CoinWeek Podcast #127: Coin Market Point/ Counterpoint (with Scott Travers)
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This week on the CoinWeek Podcast, our guest is the legendary promoter of coin collecting, Scott Travers. I have known Scott for several years and we have had more than a few hours long conversations about the state of the market, the future of coin collecting, and our shared love for numismatics.
When I reached out to him a few weeks ago, I asked him to come on our air to talk about how the marketing of coins is different today than it was 30 years ago – a period we generally look back at and think was a golden time for the market – where selling certain types of coins was much easier than it appears to be today.
I’m not sure that Scott and I arrive at a consensus on this topic and I have to admit, this was one of the more difficult interviews that I’ve ever done for the podcast. Still, Scott’s information is expert and valuable and I hope that you leave this program with a few prompts for your own conversations with your collecting friends.
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The CoinWeek Podcast is brought to you by PCGS.
Visit PCGS at the Long Beach Expo: Coin, Currency, Stamp and Sports Collectible Show and submit your coins to receive the very cool Long Beach Expo exclusive label. It looks like a California license plate, you’ll love it.
On February 20-21 from 10:30 to 12:30, collectors can meet with expert Steve Feltner to talk about coins. PCGS will also show off a spectacular set of Flying Eagle and Indian Cents.
Plus you can partake in the next great installment of the Tyrant Collection, graded by PCGS and presented by Goldbergs.
The Long Beach Expo is held at the Long Beach Convention Center starting on Tuesday, February 20 and wraps up Saturday, February 22, 2020. One of the greatest coin shows in America returns. Hope you can attend.
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The following is a transcript of Charles’ conversation with Scott:
Charles Morgan: The CoinWeek Podcast is brought to you by PCGS. Visit PCGS at the Long Beach Expo, Coin, Currency, Stamp, and Sports Collectible Show and submit your coins to receive the very cool Long Beach Expo exclusive label. It looks like a California license plate, you’ll love it.
On February 20-21 from 10:30 to 12:30, collectors can meet with expert Steve Feltner to talk about coins. PCGS will also show off a spectacular set of Flying Eagle and Indian Cents. Plus, you can partake in the next great installment of the Tyrant Collection, graded by PCGS and presented by Goldbergs. The Long Beach Expo is held at the Long Beach Convention Center starting on Tuesday, February 20, and wraps up Saturday, February 22.
One of the greatest coin shows in America returns. Hope you can attend.
This week on the CoinWeek Podcast, our guest is legendary promoter of coin collecting, Scott Travers. I have known Scott for several years and we have had more than our fair share of hours-long conversations about the state of the market, the future of coin collecting, and our shared love of numismatics.
When I reached out to him a few weeks ago, I asked Scott to come on our air to talk about how the marketing of coins is different today than it was 30 years ago, a period we generally look back at and think was a golden time for the hobby, where selling certain types of coins was much easier than it appears to be today.
I’m not sure that Scott and I arrived at a consensus on this topic and I have to admit, this was one of the most difficult interviews that I’ve ever done for the podcast. Still, Scott’s information is expert and valuable. I hope that you leave this program with more than a few prompts for your own conversations with your collecting friends. The always-on Scott Travers is up next on the CoinWeek podcast
Charles: Hi, Scott, thank you for joining me on the CoinWeek Podcast.
Scott Travers: Well, thank you for having me, Charles. It’s an honor and privilege to join you.
Charles: There are very few personalities in the coin industry who are as well known in the mainstream media as you are Scott. As an advocate for coins and the hobby, you’ve done a number of media pieces on a variety of topics. Who can forget the time you put a 1909-S VDB Lincoln cent into circulation on national television? You’ve also advocated on the part of the investor coming into the coin market to show them not only how they can buy coins in an intelligent manner and protect themselves against scams, but also how to appreciate coins and possibly transition from being just an investor into being a collector investor.
As for you, personally, you’ve been into coins your entire professional life, starting as a teenager. Coins have been a part of your life’s work and something you’re very passionate about. You also care about the future of the hobby. And since you and I have had a number of private conversations over the years about where the market is, I just wanted to get some of your thoughts and feelings about the market and coin collecting on the record in this podcast. So, I guess I want to open the conversation with a couple of general points and we don’t have to touch on each one of them in any sort of order. They basically go like this. How did the coin industry get to where it is today? How have we positioned ourselves over the last 20 to 30 years to get to where we’re at right now? With that in mind, what drives the contemporary collector changed over the past 20 or 30 years?
Scott: Well, I think to simplify this, we should understand that coin collecting consists of two mentalities. If we look back for half a century, the two mentalities of the project mentality and the profit mentality are really what predominate.
Let’s look first at the project mentality. Collecting coins is a project mentality. You look back decades, and there are so many people who began their collecting interests with Whitman folders. They take a Whitman folder and then they look at Lincoln cents. It might be a Whitman folder for Lincoln cents from 1909 to maybe 1958. And it’s a project mentality. They want each one of those coins in the Whitman folder. If they don’t have that coin, they look at that Whitman folder or that Whitman album and they look at that space and it’s staring right at them.
