By Laura Sperber – Legend Numismatics ……..
We’re going to be brutally frank here.
In our strong opinion, three issues have constrained the market recently: lack of coins, gradeflation, and changing of the old guard.
Believe it or not, the lack of fresh, nice, rare coins has forced gradeflation back out into the open. We walked the floor multiple times at Long Beach seeking to buy. What did we see? Loads of dreck and retreads were everywhere. If you wanted coins with dull eye appeal or ones that were just over-graded – those were easy to buy. It was a HORROR for us to see. However we stepped back and thought about it. We just did the ANA Show (the biggest show of the year) and now Long Beach (certainly one of the bigger shows). At either show there was little supply of cool coins for sale. So naturally your going to have nothing left to trade at strong prices. At ANA the few cool coins were in auction. While at Long Beach the auction was weak too-few cool coins in it. So naturally the results from the Long Beach show for many (especially us) were poor.
While we are crying gradeflation is destroying values, think about this, at the combined shows of ANA and LB, maybe the total amount of coins on the floor is 15-20,000. That’s not even a fraction of what has been graded overall by PCGS and NGC. Even if every coin at a show is bad, that is not even a fraction of the total graded (no, we are not trying to put lipstick on a pig). However, because of the severe drought of great coins, we’re forced to have these bad coins create the market.
If you notice, 95% of all the Duckor/Akers Gold Dollars from ANA are gone. You don’t see ANY great coins from the Newman sales floating around, by far the majorty of the best Gardner coins are long off the market, and the same for the Pogue coins. So its really the LACK OF COINS that is pulling the market down. There is nothing of quality to trade. This creates lower prices for what does end up trading.
We can tell you, our Want Lists are huge and we can NOT fill them. We have been looking for a simple $20 High Relief FE PCGS MS66 CAC for months and can’t find one. This is a coin that two years ago we had two examples of and had a sluggish time selling the second piece. For us, the lack of coins has actually HURT our business.
The fact that several major “old guard” players have sold should not be a negative. If anything it brought out new buyers and record prices. The only problem, the under swell of demand is so strong, the coins got taken way into the deep black hole of where ever they are and there is nothing left.
All the new people are having difficulty replacing the old guard because its extremely hard to build complete quality collections anymore. So they are just buying single coins with no real direction. Think about it, no one can do choice/GEM MS Seated or Trade Dollar sets or even something like a $3 Gold MS set in choice/GEM.
The current negativity of the market is not solely about gradeflation, its simply about pure LACK OF SUPPLY. Maybe an inferior better coin or two does pop up-that certainly is not motivation to start a set. So when the inferior coins sell cheap, OUCH! That reflects poorly in the price guides which does not help reality or enable growth in the market (another issue for another report).
The positive in all this is that the great coins are NOT floating around the market over and over. They are one hit wonders-they appear in auctions then are gone in to that huge black hole. Overall, the market really is in good shape for a LONG TERM perspective. In fact, we MUST mention again (we say this over and over) your making a big mistake buying for today. To make real money in coins-you BUY FOR TOMORROW. Coins are a long term proposition, period (they may have short term ups and downs).
TODAY ALL QUALITY COINS ARE REALLY ON SALE
Due to the unique position of the market, the majority of good coins are really “on sale”. Until prices break out overall (which has to eventually happen), you have the ability to buy great coins at relatively small premiums. When great collections or sets do pop up, the opportunities are staggering because once those coins are sold-there will be nothing similar available again.
You may think you are paying too strong for some coins, when in reality, in as few as 10 years the rewards you will get will be substantial. Example: We just paid a whopping $51,700.00 for the finest G $1 1857 PCGS MS68. Price guides showed only $40,000.00. The last known trade for this coin was also for a whopping number-in fact it was a crazy number at the time: $16,000.00 in 1992! We’re highly confident the next time this coin sells-in 2025 (most likely 2050 or beyond), it will easily bring $100,000.00+!
The key is to buy the BEST quality YOU CAN AFFORD and to put the coins away for the long term. Sure, its painful to do that and see a lesser quality example sell for cents on the dollar (thank you gradeflation), but in coins it is long PROVEN the cream rises to the top.
The BEST example: the case of the poor 1912-S 5C in MS66. We all know at the FUN Sale 4 were sold and that crashed the market from $30,000.00 to $10,000.00. Then another popped up in more recent sale and sold for $8,000.00 or so. The real story here-the coins were not the greatest examples and NONE had CAC beans.
In June, a phenomenal 12S PCGS MS66 CAC came up and we had to have it. We were prepared to pay $35,000.00 for it. We paid $32,900.00. Had the market not been so loaded down with dreck, we probably would have had to pay $50,000.00 for this coin. When we put it out for sale, we had TWO immediate buyers at our table at ANA. The coin sold within 24 hours.
THIS IS NOT AN ISOLATED EXAMPLE. This is why our motto is : “there is NO exception for true quality”. In the world of dreck, the saying on the floor: “cheap is not cheap enough”.
In the case of todays market, calling it choppy is a short term issue. The prices of better and NICE coins do and always will trade higher then the dreck and retreads. Collectors just have to know and understand-there are so few nice coins lingering on the market!
If any of you Wall Street biggies are reading this, we’d love to put together a $5-10 million dollar fund for a long term hold. The returns would be staggering! Do note: it might take us 5 years to build the fund of that size!
For individuals, we can easily advise you on single pieces that are great for the long term.
Next weeks Pogue Sale will yet again prove the power of what great coins are really worth. We know of no one going there to bargain hunt. We know of NO dealer going there to buy for stock. All our collectors we represent are there going to buy (its not about the cost-its about buying the coin).
The only coins that will “fall through the cracks” in the sale, are the lesser quality pieces. In fact, if you are seeking to buy any substantial, we strongly suggest you get representation-as there are a few funky coins in the sale (hard to believe but true).
WHAT IS WRITTEN IN THIS REPORT ARE FACTS AS SEEN FROM OUR POSTION IN THE MARKET. OTHERS WHO DEAL IN DIFFERENT COINS WILL HAVE DIFFERENT EXPERIENCES. LEGEND PRIMARILY DEALS IN THE TOP 5% OF RARITY AND QUALITY.