World Colonial

On 8/17/2021 at 10:42 AM, Tyrock said:

During my collecting career  I've never seen any interest in coins by the people in my life. Yes, I know dealers say that young people are using the internet to collect. True or just a self serving statement? I enjoy the hobby because I read and study numismatics. In fact I'm very much looking forward to seeing the Pogue Sultan of Muscat 1804 Dollar sell today. I've got Bower's book on the Pogue collection and I even own a late date Pogue $5.00 note. A collector still needs to be  educated. Times have changed, but some of the problems with coins haven't.  

Coin collecting is a lot less competitive as a recreational activity than it used to be (pre-internet or also up to the late 60's) for anyone's time and discretionary income.  I seldom hear anyone admit it (literally virtually never by the industry) but it's a fact that isn't going away by pretending it doesn't exist.

I don't know if the public is less aware of it now.  I'd guess less due to the reduced geographical footprint and visibility.  It's easier than ever online but this assumes someone bothers to look for it.  That's how I got back into collecting in 1998.

It's also very expensive to complete most collections, by the standards of the non-collector, if above "recreational collector" quality.  As an example, a contributor on the PCGS forum in reply to my post than an AU-58 Peace dollar set "only" costs about $5,000.  Sure, it's "cheap" to many forum members but not the general collector population or non-collector.  This is subjective but there is no reason to believe prospective collectors find such a collection (or even many much cheaper) interesting enough to spend the money.

On 8/16/2021 at 7:49 PM, Quintus Arrius said:

To quote actress Marisa Tomei on the witness stand in the movie, My Cousin Vinny:  "That's a trick question." 😉 

You are correct, the question was rhetorical (intentionally)

It's the same attitude toward most current collectors, except to the extent they can convince them to spend more money and even then, usually buying what they sell from them.  My collecting (no matter how much I spend) is irrelevant to over 99% of all dealers and most auction firms, as I'll never spend a cent on their inventory.

On 8/16/2021 at 7:49 PM, Quintus Arrius said:

When precious metals markets are in a free fall, you'll get one answer, and when it's a bull market, you'll get another.

This explains a  lot of it.

On 8/16/2021 at 7:49 PM, Quintus Arrius said:

How about I meet you halfway and intimate they rise to the occasion at least 50% of the time.  

Yes, I know my cynicism is boundless.

For anyone waiting with baited breadth, I'll provide my answer.  It's a big fat zero.

On 8/16/2021 at 1:50 PM, GoldFinger1969 said:

I don't know if there are simply more flippers in our hobby.  There are SOME -- and you see them on Ebay for sure -- but while their % has increased, I think the total number of serious collectors has been enhanced by the internet, online, HA, GC, and even Ebay (to an extent).

More flippers?  Depends compared to when.  I doubt it's much more than 10 or 20 years ago.  Most of this complaint I infer is driven by the recent experience with "limited mintage" US Mint releases.

I too believe there are more "serious" collectors than previously, versus decades ago.  There is more reference research material than ever before on a wider variety of topics, especially non-US.

On 8/16/2021 at 1:50 PM, GoldFinger1969 said:

The bottom line is that if the dealer community and the online sellers/auction houses reinvest in extolling the fun and enjoyment of coins, I think the hobby can grow nicely going forward.  Having trips to schools and doing other educational stuff wouldn't hurt.

I don't believe industry participants have any real interest in spending their own time and money at any meaningful scale to expand collecting as a hobby. It's overwhelmingly lip service.  This isn't surprising since few collectors do either.

They rely on the US Mint to do the heavy lifting for them by issuing so much NCLT few collectors want.  Or, with the recent changes in circulating coinage design since the SQ program, which most people (collectors or otherwise) don't even recognize. 

The industry wants the US Mint to promote the hobby at the public's expense, not theirs.  I'm not sure how much generic marketing occurs by anyone in the industry now or previously, except to existing collectors.  I don't watch TV hardly at all. don't read print (only online), or listen to radio at all.  I do see online ads but attribute it to my browsing history.  I have heard that the larger coin shows do or did advertise locally but have never encountered it myself.

My inference is that there is a reason for current practices.  Marketing to the general public doesn't generate any ROI.  Same problem with the example you gave of promoting the hobby at schools.  It's a long term project where the response can't be measured effectively or if it does, someone else will benefit. 

How many in the coin business care enough to spend any meaningful amount of their time or money promoting the hobby with the non-collecting public?

I find #10 particularly problematic.  

I'm not a coin club member and seldom attend coin shows.  But I still believe the longer term success of collecting as a hobby relies on social interaction.  Otherwise, collecting risks becoming a rote activity (like online shopping) and substantially or predominantly financially motivated.

It will or may remain interesting until the collector goes to sell what they bought and finds they are consistently losing money.

Consistently losing money may not matter to true hobbyists (recreational collectors) but due to the cost of acquiring many collections, I don't believe this is more than a low minority where the outlay is "material".

Much if not most of the list is really captured in your point #1.  It's not just segments but US collecting more broadly though it's creeping into world and ancient coins too.

From what I read, the more vocal group seems to think it's a positive (if not fantastic).  I presume it's actually a minority but it seems to be a plurality on coin forums.

On #22, I conclude it's inevitable given that:

At least 95% of all coins can be bought on demand or relatively short notice, maybe a few months.  It's mostly the internet where even if a collector can't afford a particular coin, they can view practically anything.