Fast forward several decades from when Whitman folders were very popular, and let’s look today, at the same project mentality. We look at the registry sets of the professional coin grading service, PCGS, and the Numismatic Guaranty Corporation of America, NGC. This is really the electronic version of the Whitman folder to project mentality. If we look at this project mentality, continuity of coins, collecting an entire series and we look how that’s been adopted by the US Mint in relatively modern times. We look back to the state quarters program from 1999 to 2008. I remember the numbers that we were using at the time are 140 million Americans were collecting the state quarters. Now, that’s a really impressive number and I can tell you we had a lot of interest in the state quarters because it was a continuity program. People were finding things that were interesting in their pocket change.
I had a price guide at the time, The Insider’s Guide to U.S. Coin Values, and the number of price guides that we were selling and we were describing the state quarters and we had price guides for the state quarters. We were selling just an extraordinary number of books, a record-high number of books, and that’s all because of the project mentality, coin collecting as a project mentality.
Going forward, if you’re going to look to the future, we’re going to need to partner with the Mint. We’re going to need to have some innovation to get people involved in collecting coins as a project, and having one of each of something, even if it says three-coin set, if it’s a five-coin set, if it’s a 32-coin set, if it’s a registry set with 247 coins, everything is about when it comes to collecting the project mentality.
Once we get past this with the project mentality, there’s also a second motive for collecting coins and that’s the profit mentality.
Now, if we look back to making money in coins, and I actually wrote a book called How to Make Money in Coins Right Now and it was one of my very bestsellers. When it comes to making money in coins, it’s really a couple of factors involved. One is what Maurice Rosen for many years has called Economic Justification. We were to see gold go to $2,000 an ounce, $3,000 an ounce, $8,000 an ounce which some people were forecasting at my seminar at the FUN show, this past couple of weeks in Orlando and now in 2020. We would see a considerable interest in coins again.
With $2,000 gold, you wouldn’t be able to buy any $20 gold piece for under $2,000. That’s a big psychological level. So, besides economic justification, Maurice Rosen’s great term, higher precious metals value, pushing more people to have an interest in coins, the media focusing on coins and precious metals, the second part of making a profit is the part relating to finding a valuable coin in your pocket change. That brings us to interesting things to look at such as the roll boom of the 1960s and the discontinuance of silver in circulating coinage back in 1964, being the last year in the US, and finding valuable coins and pocket change is always a wonderful media hook. If we’re going to promote the industry and we want more collectors, we really have to focus on– it’s all about getting back to basics. The project mentality, the profit mentality,
Charles: On the project mentality, I agree with you. But does the industry properly leverage that psychology? Take the Mint, for example, they’ve certainly given the hobby a few big projects over the last 20, 30 years.
Scott: We need another state quarters program.
Charles: Right. Well, the Mint has been doing that with the America the Beautiful quarter series. But like you’ve said before, maybe that program doesn’t have the same magic. Getting back to collecting itself, I often look at the support industries. I look at the way coins are marketed. I even look at the convictions themselves. And it seems like there’s nothing altogether sophisticated about the presentation of coins and how they are–
Scott: Well, sometimes there doesn’t need to be.
Charles: Well, sure, there doesn’t need to be, but if you go to a Christie’s or a Sotheby’s auction and you sit there in a well-appointed room and eat a canape or two, there’s a degree of sophistication in the presentation and the marketing of the product that we don’t usually see in the cacophonous exhibition halls of your typical coin show with their concrete floors, temporary booths, and bad lighting.
Scott: A 1933 Saint-Gaudens Double Eagle sold for 7.59 million dollars plus a $20 remonetization fee. We sat in such a room and we watched the hammer come down as the coin sold for the 7.59 million.
Charles: Right. But when you go to a coin convention, it really resembles a flea market at this point. We’re offering people coins that cost as much as automobiles in cheap-looking presentation cases with harsh, less-than-ideal lighting in most venues. The entire packaging concept doesn’t seem to appeal to people. And I think taken together, the entire package does not appeal in the same way as we might see with some other luxury items in the way they’re sold.
Scott: Well, some of these items aren’t luxury items, everything’s grouped together. So, if you go into a clean convention, you will walk in there and it’s daunting and if you went to the FUN Convention in January 2020, you would have seen hundreds of dealers and without knowing who you wanted to see or what you wanted to see, you would be without direction. Coins of all values were kind of scattered. At least to the novice, it would appear haphazardly everywhere. You walk in and take a look at some things offered for $3 for $5. A hobo nickel here, a 20-cent coin over here, coin actually being sold for 20 cents, and then in the next case, a $5,000 coin and $40,000 rarity on display to be sold at an auction. So, that’s the nature of the industry. We’re going to reorganize. Well, let’s talk about it. What are your recommendations? And what do you suggest?
Charles: Well, the first thing I would say is that I think there are two industries at play here. I think there’s a rarities industry and regular collectors’ industry. Unfortunately, so many of the problems we as industry observers might see tend to affect that regular collector industry much more adversely impacting both the collector and the dealer. For example, generic gold used to be a very profitable area for dealers, especially telemarketers, because you had two factors at work. The intrinsic value of the coins and their historical cachet as being pre-1933 US circulating gold that for those who want to look at precedent would suggest to nervous investors who had lived through a period when private gold ownership was forbidden but these coins were not forbidden due to loopholes afforded to coin collectors.
