World Colonial

I bought from Noble Numismatics (an Australian auction firm) once or twice, between five and ten years ago. I've bought from European auction firms and from foreign sellers on eBay, many times. Customs was never an issue even once. Never had to go anywhere to pick it up and pay an import tax.

No, no advocate of BTC or any other crypto currency at all. I see it as nothing more than another aspect of the on-going global financial assets mania. Only in an environment of unprecedented optimism and speculation would so many collectively believe that something with no actual value should be worth trillions. I don't see as any different than a Ponzi scheme.

Yes, to a point though I'm not going to claim to know all the specifics of both. To my knowledge, Keynes wouldn't agree with modern Keynesians either. I never agreed with it but at least government economic policy was reasonably sensible until it started going off course under the Bush II administration. It's gone completely off the rails in the last two administrations. Same for monetary policy with Greenspan around 2003, though it actually started in response to the 1987 crash. There is no turning back now without crashing both the economy and financial markets. Moreover, there isn't even a hint of an intent to attempt it. Another reason it isn't possible to turn back is because there has been substantial social decay which isn't completely visible since it's partly mitigated by artificially cheap money and deficit spending. It's evident to a point politically even now but this is a topic outside the scope of the forum.

You are still using the P/E as your benchmark for value. I also presume you are using the forward P/E, as that's what you did the last time we had this conversation. We have a difference of opinion on it's relevance as a measure of relative value. I consider it one of the least relevant, for the reasons I have provided.

That's where we disagree. I'm telling you it's worse. Don't just look at US stocks which are also worse, but the aggregate. There is no "maybe" about it. At $30B, it would still be overpriced or at most "fairly" valued, depending upon it's future market position and the future state of the auto industry. In it's most recent quarter, it made record profits but in it's existence, it's lost boat loads of money and all prior "profit" was due to the sale of regulatory credits. Only by performing the assessment assuming permanently cheap money and ignoring that the US auto industry is mature if not shrinking would anyone believe otherwise. Netflix is somewhat different but mostly a bag of hot air at current valuations too. There is nothing in economics that prevents Americans from at minimum experiencing long term stagnation in living standards to work off the excesses and distortions of the last 40+ years. The sentiments you are expressing are akin to believing the distortions I have described are a minor blip. Well, maybe it is in a longer term context (not going there here as it isn't relevant), but it's myopic to say the least to believe that after this country has been living beyond it's means for decades, any future setback will be so minor as to be insignificant to those living now and living standards are destined to to increase for most of the population as far as the eye can see. Good luck with that.

People don't necessarily manage their money the same way they manage someone else's because it isn't theirs. Someone may also hold different views over different time horizons. That's my view. I don't think the US or global economy will completely fall apart now, I just know that risk is a lot higher than practically everyone else believes. There are areas I am looking to buy into, but it isn't in the US stock market now and none are for long term holds though I'm not a day trader either. I am also not short on anything.

My outlook is pessimistic because I look at the environment for what it actually is, not for what I wish it to be. I haven't ever claimed that everyone is going to be worse off. In the 30's or other periods of economic adversity (not the 70's), a noticeable minority of the population remained well off or prospered, at least relatively. However, most were (a lot) worse off. The "fundamentals" now are also a lot worse than the past, though the starting point is from a higher base. Most either do not know it because they are ignorant of current reality, ignorant of historical context and even if they are informed, have a false sense of confidence (a belief in "magic") that somehow, central banks and governments have the ability to (mostly) prevent declining living standards. There is no doubt to me that government economic policy will run the economy "into the ground" in an attempt to prevent a general decline in living standards and for other reasons I'm not getting into here. These efforts will ultimately fail.

The last time we had this conversation, you used the forward P/E. I consider it one of the weakest and least reliable measures of valuation. This is aside from the fact that earnings are just an accounting number, not even real money. You can't spend earnings. Earnings flow into dividends and book value. No one cares about book value, except when a company is about to become insolvent. As for dividends, somewhat in fashion now and "competitive" versus bonds but that's only because bonds have never been more overpriced either. Dividend yields have never been lower than now, except at the 2000 peak. Other valuations such as market cap to GDP (Buffet's favorite if that means anything) and price to sales are also at record levels. US valuations are on an island in deep outer space versus other global stock markets, not just China. The valuation level you are referencing is only "reasonable" because of artificially cheap money and the fake economy. The actual economic "fundamentals" are a combination of weak and terrible, disguised by artificially cheap money and "growth" since 2008 which is mostly or entirely the result of increased government deficits, even pre-COVID. When the mania finally ends, whenever that is and regardless of the "reason", the real state of the American economy and society will be exposed for what it actually is, not what everyone sees now and wants to believe.

