By Jeff Garrett for Numismatic Guaranty Corporation (NGC) ……
For the past few weeks, I have been diligently working on the pricing for next year’s Guide Book of United States Coins (the Red Book). The task was enormous this year, as nearly every price in the book needed to be increased, some substantially. For example, prices of Morgan Dollars increased by higher percentages than for any edition I have worked on over the years.
It’s probably no news to anyone reading this, but the rare coin market has been hot recently. Some auction records in the past several months defy explanation. Last year, a record 22 coins sold at auction for more than $1 million.
Until recently, the supply-and-demand forces that dictate prices were heavily tilted toward supply. For several years the market seemed to struggle with the number of major collections entering the market. Some segments of the market, most notably Colonial coinage, experienced depressed prices across the board. For colonials, the market was affected by excess supply and the passing of major collectors who previously drove the demand.
Collectors, Not Investors, Driving Current Boom
These forces began to change in earnest last year.
Collectors have been rushing into the market with a fervor not seen in the past few decades. The current booming market is also much healthier than past booms as investors are not driving the bus this time around. The demand is solidly collector-based. This can be evidenced by the fact that coins with great eye appeal can bring staggering prices. Investors care little about such nuanced aspects of the hobby.
Of course, not everyone is excited about the sudden explosion of interest in the hobby. Many long-time collectors have begun to express frustration with the lack of material available and the new, higher prices. One collector related to me that he attended a coin show recently and, for the first time ever, came away empty-handed. He could not justify the sudden increase in prices for coins he needed to complete his collection. This collector, like some others I have talked with, has concerns about the negative effect this may have on the health of the hobby.
The Wait for Price Drops May Be Long
Long-time collectors have few options if they want to compete with the new throngs who have recently discovered our hobby. You can either pay higher prices or pause, hoping for a price adjustment in the future. In my opinion, it could be a long wait for prices to come down.
Personally, I have been considering the purchase of a Florida condominium for the past few years. Every time I get serious and find something I like, the price just seems unreasonably high. Those same condominiums are now 20% to 40% higher than when I first started looking. I’m sure more than a few rare coin buyers feel the same way. Waiting for prices to come down may be an unreasonable expectation.
The following are some ideas and tips for how to cope with rising prices and limited supplies:
Cull the herd! Now would be a great time to carefully examine your collection and dispose of coins that don’t fit your long-term objectives. Even the greatest collectors end up with duplicates or coins that are not just right. The mega-collector Dell Loy Hansen regularly offers his duplicates for sale at auction. With prices up, now is a wonderful time to sell or trade coins with less-than-ideal eye appeal. You use the funds to purchase coins that will be more desirable when it’s time to sell your collection. If collectors continue to dominate the market, then having the right coins will be imperative for the best results.
Research other areas of the market. Not everything has skyrocketed in the last year. You may wish to pause your Morgan Dollar collection and investigate other series that have been more stable. Type coins still seem undervalued in comparison to other more popular series. Generic gold coins have also been relatively quiet. Colonial coinage still seems burdened by oversupply and next year Stack’s Bowers will start auctioning the Sydney F. Martin Collection, one of the finest assembled in the past few decades. Regardless of what series or area of the market you choose, be sure to pay attention to quality.
Concentrate on the “key” dates for the series you collect. If your funds are limited, try finding and purchasing the most elusive coins. These will always be in demand and are more unlikely to fall in a depressed market. You can fill in the more common coins as funds become available or prices make an unexpected adjustment. From my experience, common coins that have gone up dramatically are the ones most susceptible to tumbling prices as the supply-demand equation comes into play.
Invest your limited funds into numismatic education. We have heard the old saying “buy the book before the coin.” But in reality, how many do? We live in an age of unbelievable resources for numismatic research. Whitman books has published more numismatic books in the past two decades than all other decades combined. There are numerous websites devoted to numismatic research. The American Numismatic Association (ANA) is devoted to numismatic education and is one the best bargains in the hobby.
You should also consider attending the ANA Summer Seminar this year. After a two-year hiatus, classes will resume this year in Colorado Springs. I will be teaching “Advanced Coin Grading” on behalf of NGC. I won a scholarship to the 1974 Summer Seminar and studied Colonial coinage with my future Red Book mentor, Ken Bressett. The Summer Seminars are an amazing opportunity to study numismatics with hobby leaders from around the country.
The rare coin market has seen plenty of ups and downs over the decades, and this recent surge will most likely subside at some point. Inflation has surely drawn some to our hobby as a means of protecting wealth, but in the long run, many of these folks will fall in love with the history and beauty of numismatics. Hopefully, these new buyers, many of whom are quite young, will continue to collect coins well into the future.
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