So, for 15, 20 years, generic gold coins were traded quite heavily, with the numismatic premium applied to them because they were rare or old, even though they weren’t really rare. But with the run-up of gold prices around 2010 or even as far back as the early 1980s when the Hunt Brothers tried to corner the market on silver and ended up putting upward pressure on gold too–
Scott: The recent high for gold was in August-September 2011. And gold was about $1,923 per ounce, right?
Charles: Right. And that $1923 per ounce all but wiped out the numismatic premium of generic gold coins, a premium that really has not recovered. And that means that there’s really a large volume of classic US gold coins that can no longer be sold at the same level of profit as before and as the industry has changed its focus to modern bullion coins instead, do you agree with my assessment? If we take generic gold as a key example, does it speak to the state of the regular collectors’ industry today?
Scott: It’s a complicated question because there are a number of variables relating to why these coins came down in value. There’s the question of how many coins are still out there. Some leading experts who are very familiar with overseas quantities have told me that in France, there’s well over 10 million $20 gold pieces, lower Mint State grades, some about uncirculated, but many Mint State coins, nonetheless. If you have 10 million coins, somebody even mentioned to me, there might be 15 million coins. If you have 10 million coins or eight million coins, with this type of an overhang on the market, you have mostly Saint-Gaudens Double Eagle and Liberty Head $20s, you’re going to see for the foreseeable future, very low premiums on these coins.
Then, you add into the mix lower gold bullion prices, yeah, these coins are lower and these have historically been for our industry, entry coins for people who are interested in other things. Large coin dealerships that are interested in getting and cultivating new collectors and investors often sell lower grades, Saint-Gaudens Double Eagle and Liberty Head $20 gold pieces, and people buy these coins either as a one-time purchase or in quantity, viewing them as a collectible and as an investment. Many people who bought these in quantity have seen considerable losses because we have apparently millions of coins that are overhanging the market and we have a lower bullion price. Lower bullion prices all by itself will bring down the values of these coins and less interest in these coins will bring down the value of these coins.
Charles: Fair enough. If you could describe for our listeners what the typical business model for a coin dealer is? Where are they deriving most of their profitability from coins?
Scott: This is an industry of thinly capitalized entrepreneurs, each with their own business model. I can’t speak for how they’re doing business. But I can refer people to the Coin Collector Survival Manual to a phenomenal section I have about How to Make Money in Coins Right Now where I did an interview with Jim Halperin of Heritage Auctions and I have a chart of coins that he finds most profitable when they are upgraded by a grading service, and I discuss grading service ownership. I can’t speak for in generalities about that, but I can point to what I consider fascinating specific examples.
Charles: Well, speaking of specific examples, I think vintage silver commemorative coins are the biggest missed opportunity in the market today for all parties involved. On the collector side, it’s a shame that some of the most beautiful designs struck by the Mint in the 20th century are not affordable enough for most people in the hobby to complete a set. There’s also not enough demand on the part of collectors for dealers to freely make markets in them or feel confident that when somebody comes to them with a Texas Centennial or Cincinnati or Vermont, one of the finest designs of the 20th century by the way, that they can make a good offer on it because the demand isn’t there. So, the retail prices, even today, for many of these mid-tier middling-grade coins in that series are probably 50% too high.
I think that unless the price has come down to a point where they are logical and supply and demand find equilibrium, you will have one of the most interesting coin sets that you could build go wanting for buyers, and that’s a real problem. So, what’s your take on vintage silver commemoratives? Do you agree with me that the price is too high? Or do you think they’ve come down enough?
Scott: Vintage silver commemorative coins will be lower in value in five years.
Charles: But you agree with what I’m saying? I think they should be lower now so they can sell now, not in five years. That’s why I’m saying.
Scott: Well, they might be lower now. [chuckles] They’ll be lower now and they’ll be lower in five years.
Charles: Okay. Let’s change gears slightly. I’m going to go on record and say that I support legislation that alters the relationship the Mint has with Congress, as it pertains to modern commemorative coins. I think the system we’ve used since 1984, where the Mint can produce only two commemorative issues per year and the United States Congress dictates the parameters of those programs down to the design details often. I think that the Mint if it had a marketing team would be better informed about the commercial viability and artistic aesthetic viability of a coin program. I think the recent sales of many commemorative coin programs such as the 2017 Boys town or 2018 Breast Cancer Awareness coin show that these coins, in the system that they’re produced in, have failed to capture the excitement of the collecting community.
The only way to fix this problem is for the Mint to have at least some authority to create its own market-driven commemoratives that are more popular with younger collectors and a broader segment of the American consumer. I’ve been corresponding with the staff of a US Congressman about this topic and I hope to get the opportunity to talk to them in more detail.
