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HomeCollecting StrategiesRare Coin Road Warrior (May 2013) - Buy High-Sell Low

Rare Coin Road Warrior (May 2013) – Buy High-Sell Low

Dear Rare Coin Enthusiasts……..

The recent rare coin show schedule has been grueling.  In the last month we have had two major shows and recently visited Denver for the good regional spring show there.  Despite the drop in gold prices in mid April we are continuing to see STRONG dealer demand, yet our sales to the general public via our Ebay Store and at shows have slowed markedly.   Conversely, our website sales have remained strong because we have had a large amount of new ‘high interest’ collector material recently.

There are several factors affecting rare coin sales currently.  I am going to breakdown my observations in terms of wholesale and retail.  Wholesale sales are STRONG and have been very active since the FUN Show in early January.  Dealers are lining up to buy coins at shows and the wholesale dealer market is stronger than I have seen in more than six years.  There are some caveats.  For example, type gold prices are weaker because of bullion prices.  Generic price levels are somewhat questionable because there are plenty of these coins available, BUT…rare coins are NOT available in any quantity and DEALERS KNOW IT!

us_coins_group_allConversely, our retail-to the general public-sales were quite strong through early April, but dropped precipitously after gold BULLION prices plummeted in mid April.  GOLD BULLION prices almost always affect RARE coin prices.  In addition, I believe that NOT only are both gold and silver bullion prices being manipulated, but that much of this has to do with the inflated stock market.  Personally I believe much of our stock market and our economy itself is nothing more than a ‘house of cards’.  Yes, we are seeing some positive signs, but who is doing the reporting?

I have seen market cycles, and although I am nothing but an armchair quarterback so to speak, something about this market stinks.  The stock market is booming and housing prices are improving.  The problem with this is that the stock market is at RECORD highs.  Is it a good time to buy when prices are at record highs?  Housing still looks good on a personal level, especially because of interest rates, but I question investment (for investment sake) in real estate currently-especially after some of the most active markets in the country have already recouped a large percentage of their losses.

What I really find CRAZY is the tendency of average investors to ‘chase’ an investment medium when that particular medium is at an ALL TIME HIGH.  Face it folks, you can’t fix stupid, but….this borders on insanity.

During our trip to Denver this week we had dinner with a friend who is a very savvy investor collector who explained how he had built his collection starting in the early eighties by using the monthly acquisition program a major dealer had available for their customers.  My friend began by investing $300 each month.  He focused on Choice AU collector oriented material like Indian Cents as well as Seated and Bust coinage.  Remember this is before PCGS and NGC and he was very careful to buy coins that were properly graded.  He also said he only bought coins he liked.  After returning a few coins over the first year or two, he and his ‘dealer’ were able to find a nice ‘rhythm’ and he kept virtually everything he was sent for quite a few years to follow.

Admittedly, my friend is quite savvy and his focus on undervalued Choice AU material was incredibly astute.  Not long after he started putting together his collection, PCGS and NGC came onto the scene.  Much of the focus of a huge percentage of the market in the late eighties was on ‘Investment Grade’ coins in MS64 and higher.  The problem with this focus was that much of the rise in prices on some of the more generic MS64 and better material was artificial.

Artificial?  Yes, artificial.  Much of the rise in price on common Walkers and Morgans, for instance, was artificial because demand far outpaced supply-the coins were out there, but the dealers and the grading services could not buy, send these generic coins for grading, and get them back to sell to their customers fast enough to satisfy the incredible demand.   Because the market demanded more product, the prices were PUSHED up significantly.  For example, common date Morgan dollars were trading at nearly $200 each at one point in the late eighties.

coin-slabsWhat does this have to do with the rare coin market today?  Markets WILL correct themselves over time.  The coin market has definitely returned to reasonable levels.  In fact, I believe coin prices are a bargain at current levels.  Will you make money buying coins at current levels?  Although I firmly believe that is the case, the truth is that NO one knows.  But….one thing I can guarantee is that buying anything at RECORD price levels is a formula for disaster.  If you want to lose money-buy high and sell low!

The rare coin show circuit has been quite busy this spring.  The CSNS Show in Schaumberg, IL-a suburb of Chicago-was quite active and improved over last year’s show in the same location.  Conversely, the ANA Spring Show in New Orleans was nothing but a giant ANA ‘show and tell’.  Many local dealers who could drive to the show didn’t bother attending.  And, many major dealers skipped the show also, because they remembered how terrible past shows in New Orleans have been.  In 1994 many dealers left early in the afternoon to head to the local casinos, because ‘at least there was some action there’-ha.  Rare coin shows depend on the public’s attendance to ‘make’ a show.  Unfortunately, the ANA board keeps putting ANA Shows in second tier cities.

One of the comments I read in a major coin publication last week said that the ANA Show in New Orleans was ‘OK’.  OBVIOUSLY, no one from that publication was at the show.  I am-IN NO WAY-disparaging New Orleans.  Personally, we had a great time, but….New Orleans for a major ANA show choice was completely incompetent!  Are you ANA Board of Governors members listening?  Unfortunately, the professional ANA staff is in the position of playing the cards they are dealt and usually suffer the brunt of the dissatisfaction.  As usual, the ANA staff performed admirably.

Interestingly enough, both major shows next month-the Long Beach and Baltimore Summer Shows- try and work with dealers and in fact each other.  Recently, there was a scheduling conflict between these two great shows.  The professionals with the Long Beach Show and Whitman Publishing who run the Baltimore Show worked out a compromise where one of the two changed their show dates to remove the scheduling conflict.  I expect BOTH shows will be successful.

Vic Bozarth
Vic Bozarth
Vic Bozarth is a member of the Professional Numismatics Guild (PNG), the ANA, the CSNS, FUN, and many other regional and state coin clubs and organizations. Vic has extensive experience buying and selling coins into the mid-six-figure range. Both Vic and his wife Sherri attend all major U.S. coin shows as well as most of the larger regional shows.

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