roadrunner
<< <i>If we factor into the weakening of the US Dollar index from it's cyclic high in 2001 (120) to what it is today (75), you realize that any increase in the stock market (denominated in US dollars) is more than overcome by the 38% loss in the dollar. Using 120 as a baseline, today's DOW is worth 8750......and that ain't no bull. >>
Your formula holds true for all assets held in the Dollars not just the stock market.
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<< <i>I for one would love to see the coin market drop sharply but I'm not holding my breath. It's the current high valuations that have me mostly on the sidelines. A nice 25-50% pullback would give me a lot of targets to shoot at. >>
Me too! I'm in a much better position to buy coins now than I was a couple of years ago. If the market pulls back sharply then I can snatch up many bargains.
<< <i>I *wish* the key dates would crash - I'd love to be able to afford the ultra rarities again.
The bottom line is that there is an inordinate amount of money chasing the limited supply of really nice coins right now. The wealthy in this country tend to be insulated against the falling dollar and thus are rolling in cash. It's got to go somewhere. Any appearance of falling prices at the top end of the coin market is due to limited supply, not demand. >>
I question the assertion that US coin collectors have significant assets in foreign markets. Most of the wealthy have a high percentage of their money tied to real estate and the US stock market. Both real estate and the broad stock market are still within striking distance of all time record highs, despite recent declines. If those markets turn and tumble, it could be the case that the wealthy in America will likely get hit much harder than the middle class or poor with fewer assets. In particular the real estate market as a whole hasn't ever seen a nationwide across the board decline since World War II. Many real estate analysts thought it impossible because they had never seen the event occur with over 40 years of data, then it happened this year. During the great depression, high end luxury real estate went down 90% in value. Sometimes the worm does turn. Again, I am not predicting that it will. However, those that believe it can't turn are fooling themselves.
As for the severity of the 1990 decline, yes, I'm sure there are anecdotal stories of isolated coins that dropped much more than the graph shows. There will be again, such as the carefully marketed $5 million gold coin that may drop back to $1 million even in a mild coin bear market with a few motivated sellers. There is a lot of air under some of the prices. Overall, I believe in the strength of data vs. anecdotes. The PCGS index isn't perfect, however, it is a cross section of hundreds of key date coins, and early type coins, across many series so in my mind gives a better indication of the overall market segment than anecdotes.
I am sure there will be another dozen folks with reasons why key date coins and early type can only go up in price. It happens every time I link the key date bubble market graph. However, all that information is baked into current prices. Fundamental reasoning always looks rosiest at the top. Be careful out there, what goes up in price often comes down twice as fast. I don't care what is being traded, there are no "one-way" markets. Those that believe in them are fooling themselves, just as the real estate analyst fooled themselves. For them, the worm has turned.
And even for modern collectors (the low end of the coin market), with the mint increasing the price of gold spouses from $429 to over $500... prices are going up even if interest in them doesn't. It's even more drastic for platinum.
HE>I
That's basically true. Hence to those that say that gold has only gone up because of dollar weakness, I'd say incorrect. Gold has not only covered the 38% due to the dollar (to increase from $260 to $360/oz), it has increased a total of 3X (or +200%). Hence gold's rise is much more due to "something else" than just dollar weakness. Or......the real answer is that the amount of dollars printed and/or 20 years of artificial price constraints has not yet been accounted for in the pog.
I expect housing and the stock market to only weaken with time.
I don't place quality art (ie collectibles) in that category. They are different animals.
roadrunner
<< <i>Your formula holds true for all assets held in the Dollars not just the stock market.
That's basically true. Hence to those that say that gold has only gone up because of dollar weakness, I'd say incorrect. Gold has not only covered the 38% due to the dollar (to increase from $260 to $360/oz), it has increased a total of 3X (or +200%). Hence gold's rise is much more due to "something else" than just dollar weakness. Or......the real answer is that the amount of dollars printed and/or 20 years of artificial price constraints has not yet been accounted for in the pog.
I expect housing and the stock market to only weaken with time.