But short of something like that, I think the Mint will continue to sputter around, trickling out random programs based solely on parochial congressional interest. Having said that, the current Mint leadership, especially with Mint Director David Ryder, is lightyears ahead of anything we’ve had in a generation or two as far as generating excitement as far as the hobby goes. But the constraints are real, and I think some of those constraints need to be eased.
Scott: Yeah, well, look at the size of the Mint’s mailing list. I think you and I together, we’re at a mint conference where we were invited by the US Mint to give our two cents’ worth about what we think the Mint should be doing and where its direction should be. It was revealed to us that the– how many– What was that number that was told to us 5 or 10 years ago? There were two million collectors or two million active buyers on the Mint mailing list. What’s the number today?
Charles: It’s 10%, I think, of what it was a decade ago. That’s because, I believe, the Mint stopped advertising. The Mint is an unusual organization. It’s a government bureaucracy that has a certain level of sophisticated government funding and is not going to fail and it behaves online like a Fortune 500 company, building better platforms and integrating new technologies. But when it comes to actually marketing the things they’re trying to sell, the funds are heavily, heavily restricted. And unless you’re already a member of the tribe, so to speak, you’re probably not going to hear about the 2019-S Enhanced Reverse Proof Silver Eagle or the latest quarter or whatever, because they don’t have an advertising budget that gets ads and magazines and newspaper or TV or radio. They don’t support online publications like CoinWeek. They don’t support Coin World, Numismatic News, they don’t support our hobby, because they don’t have the funds to do it or the authority.
The Mint is doing very little along these lines to support the perpetuation of the hobby, and almost nothing to compete with foreign mints which are capitalizing on our mint’s inability to create pop culture coins.
Scott: The numismatic media enthusiastically covers it.
Charles: Exactly. We’ve had conversations and other publications have had conversations with the mint leadership about this very thing. And we’ve told the Mint that there’s nothing that the people in the bourse floor and any coin convention across the country will like more than for us to tell people not to buy their coins, and to buy vintage coins instead. But yet, we don’t. Anyway, comparing today’s interest in modern Mint products with yesterday’s, what was demand like for silver commemorative coins in the 1970s and 1980s?
Scott: Demand was very strong. We saw high-quality silver commemorative coins, Mint State ’68, and occasional Mint State ’69s bringing record prices. It was a different era because back in the 1980s, we had collectors who appreciated toning, and part of the reason that we don’t see a lot of appreciation, both financially and aesthetically through vintage silver commemorative coins, is that we see a lot of collectors who really don’t appreciate original toning anymore and aren’t educated to how a toning should look like. You take a coin with magnificent and completely original concentric circle toning, and the coin has perhaps an ocean blue periphery that fades into a sunset golden center that accentuates the cameo contrasts of the coin, and you show it to a newly minted collector and he shrugs his shoulders and asks, “Well, can you dip that? How can you make it brilliant?”
Charles: So, doesn’t that imply to you that the media that collectors are getting their information from is not giving them actionable knowledge? Or do you think that collectors today are just less motivated to educate themselves?
Scott: We just don’t see the types of collectors that that are educated in the ways that they were educated 30 years ago, 20 years ago, even 10 years ago. This is a trend we’re seeing in other fields. There’s very little interest in antiques. Good luck in trying to sell brown wood furniture, it’s worthless. Many people today collect contemporary things, collect modern things, so people collect art. They just don’t collect chairs. They’re collecting contemporary chairs, modern chairs, not antique chairs. And people collect coins, so many people are collecting contemporary coins, are collecting modern coins, are collecting things that were manufactured five years ago.
For collectors of modern coins, they’re used to brilliant items, so they use the items that aren’t toned. Once you have somebody who’s collecting untoned coins and is used to modern coins, and a coin in a ’65 holder, and a coin in a ’69 holder, and a coin in a ’70 holder untoned, and suddenly, that person starts to collect vintage coins. They want their vintage coins untoned also.
Charles: There’s no shortage of untoned or dipped-out commemorative coins. They’re predominantly white in the market today.
Scott: And a lot of those coins don’t have the kind of vibrant luster that a modern coin from two years ago would have that’s in a ’70 holder. They look washed out and lackluster. Some of those coins retone in the holders and they’re particularly unattractive. And then, it gets confusing for people to look at a coin that’s retoned in the holder and looks very unnatural with a coin that is completely originally toned. We don’t have the educational mechanisms in place to educate these people.
Charles: Where are we at, then?
Scott: $2,000 gold, $2,500 gold and that’s going to propel the marketplace to greater heights. People are going to be buying Mint products. As we see these millions of $20 gold pieces being sold off– and many of these coins are going to refineries. They’re being melted down. Ultimately, it’s going to make $20 gold pieces rarer and people at some point will collect these by date, five, seven, 10 years from now, and the premiums will increase. So, I’m optimistic about where the marketplace is headed and I’m optimistic about metals prices. I would not want to see $20,000 gold or $15,000 gold. I say a prayer every night that gold doesn’t go to those types of levels because this wouldn’t be a great world in which to live if we had $20,000 gold, gold at $20,000 an ounce. It would be pandemonium out there economically. Blood in the streets.