You and I seems to be in agreement on most of this topic. Coin collecting is a good hobby. A coin is nice or "great" whether it is cheaper or more expensive. It's the same coin. Where collectors go wrong is in placing too much emphasis on the financial side by mentally viewing it as an "investment". Coins aren't competitive with "mainstream" asset classes. That's just reality. Sure, someone can get lucky and there are times when it can perform better or move contracyclical but that doesn't change reality. That's why I used an example like CVX (Chevron) last time this subject came up. Late last year, it had an 8% to 10% annual yield differential with any potential coin related fund and slightly less than owning a a coin outright It's a business with cash flow paying dividends that sells something people actually need and that's what these asset classes do. Since then it's left most coins in the dust and anyone can trade it at scale in a liquid market. A coin can give a collector satisfaction but has no utility to anyone else, whether it increases in value or not.

This is true, but it has already been irrational for at least 22 years minimum, depending upon how you want to measure it. It's one hell of a lot closer to the end than the beginning, that's for sure.

I don't believe the psychology can be tied to a specific root cause. That's what everyone tries to do with price movements in the financial markets where some outside fundamental event supposedly "caused" an asset (stocks, currencies, commodities, whatever) to move "up" or "down".

If you are familiar with financial history, the end of the current mania I am discussing will be the dominating economic event for the majority of the population for the rest of their life. The current financial excesses and economic distortions dwarf any other period in the history of this country and many others. No, it doesn't mean the "end of the world" and no, it doesn't mean everyone will end up poor or destitute. It also won't happen linearly, since there are cycles of contraction or expansion within good times and bad. It does mean the majority of the population is going to become poorer or lot poorer than they are now over the indefinite future. I'm not claiming collecting is ending either. A crash in the price level which is what the end of the mania represents just means that those who bought at inflated prices will lose a noticeable proportion of their outlay. Nothing more and nothing less. If the buyer doesn't care, they collected within their means, and it's mostly or all about the coin, then it doesn't make any difference, does it?

Let me clarify. I don't consider the recent increase in activity and prices since COVID a mania. I do consider the elevated US price level dating back to the late 70's a side consequence of the mania. The "wealth" from inflated asset prices in other asset classes and income made possible by the fake economy is the predominant cause, whether the buyer is predominantly motivated by collecting or not. Without both, there would be no market for the most expensive coins at anything close to current prices. This is equally true of art and other collectibles.

I attribute most of what you describe to the surrounding asset mania. I'm not questioning your personal observations.

None of this has anything to do with actual collecting. It's pure speculation. I already attempted to answer this in my last post. So it's happening now with other areas? The best explanation for it is the greatest asset mania ever in stocks, bonds, real estate and so forth. What's going to happen when the mania eventually ends? Or are you one of those who might believe it's going to last forever? Because if you do, I'm one of those who doesn't. I see no basis for such a belief whatsoever. There is nothing remotely normal with current financial conditions, asset prices or economic conditions. Unprecedented speculation in every major asset class and varying levels in smaller ones, including collectibles masquerading as one. The loosest credit conditions, aggregate credit standards, and most overvalued asset markets in human history. A predominantly fake economy driven by artificially cheap money and government deficit spending, not just since COVID but going back to at least 2008 with the response to the GFC. What you are asking about here, this combination is what makes it (temporarily) possible because it's "normal" in the context of the surrounding insanity. Did you read my definition of "dead asset"? Where is the "yield" going to come from? Are these collectibles being lent out (similar to gold bullion) where the borrower pays a lender to use it? I can't imagine that this would have any meaningful appeal for any collectible where this fee is going to be more than a trivial amount relative to the value, if it is happening at all. The questions you need to ask yourself are these: What evidence is there that this has any long term appeal (outside of a raging financial mania like the one we have now) where anyone is going to trade this fractional interest like a "widget" at perpetually higher prices? Why would anyone do that? How are these fractional interests supposed to be competitive versus competing "investments"? Negative yield forever where all return comes from perpetually higher prices, including by people who aren't even collectors. The reason I disagree with what you are describing is that there is no evidence that people will exhibit the required behavior to make it successful. It's all in the abstract. In a prior thread, someone mentioned race horses as a comparison. There is no actual equivalence and neither are other high profile alternatives. There are a lot of horse lovers who might be willing to lose money on a fractional interest. It's been a round for a long time and I infer most lose money, so it must be something other than profit to motivate them to do it. There is status value associated with the social aspects within the social environment these people operate. None of this applies to coins, except as a temporary speculation. There is no such motivation with coins, other than maybe with a low minority of the existing collector base for a low number of relatively high profile coins. Even this is questionable, longer term.