I don't place quality art (ie collectibles) in that category. They are different animals.
roadrunner >>
It is earnings that ultimately drives stock prices. You keep forgetting it is a global economy, much more so than 2001.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
When the real estate corrected here in '86 after the SnL problems, the cheap stuff stayed cheap or got walked but the good stuff appreciated and was in high demand. As this correction that we are in now plays out a little more, there will be a line defined as to what's cheap and what's expensive and the stuff below the line will depreciate and then recover slowly while the more sought after pieces will continue to appreciate and be sought out. This applies to coins, stocks, real estate, all things that are in play in the markets.
In '95 when the morgans in particular crashed and found bottom, the rare stuff got put away and continued to appreciate in the dark and the widgets were dumped at any price. Many gunners and vest pocket guys went down with the ship. The better stuff will get put away again if the coin market corrects downward again and it will continue to appreciate even if it is not bought and sold, the appreciation is built into the piece. The common stuff will be very common.
Yeah, the '09 VDB in pr65rd for the au morgan set sans stoppers, all day long and then tomorrow too but I would take a nice US dated gold piece any day.
JMHO
Coin ON!
Very few dealers will honestly say the coins they sell are about to tumble in price to the general public on a public forum, even if they believe it, even if the writing is on the wall.
All through the 1990 sight-unseen run-up and subsequent crash, there was Dave Bowers talking about tulip mania and the perils of sight-unseen bidding in his Coin World column.
As for the future crash of the key date coins, I seriously doubt that could occur with the way prices are determined in this market. We no longer rely on pumped up sight-unseen bids for our pricing. We use auction records, and personal knowledge regarding the coin in question.
The sight unseen market started in the late 1980's as a way to add value to certified coins. Dealers bid for the coins with prices they had to honor for any certified coin offered. The obvious problem arose fairly quickly - with low population coins the dealers could make a position of a few pieces and then run up the market knowing that there would be very few people hitting their bid. This drove up prices tremendously. Then the liquidity problem hit with one of the big sight unseen dealers and bids were removed almost over night. This roll out caused the market to drop quickly and in many cases a huge amount.
Today we have all but abandoned sight-unseen bidding. Most dealers know where the real market is by checking the past auctions. For a bust to occur, say in 1909-S VDB Lincolns or 1916 SLQ's, we would have to have buyers stop buying. The market today is driven by buyers and has been since at least 1998, IMO. Knowing this, make me feel very happy with the current market and its future. If a downturn were to occur, it would not be a big surprise to anyone because the reason would be very obvious. Collectors will be fed up with the price of those certain coins and decide to move elsewhere. A downturn in demand is not as harmful as a downturn in liquidity.
Even the gold and silver engine is not built on speculation, like in 1979-80. It seems to be built on true demand from buyers around the globe.
Incorrect. The stories are not anecdotal but rather an honest representation of what happened to nearly every coin with a grade of 63 to 67 worth over $100. If you lost only 50%, you did good
as the average loss was in the 60-75% range on premium grade
material. One of the few saving graces was if you had picked a very high end coin and lucked out with an upgrade by 1995. In that case your loss may have only been 20-30%.
The majority of investment and higher grade coins lost 66-80% of their value. Generic gem Morgans lost 80-90%. Generic gold, esp Saints, got pummeled over 50%. Choice unc bust halves, gem seated dimes/quartes/halves/dollars, choice SLQ's, Red Indian cents and 2 Cent pieces, proof Lib nickels and Lincolns, classic commems, Walkers, gold commems, 1895 Morgans, gem Washingtons, Franklins, and Mercs, etc.....all got decimated....and it kept dropping right through to 1996. Nothing anecdotal here. It was a complete throw the baby out with the bath water. You would be hard pressed to find anything in UNC that did not get hammered. Circs, rare dates, and moderns were 3 of the basic areas that got out alive. Dealers and investers stayed away from circs in 1989 because they were pushing choice and gem material.
It might make more sense to go back and review the actual CDN and blue sheets than to take anecdotal data from PCGS CU 3000 charts, etc.
roadrunner