Charles: I think we should be careful what we ask for though. I imagine if gold goes up substantially, silver will go up as well. I know they’re not directly tethered to one another with the bimetallic ratio being long gone. But I think if silver was on the march and got past a certain point where it wasn’t affordable, I think it’d be very damaging to the coin industry.
Scott: I’m not asking for anything, and I’m not wishing for anything. I’m giving a forecast based on analysis and my forecast is that we’re going to see $2,000 gold.
Charles: So, if you have $2,000 gold, then where do you think silver is going to be in that scenario?
Scott: I can’t say where silver is going to go. I view gold as a universal currency. I view silver as an industrial commodity. Gold is in a different league than silver. Silver is very difficult to transport, has a lot of problems. Gold is the place to be.
Charles: Well, I’d have to wholeheartedly disagree with you about silver, but you’re saying that you can see gold at $2,000 or $3,000 an ounce?
Scott: I’m not pushing things. Yeah, I could see gold at $2,000. I think realistically $2,000 gold in the next couple of years is realistic.
Charles: Okay. Well, I don’t think it’s much of a stretch to see gold going over $2,000 an ounce. I think it’s going to go over that no matter how the 2020 elections turnout here in the United States because you can’t escape the fundamentals. Economies don’t experience positive economic growth forever. The national debt is not something you can wish away. At a certain point, our Congress’s profligate spending needs to be addressed. And there’s going to be a reckoning and the stock market will correct and people with enough means will protect their investments by putting them in safe havens, while things get sorted out. But I do think that for the coin collecting hobby, since the majority of collectors aren’t collecting gold coins. They’re collecting base metal coins and silver coins. If silver reached a certain height, maybe over $100 an ounce, I think it would be disastrous. It would make coin collecting absolutely unaffordable, and we would see a major decline in participation.
I look at metal prices as a good way to get people thinking about coins as having some kind of inherent value, but it’s a double-edged sword. You can get priced out of the market really easily. And no rise in precious metals prices is going to affect the amount your employer pays you for your labor.
Scott: It will be priced out of the market because they’re going to be able to buy copper-nickel coins. They’ll be able to buy cents. They’ll be able to buy nickel coins. You and I have touched upon this in conversations, aside from this podcast, about how the market is actually very vibrant right now for coins that are at $100 and below. And dealers who have an eBay presence are doing extremely well. It’s a lot of work, but they’re doing extremely well, selling $100 and below-priced coins.
On the other side of that spectrum, coins that are valued at hundreds of thousands of dollars, millions of dollars. Many of those coins are doing well because we have a number of well-heeled investors and collectors who are buying multimillion-dollar rarities. I’ve covered that in my capacity as the executive editor of COINage Magazine. And we’ve done features on billionaires buying coins.
The coin buyer who has been out of the market for the last decade or more has been– everyone in between. Everyone in between the person buying $100 and the person spending $100,000 or more. So, we don’t have people buying $5,000 coins and $20,000 coins and even $3,000 coins with the same fluidity that we saw 10 or 20 years ago. That’s the market that as an industry and as a hobby, we need to cultivate to have a healthy marketplace and to bring the coin hobby, the science, and the industry back to life.
Charles: Okay, let me ask this question. You knew John Jay Pittman. I think he’s a very interesting case study of a point that I’ve wrestled with for years. John Jay Pittman was an executive at the Kodak company. He wasn’t the owner or the president or anything, but he made a decent living. But John Jay Pittman probably couldn’t have put the Pittman Collection together today if he was doing the same job for a comparable company in the current economy.
Scott: Look, knowledge is power. And what I can say about John Pittman, because I haven’t looked at his bank account, I can tell you that he had great knowledge and he was self-educated. It all goes back to the axiom of when you spend money on something that you should know what you’re doing and you should educate yourself. And the people who know what they’re doing and are truly collectors are the people who make the very finest and put together the best collections, the most diversified collections. And in the end, their bottom line is the most impressive.
Charles: Right. But at the same time, when John was buying his coins, there was a lot left to be discovered. The industry was not nearly as technologically advanced, not as sophisticated, information wasn’t as easily available. And it was in this environment that Pittman was buying coins based on deals he made with people. I’m thinking specifically about the Dot Cents he bought. I still argue that you can’t do what he did today with the means that he had, and that I think is the crux of the entire issue.
Scott: What’s interesting about John Pittman is that despite all of the fantastic inroads he made with his landmark milestone collection, he’s probably best known as being a former governor of the American Numismatic Association because of the innovations and the great deal-making that he did on the board of the ANA and he set an example of what someone who’s a member of a nonprofit board can do.
Charles: Well, I think it’s an important moment for collectors to begin to figure out how our industry actually works and what the challenges are without us having to promote the best face of it. For instance, the point I was making about Mr. Pittman was that Pittman was a super coin weenie, very enthusiastic about coins, and a ruthless dealmaker. And you’re right about that. But at the time, he was purchasing coins, the collector with major knowledge advantages still had a number of opportunities to leverage.