Many coins are hybrid collectibles (an alternate form of partial consumption) and "investments". Attitudes toward each differ. With consumer goods, higher prices discourage demand while lower prices incentivize it. It's what we each studied in economics. I don't know what is taught now but from both what I learned in the classroom and what I read, the psychology of "investing" isn't considered hardly at all and not in this context. Looking at asset markets, it's evident that higher prices attract increased interest and lower prices less. It's the opposite behavior toward consumer goods. Higher rpcies make "investments" more desirable. That's how we ended up with the biggest asset bubble in the history of civilization. This is a generalization but it's evident somewhat in a lot in coin buying. I'm of the belief that it will have no meaningful success with coins. If it works with sports cards now, my assumption is that it has been successful because it's in another bubble, not necessarily due to that much interest in collecting. I commented on this subject at length in another thread. It may eventually be necessary for "growth" if by "growth" you mean inflating the price level as much as possible. Since there is unprecedented historical speculation in practically everything, it may work temporarily. Longer term, I'll take the "under" on this bet and predict (again) that any such attempt will fail spectacularly, just as it did in 1989 with the prior attempt to commoditize collecting. As "investment", coins are a dead asset. It's what Buffet says about gold but at least gold has some utility as jewelry, a central bank reserve asset and to some, an alternate form of money as a liquid store of value. Today, the most expensive coinage also has an outsized dependency on the TPG label (plus the CAC sticker for some US coins) which doesn't mean anything to the non-collector, except for the price. Coins generate no income in the form of interest, dividends, rents or royalties. The annual yield is negative due to carrying costs. Coins have no status value to non-collectors which, in the absence of "yield", is necessary to incentivize the non-collector to hold it. There is no basis to believe that anyone will perpetually trade coins or a fractional interest as a type of "widget" at higher prices which is the only way this concoction can be successful longer term. Without this behavior, coins will never be competitive versus other "investments". So to sum it up, the idea of fractional ownership sounds great to those who are motivated to inflate the price level as much as possible but it contradicts human motivation in the real world. It's only feasible longer term in the abstract.

Recap of the mega trends I see: Future appeal as a recreational activity - negative. However, this is a lot less important for some coins versus others. It's a lot more of a negative for the cheaper and cheapest coins, though lifetime collectors usually start at lower prices and spend more as their finances permit it. Bullion prices - positive for now, but mostly for a low minority such as pre-1933 gold, Morgan/Peace dollars and NCLT. The 2011 run-up in gold and silver did not correlate to the same price increases as in the 70's. Too much of run-up in one or (presumably) both will be a negative though, as it would price out an increasing proportion of collectors from numerous series they can afford now. The asset mania - big negative. An end of the asset mania will have the biggest impact on the most expensive coins versus any other factor I know. It will impact both the ability and willingness of these buyers to pay current or higher prices. Long term economic conditions - negative. There is a day of reckoning in store for the typical American's standard of living, which is substantially made possible by the asset mania and the unprecedented loose credit conditions that go with it. Most Americans are destined to become poorer or a lot poorer in the future as the pulling forward of future demand through debt finally catches up with this country. I don't see this as imminent but it's a factor I don't believe is mostly considered at all. Demographics - Age I think makes some difference but mostly in the content of recreational interests. The changing ethnic composition of the population is undoubtedly a negative for both coin collecting in the United States generally and the collecting of US coinage specifically. The core collecting demographic is non-Hispanic white males. Other groups have a much lower propensity to collect at all but when they do, will choose to collect US coins in lower proportion. Internet - positive. I agree with you.

I see it as a balance. The price level is very inflated for many coins now but too much of a price decline I agree would be a negative for collecting, since even those who are primarily motivated by the coin still reasonably consider the financial aspect. Conversely, I don't see and don't remotely believe that a perpetually higher price level which prices out more and more or most collectors out of the coins they want to buy is a positive either. Other than my posts, I don't recall anyone ever mentioning this even once. as if it doesn't matter. It's like well, they can just buy something else that is still affordable. This presume that what remains affordable remains interesting enough to enough collectors. Whether it is depends upon the interests and psychology of the individual but as a common sense principle, it should be evident that access to more coins will generate and maintain more interest than the opposite. No one knows whether the collector base is increasing or if so, how much. Since prices are set at the margin, it's easy enough for a very low number of buyers (relatively) to maintain the price level, as long as there aren't many sellers.

