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The Market Now and Then

By Vic Bozarth – Bozarthcoins.com

The Labor Day holiday weekend has passed, most young people are back to school, football season has started, and I feel the need to get back to work.  I love my work, but once the calendar rolls around to September, I get the feeling that I’ve been slacking?  Maybe it is the ‘summer is over’ feeling.  Maybe it is the ‘conditioning’ of years in school.  In any case, I really feel the need to bump up my already busy work schedule.  Of course, my wife Sherri thinks I’m nuts because we are always busy.

The coin business almost always follows the calendar.  Summer is for vacations, family, and fun.  Fall is about getting serious about your ‘work’ whether that work is school or your profession.  The coin business isn’t nearly as calendar driven as it once was.  Because of the internet and instant access to coin and bullion prices and the increased coin show schedule, the summer months are much busier for the coin business than in past years.  In fact, this summer will be remembered as one of the busiest we have encountered in the last thirty years.

Normally summer months in the coin business are slower-not this year.  Today I’m writing about what I expect to happen this fall and winter.  The similarities I see between the coin market and overall economy today and the coin market and economy of the late seventies are quite interesting.

The coin business is going to go crazy.  First I am going to lay the foundation for why business is going to go crazy.  Second, I am going to sight some interesting similarities to the ‘white hot’ coin market of the late seventies.

The bullion markets are the biggest factor driving the rare coin business today.  Gold topped $1900 an ounce again Sunday night of Labor Day weekend.  Silver has been holding very strongly in the low forties.  Many of my bullion dealer contacts have told me that buyers outnumber sellers at least 3 to 2.  The bullion market has ‘legs’!

The Chicago ANA Show in August was a blockbuster.  As I wrote in my Rare Coin Road Warrior column late last month, this year’s ANA was the best ANA we have attended for quite a few years.  Attendance was excellent, the venue was more than acceptable, and the ANA itself did an exceptional job coordinating and balancing both the ‘wants’ of the collectors with the ‘needs’ of the dealers.

The blockbuster ANA gives the coin business a ‘jump’ for the fall and winter season.  Indeed, the fall coin show schedule is ‘chock’ full of great shows from coast to coast.  There are more major shows this fall than we have ever had scheduled.  When you add the great fall coin show schedule to the strong bullion market you have a recipe for coin market frenzy.  In addition to the great Long Beach Show, Silver Dollar Show, and Whitman Baltimore Show this fall you now have the Whitman Philadelphia Coin Show and the new ANA Fall Show in Pittsburgh.   Don’t forget the Houston Money Show in December either.  Many consider the Houston Money Show in December to be a major show now and no doubt it is the biggest show during the month of December.

Why is the market going to go crazy’?

Look at the history of the coin business and how the economic climate of past markets affected the business.  Bullion has driven the coin market before.  Look at the late seventies for example.  Jimmy Carter was our president.  The economy was in a shambles.  Inflation was running rampant.  Coincidentally, we currently have inflation also, but they call it something else today.  The bullion markets were heating up.  The Hunt brothers thought they could ‘corner’ the silver market.  The general public did not trust their government or their economic policies.  An election year was approaching.   Sound familiar?

Don’t get me wrong, I don’t do ‘politics’ other than how it will affect the coin business itself, but currently both the president and congress have the lowest approval ratings on record.  Confidence in our economic future is at an all time low.  The bullion markets are at an all time high already and buyers still outnumber sellers.  An election year is approaching.  Nostradamus would love these similarities.

What is going to push coin prices higher?  Bullion prices are the biggest factor.  In addition, supply and demand are completely out of balance.  Ask any rare coin dealer what his biggest concern is right now and he will answer ‘finding fresh material’.  Nice coins are in very short supply.  Dealers are trying to stock nice coins, but are finding it more difficult with each passing month.  Like the coin market of the late seventies, prices must rise.

Granted, following the coin market frenzy of the late seventies we had one of the largest market corrections the coin business has ever experienced.  But this is where the similarities between now and the late seventies end.  Professionally graded rare coins from PCGS and NGC did not exist in 1979.  The amount of capital chasing the bullion and rare coin market in 1979 was great, but nothing in comparison to the amount of money coming into our market today.

In other words, the downside or risk isn’t nearly as significant when comparing 1979 to 2011.

Currently prices for rare coins HAVE NOT jumped considerably YET.  Yes, we have had some price increase in bullion related items, but rare coin prices have not followed suit.  Dealers who have been primarily focusing on the bullion trade for the last several years are quietly buying rare coins again.  On a personal note, we sold coins to dealers at the ANA who haven’t purchased rare coins from us in quite a few years.  When asked why they were buying rare coins again, the answer was basically the same-rare coin prices are too cheap.  Bullion has moved up in price, but I don’t know a better place to put my money.

You should follow the ‘smart money’ also.  Buy rare high grade PCGS or NGC certified coins now before the price levels catch up with the market itself.

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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