Scott: Well, that’s true because coins are declining in value. Just using a generalization, many coins have gone down in value. And it’s like buying a car, the coins are depreciating assets. So, no, you can’t take a small sum of money today and easily parlay it into a large sum of money in coins. At the time John Pittman was the dealmaker, you can put the recording back on, the coin market was inefficient. We never talk about that. That’s an extremely important aspect that was left out of this whole thing, efficiency. Grading services, CAC, PCGS, and NGC are making the market more efficient. When they make it more efficient, the dealer profit margin goes down, and the ability for someone who’s extremely knowledgeable, to go to a coin show, as I did as a young numismatist, and buy something for $50 and then sell it for $1,000 at the same show because it has a certain die variety, that opportunity isn’t there now. NGC, PCGS, and CAC have squeezed out all of the inefficiencies.
Now, when you have an inefficient market, you have a tremendous opportunity for people to make a lot of money, but you also have an opportunity for people to lose a lot of money. If you look back to the 1980s, it was a double-edged sword. People who were very smart could make a lot of money. People who were not very well educated to the ways of the marketplace, they lost a tremendous amount of money. Today, we have the ultimate consumer protection mechanisms built-in. If you have a PCGS or NGC-certified coin and it has a CAC sticker on it, as long as you have a price guide to match the coin that you have, you’re basically on the same playing field as the dealer. This makes the marketplace extraordinarily efficient and it makes it less easy, even for someone with knowledge, to capitalize on that knowledge because everyone is on the same playing field.
Now, as I said, it’s a double-edged sword. People can lose a lot of money in an inefficient market, but they can also make a lot of money. For every John Pittman you had, who is well educated who made a lot of money off of the inefficiencies, you had multiple people who were the flip side of John Pittman, not educated. And they were fleeced, and they lost collectively millions of dollars. Is it a good thing? Is it a bad thing today that we’re much more efficient? Everyone’s on the same playing field? There are fewer people losing money and fewer people making money. It’s that reason, that efficiency reason, the price guide mechanisms, NGC, PCGS, and CAC that we can’t have John Pittman’s today, but that’s also the reason why people aren’t flocking to my office as they did 20 years ago and presenting me with transactions where they overpaid by 1000% or 2000%.
We had companies that the Federal Trade Commission, back in the 1980s, charged with false, misleading, and deceptive practices in or about commerce. And we don’t see these allegations today because the opportunities for ripping people off to that extent don’t exist today because of grading services and because of matching price guides.
Charles: Do you think that the impetus for people to get into coins today is different than it was then? Do you think the investment angle was as pronounced in the 60s and 70s as it would have to be today, to justify some of the prices we’ve seen in auction?
Scott: I’ll put it to you this way. We need higher gold prices to get people involved. The mechanism is real. The basic mechanisms haven’t really changed then and now. As we said at the beginning of the interview, coin collecting consists of two mentalities. It’s a project mentality and it’s a profit mentality.
Charles: Not necessarily. We do from time to time see other psychological issues at play. Take for instance the removal of silver from circulating coinage. This brought about a major collecting boom. You had sales like the Paramount sales or the Redfield hoard and the GSA sales, Morgan dollars from the Carson City Mint. Then, you had the launch of the modern US commemorative coin program, which we mentioned earlier. All of these are motivating factors that brought millions of people into coin collecting.
Scott: I’m looking back to where back in the early 1980s, in 1979– Oh, let’s look at the modern history of the industry. Let’s do a capsule profile, capsule summary of where we were and where we’re going to go. This is probably more important than anything we’ve said during this whole podcast. Maybe we should put this now at the beginning, now that I’m thinking about this.
Back in 1979, 1980, where we saw the coin market’s greatest boom, it was an extraordinary situation with gold hitting $875 an ounce on the international market briefly. Everyone and his or her dog were buying coins as an investment, 1979, 1980. And then, when those people went to sell those coins, they found out they were worth a fraction of what they paid for the coins. But we had that economic justification of $875 gold– 1979, 1980, I was an undergraduate at Brandeis University at the time. That was a monumental moment for this industry.
Then, the Federal Trade Commission turned to industry leaders after the abuses were discovered, and the FTC basically said, “Hey guys, either you regulate this industry, or we are going to regulate it for you.” And with that, came the advent of the professional coin grading service, PCGS, in 1986, a monumental milestone moment. And we reinvented ourselves as an industry. Coins were then safe to buy as an investment again. It gave us tremendous motivation to speak out and reach out and promote ourselves and be featured from the Wall Street Journal to the New York Times, to Barron’s, with new book contracts being signed, left and right. A very exciting time.
Then if you remember, in the late 1980s, since coins were rediscovered as an investment, it was safe to buy coins again because we had independent grading services, NGC and PCGS, grading coins and placing them in sonically sealed, tamper-resistant holders, grading the coins with consensus grades, telling people that coin grading is a process of subjective evaluation but it’s really a consensus of subjectivity. And then we had Wall Street come in. We had limited partnerships, investment partnerships. People were buying coins left and right. We had Kidder, Peabody establish an investment partnership in coins. Merrill Lynch established an investment partnership in coins. And then recall, the 1989 coin boom as a result of coins being rediscovered as an investment being promoted, self-fulfilling prophecies, Wall Street coming in and then allegations of fraud relating to the Merrill Lynch fund, and then it fell apart. And then the coin market saw a tremendous decline in value and in interest with 1989 values falling precipitously.