State Quarters, an equivalent to those collecting out of circulation which predominated until the 60's.

I know my comments are unpopular. Try seeing it from the standpoint of the non-collector. If the collector doesn't care about the financial outcome, then nothing I wrote should make any difference. The fact is, most of the time it does. That was my first primary point. The second point I was trying to make which I will repeat is this one. What's going to make collecting interesting enough to a large enough number of non-collectors to create "growth" in the "hobby"? The industry doesn't or didn't care about SQ collectors, except to the extent they can convert them to buying more expensive coins later. There is virtually no profit in the "traditional collector" base. That's one reason (not the only one) why B&M stores are either closing or have been forced to survive selling something other than coins, whether it is bullion, jewelry or something else.

The more expensive coins in these series are predominantly dependent upon the broader asset bubble. Yes, collectors find them interesting but the only reason for current prices is because the bigger asset classes are so hugely inflated. This isn't just true of coins but other areas too. The premiums on generic US gold aren't that high except in the higher TPG grades. But are very high on common Morgan and Peace across the board. Even if one of these two sell for spot, that's about a 40% premium to the metal content which is hardly low considering how incredibly common some of these coins are. Current premiums are a lot higher than that. Considering how common the most common dates are in grades at least up to MS-65, as a collectible, a more "reasonable" general premium would be a few dollars between one point increments. The differences are minor, except to US collectors and anyone else who has been conditioned by the TPG culture. So what I am telling you is that, as long as the broader asset bubble continues and living standards don't take a big hit, I don't expect much if any change. But watch out if otherwise.

If you disagree with me, that's fine. I don't see any tangible connection between coins and history, much less one which is meaningful. I know a lot of collectors do. The point I was trying to make is that yes, I do believe the industry uses the history aspect as a marketing point. It works for collectors mostly or exclusively because they are already interested in collecting. I don't see any analogy with your car example. Maybe some classic car buyers buy it for this reason but 99% of the time, I'd guess it's either for nostalgia, as a status symbol and partly as an "investment". A classic car has some utility. No one needs one but at least you can drive it. With the MM card, I'd guess it's mostly those who grew up as avid fans of the game, might have been Yankee followers, and presumably admired him as a player. I don't see much similarity either, other than the price is also substantially driven by the label holder.

I was attempting to define US collecting, not others. I used South Africa as an example. Collecting elsewhere has not been financialized nearly to the extent as the US, if at all. I also specifically said there could be other categories I did not list. I also specifically stated it was a generalization. I'm not claiming money was never a factor, but my bigger point which underlies the title of this thread is that collecting has been driven more by money since coins came to be bought as "investments" starting in the 70's than previously. I know my view is a very unpopular one, as I see in your reply. Well, what's going to make actual collecting interesting enough to a meaningful number of new participants to increase the price level, other than mostly speculation? I ask because that's what is driving this acquisition, to the extent it has anything to do with coins at all. Collectively, dealers, TPG and auction firms are primarily interested in attracting new collectors to spend as much money as possible. To the extent they actually care about coin collecting as a hobby, it's a distant second to inflating the price level.. I presume you read coin articles regularly. That's the inferred measure of the "health of the hobby", the price level. Partly it might be because it's a single visible data point but mostly, I reasonably infer that's what they actually care about. The industry has somewhat (at least) painted itself into a corner. The marketing variables I listed (TPG labels, registry sets and CAC stickers) aren't remotely interesting enough to maintain interest by the majority (I never said any) of current collectors at any "meaningful outlay, much less for those who aren't, unless the price level is at least mostly stable if not increasing. Look at what (predominantly US) coins cost and what it actually is as a collectible. Look at it from the point of view of the non-collector and then tell me why any meaningful number should be interested in paying current (much less far higher) prices for what they actually get? That is, unless they can get most, all or more of their money back.

I attribute this to the global asset mania and it's nothing positive if by positive someone is in favor of a perpetually higher price level. The global asset mania is the single best explanation why so many assets (including coins) sell at such inflated prices. Some of it is general inflation but not most of it. Coins are a luxury discretionary purchase which no one needs for any purpose. The price trend up to 1971 (before Nixon closed the "gold window) or maybe the mid-70's is a much better indication of hobby demand. The US coin price level was already an outlier (versus other countries) but that's when coins were first widely bought as "investments". Steady consistent price increases to the early 70's (per the Red Books) and then the explosion we see in the PCGS 3000 index from speculative buying and TPG.

I would expect the price to decline significantly, as I would for any other coin. It would probably also happen to other currently unique objects, such as the Faberge Imperial Easter Eggs I have used as examples numerous time too.