But then 10 years later, the coin field was discovered again with 140 million Americans collecting state quarters. 1999 to 2008, an extraordinary time for coins, an extraordinary coin boom. My books were selling extremely well. And then another coin boom, 2008, economic justification all through that period in 2008. August of 2011, gold at $1,923 an ounce.
So, since that 2008 period where we saw tremendous premiums on $20 gold pieces in generic gold, we really haven’t seen a strong coin boom and we need the next new great thing that relates to project and profit. The project mentality, registry sets. The project mentality, Whitman folders. The project mentality, US Mint continuity programs. The profit mentality, finding a fortune in your pocket change. Sold tremendous numbers of books about making a fortune from your pocket change. I had probably the most successful coin promotion in the history of this field, was in April of 2006, when we had National Coin Week, and with the assistance of Donn Pearlman, I spent some valuable coins in pocket change as the whole world watched. I was on conceivably every well-known media program that there is. I was on everything from the Today’s Show to MSNBC, you name it, there was coverage of this. We’re not seeing that type of excitement right now. And I think there are things that that we can do and things that will happen that are not in our control, that will happen that will bring back the excitement.
So, that’s the modern history of our industry. The advent of PCGS and NGC respectively 1986 and 1987, that great height for coin prices, which still we have not come even close to seeing again. Those 1989 heights which are still used as the milestone moment of our field when Wall Street was buying coins. The continuity program of the state quarters, 140 million Americans collecting coins. 1999 to 2008, that amazing 2008 coin boom. That incredible August 2011 gold height of $1923 an ounce.
Charles: Well, maybe the next big thing needs to happen. It’s not the creation of something, but perhaps the elimination of something. Take, for instance, the penny.
Scott: Be careful what you wish for. You brought that point up before we could end up seeing the elimination. If we see the elimination of the small cent, we could end up seeing the elimination of all circulating currency.
Charles: Scott, thank you very much for taking the time today to talk with us and share your perspective on the coin hobby and where it stands, where it needs to go, where it just might go.
Scott: Thank you for having me as your guest, Charles. It was both an honor and a privilege.
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This was a difficult interview and I agree with your observations. Historically the upper end of any collection (either rarity or collectability) have held their value. But in recent years those coins have not held their value and this discourages both the collector and the investor. Bullion values at this end of the hobby are interesting but usually a minor portion of the value. The hobby lacks demand and that is what is driving prices down. The US Mint needs help with marketing and we need ways to entice younger collectors back to the hobby.
interesting to read this interview now in January 2021.
I love the classification that the project mentality typifies the coin collector who sees numismatics as an acquisition of history, art, science and sentimental value with some hope of its value increasing but sanguine enough to know it may decrease. But if the coin “speaks” to the person they will buy it, within their means. In my case, I began collecting British Mandate Palestine coins. With my budget, I can afford mostly those in grade high VF to high Au, maybe MS 60 for some coins. The currency is mostly out of reach except for a buy every few years. So for now I focus on the coins. The reason? My father was born in British Mandate Palestine and he grew up with a father of Greek Palestinian Christians and a mother from Jordan and Christian. I love to mention this Americans as it reveal their knowledge of the area – I find, to my surprise, some quite intelligent people suppose most people from the Middle East (except modern day Israel) are Muslim. heck, one must recall that in Pakistan and Afghanistan before they became independent nations, there were flourishing Jewish communities in the large cities. So too Jerusalem with its various quarters.
I mention the family connection to my coin collecting habits as there is another psychological impulse to collecting – one way to connect to one’s roots and rediscover or create new tokens to represent important years in family history. It is these nuances that I see missing in many conversations about coins and one that I see only in the marketing of medals and for collectors of exonumia more than numismatics. Yet it is quite important, very important I must say. Why do you think the 1986 dollar and half dollar commemorative coins sold so well – it spoke to so many American immigrant or ancestors of immigrants as well as knowing that their purchase would contribute to the refurbishment of the Statue of Liberty. of course, their was the project and investment impulses from collectors and non-collectors but the appeal captured some who soon left coins and bullion after the market declined and found, and just as important, the joy was not the same as obtaining the 1986 Commemorative coins with Lady Liberty’s torch and the wonderful portrait of a family arriving on Ellis Island. I mean with the project and investment mentality you could direct your interests to a myriad of things aside coins. in sum, if you want a coin to capture the widest audience you really have to dig into the collective myths of a nation and the national psychology to create symbols on the coin that transcend both project and investor mentality —- in other words the buyer has to feel there is some ineffable intrinsic value attached to the coins as well as extrinsic value. The project mentality usually develops after one finds a coin of both deep extrinsic and intrinsic value. Note how many stories you hear of completist collectors starting because of their experiences with dear friend or relative. Those long-time collectors often return to that intrinsic attachment that the coin serves as a symbolic token. It is a very hard thing to create in a coin design and marketing campaign, although great psychologists such as Carl Jung realized this. Maybe for this reason, I have seen few or no articles and interviews concentrating on the more intrinsic reasons one collects or invest in coins: was it a connection to family history? a particular event that was connected to a coin? a desire to capture something from one ‘s life at that moment or in the past? a coin that spoke to even a medical condition one has battled with?
I believe the pandemic of 2020 is one of the reasons why such hobbies as coin and stamp collecting have flourished. When your world is curtailed to a house or a few rooms and limited trips to the outer world wearing a mask and maintaining a healthy distance from people, the desire to find something to do and something that holds potential intrinsic meaning is important. I think coins have that potential with their designs and production, but it is not easily captured, especially in the US where the circulating coinage we do see is largely stagnant and what variations in designs have been either overplayed (quarters) or barely done (dimes). Furthermore, some coins such as the old golden dollar coins that you can find, are aging and getting duller and duller to view. The most interesting coins produced by the US Mint are often the not intended for circulation issues such as the Kennedy halves and golden dollars.
So in such a greyish, isolated world numismatics offers a wonderful combination for the person to find extrinsic and intrinsic value. Later on they may develop the project mentality and become a long-time coin collector. But there is even an intrinsic value of completing a set of the best coin type you can get with your means. And over time, as one completes other “projects’ in their life – be they numismatic or not – their organized coin collection when let go will be something they will hopefully find a person who will remunerate them well and take good care of what they have acquired.
As for gold going to $2,000 – it did and mostly out of fear and the distinctly American taste for doomsday scenarios (maybe due to our Puritan background and 18th century America being a convenient dumping ground of Great Britain’s religious extremists, as they were considered during the day). There was a disruption of the supply chain as mines were closed and demand was down initially for precious metals, but then fear of economic collapse and a thinking that the series “Walking Dead” would actually come true helped propel this drive to precious metals for “safety”. Compound it by a tumultuous Presidential election you have all the ingredients for a rush to buy and hoard precious metals such as gold and silver. So the real price of precious metals will not stabilize for a few years. I do think prior to the pandemic silver prices, at least, were at a higher price bandwidth than the period of 1993 – 2005 which matched prices (adjusted for inflation ) to those of the mid 1950’s into early 1960’s. So I agree that silver will sat in a higher bandwidth as there will be more industrial uses for it in the need for a greener economy and the desire for silver coinage which is more readily affordable than gold coins for most Americans at least. But I am far from being an expert in precious metal markets and metal mining, so I refrain from providing what this higher bandwidth may be. Furthermore, who knows what unexpected events may arise from such exciting technologies that are in their early infancy such as phytomining.
Finally, one area I have never read in publication so far that is a barrier to attracting coin collectors to some degree is income inequality in the United States. real wages have fallen in the US and the majority of Americans do not pursue some of the “dreams of earlier generations due to the lower purchasing power of their wages: large houses, multiple cars, multiple trips far from home. The signs are evident in our television entertainment (a great symbol of the state of American psyche Jung would think of here alive today) — the focus on tiny house building, the number of survival or simple living shows (Alaska Frontier, Naked and Afraid, etc), and the home shopping shows that present ersatz luxury items which have their prices fall during their time of presentation. Income inequality and is great growth since the early 1970’s (with a brief reprieve in the late 1990s) and how it has impacted accessibility to entry into numismatics and the coin market is a topic I have not seen yet in numismatic articles.
I hope my points afford further discussion that expands on a few areas of the impulse to collect and the barriers to entry into numismatics. I am glad that it was an inheritance sold under duress that ignited my avid interest for numismatics and the potential legacy I hope to leave.
Thank you for taking the time to share your take. I’m glad the Podcast sparked the dialogue.
Very good discussion, Charles. In the future, I’d love to hear from the experts, commentators, journalists, and dealers about what they feel has happened to the number of individuals collecting the key U.S. coin series: Saints…Morgans….Barbers….Lincolns….etc.
I rarely see numbers thrown out there but a dated CoinWEEK article did reference 500 registry/serious Saint collectors and maybe 25,000 type/partial collectors. Would love to get more color today on those guestimates (even if they aren’t exact) as long-time dealers should have an idea of how many people they see at their shops, online, and at coin shows asking and buying the various types of coins.
As a general observation, U.S. coin prices have been very weak, especially non-PM coins, since 2012. Older Franklin and Barber collectors say the drops resemble those in the past following a bubble spike, but this time there was no big rise in prices, just apparently more and more people selling their sets (or their estates or heirs selling).
Often not said: how BitCoin is taking $$$ from the coin hobby and gold/silver bullion markets. If BitCoin were not around, or even if it were just half the current level (still a 5-fold increase from the March 2020 lows)….then gold would probably be closer to $2,500 an ounce.
Can we get more color on that amazing quote from Scott Travers about there being MILLIONS of Saints and Liberty Double Eagles in France/Europe. That is AMAZING considering that most of the big hoards were found in European banks in the 1950’s and 1960’s. By the 1980’s, the buyers scouring European banks were running on fumes.
Where are the coins coming from — banks ? Individuals ? Government stockpiles ?
That statement needs to be vetted and quantified by other dealers and collectors.