There is a limit to how much marketing and exaggeration are successful in maintaining interest in actual collecting.

On 8/13/2021 at 5:00 PM, RWB said:

Demand forecasting means collecting and sifting data - but Congress placed "excessive" controls on what could be done. That is also the reason for the fall in precious metal NCLT demand - lack of advertising that was promoting Mint products and coin collecting.

I have another reason for the decline in demand.  It's over priced and buyers (many of whom aren't even real collectors) don't find it sufficiently interesting, sometimes not at all.

On 8/13/2021 at 1:55 PM, RWB said:

No, your point was clear. It is my contention that what happens on the secondary market is not part of the US Mint's business. Other than fair initial distribution, secondary profit/loss is irrelevant. But, the Mint should be doing a much better job with product artistic quality.

Yes, I agree.

But by limiting the mintage below demand, they seem to be making it their business.  Assuming they care (and don't see why they would), seems to me the Mint could make more money selling to demand.

On 8/13/2021 at 9:16 AM, RWB said:

The US Mint, as a government entity, should never be involved in the secondary market. Awareness is desirable for production planning, only.

Auctions by a producer are inherently inequitable, which is contrary to the equality expected of government. Proof set production is an excellent example of successful mint-to-demand; everyone could order at the same price and under the same terms (with some small adjustments for large volume buyers). That remains the best model, although fixed-production/order-limit can also work, if better management is in place.

I think you are missing my point.

One of the biggest complaints with US Mint issues is that it almost always loses value in the secondary market.  Where it doesn't, it's mostly due to increasing metal prices, not due to the desirability as a collectible.  Proof sets are successful if viewed as a collectible but that's not the reason for these complaints. 

The real root cause is that most buyers just don't like what they are collecting enough (whether it is new US Mint coins or otherwise) to lose money on it, though this sentiment varies with the amount of the loss depending upon the buyer.

I have never seen anyone admit this directly.  The most likely reason for it is because it brings into question the desirability of the hobby and the viability of the price level which is substantially and sometimes mostly contingent on marketing and financially motivated buying, aka "investment".

For anyone who spends "meaningful" amounts, only a (very) low proportion are spending what they do and paying the prices they pay primarily or exclusively as a recreational activity.  With this mindset, minting to demand which is the obvious option won't resolve the contradiction I am describing.

I guess Congress could stop authorizing new coins, discontinue all non-circulating coinage except clad proof sets, and go back to the designs in use prior to SQ.

Oh wait, that wouldn't make everyone happy either.

On 8/11/2021 at 4:35 PM, Quintus Arrius said:

But what about that recent announcement that they would be pivoting to auctions only?

I hear it's going to happen but don't know if it is a one time event or not.  Either way, there are still going to be some who won't be satisfied.

Auctions will price some people out.

"Limited" mintage at below market prices means a quick sell out where everyone who wants one (even if only for "flipping") doesn't get one either

Minting to order means an almost certain loss for the buyer in the secondary market.

On 8/11/2021 at 3:25 PM, gmarguli said:

The Mint still got the initial sale. In fact, the Mint is better off by selling the same quantity to fewer buyers. 

This is the first point I think people miss.  My inference is that the US Mint would rather not deal with the retail buyer, at all.

My second inference is that US Mint employees would rather not deal with collectible coins either, unless and except to the extent their job depends upon it.  I've never heard they get performance bonuses for sales volume or accounting profits, so why would they care unless they are also collectors?

The US Mint does not exist primarily to serve collectors and issuing collectible coins is not its primary mission.  It's to facilitate commerce with coinage which increasingly ends up in a "change jar" due to its perpetually decreasing purchasing power.

I don't own any gold now but if I do, I won't lose any sleep over it.

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.

On 8/10/2021 at 4:56 PM, bernard55 said:

funny....  I am a programmer and i have been deep into the Ethereum world for quite some time... I've heard just about every argument when it comes to crypto currency... In reading your comments (most/not-all) I would have thought you were a bitcoin maximalist... everything you point out in this series of posts are the same arguments that those that really understand bitcoin make... (I'm not referencing all the nitwits that trade BTC because 99.99% of them but don't understand it).  https://medium.com/efficient-frontier/on-austrian-economics-and-bitcoin-15051a28820d

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.

On 8/10/2021 at 1:29 PM, bernard55 said:

your an austrian economist in a keynesian world... :-)

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.

On 8/10/2021 at 10:30 AM, GoldFinger1969 said:

Median P/E's are much lower than the S&P 500 or R2000 average because of the influence of the mega-caps (which themselves are much more reasonable than their counterparts in 2000).

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.

On 8/10/2021 at 9:35 AM, GoldFinger1969 said:

There was a mania in 1999-2000 with valuations.  No where near that today.

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.

On 8/10/2021 at 9:35 AM, GoldFinger1969 said:

Look at TSLA.   I still think it might be overvalued, but does anybody still think it's going back to $25 or a market cap of $30 billion ?  NFLX....everybody has it.  Disney could have bought the whole company for $12 billion.  Today it's 20x that amount.

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.

On 8/10/2021 at 9:35 AM, GoldFinger1969 said:

Never bet against America, WC. 

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.

On 8/10/2021 at 12:24 AM, GoldFinger1969 said:

I doubt that Bridgewater's asset allocation reflects that piece.  Dalio himself may have changed his views.

I met Ray before he hit it big.  Wish I had given him my resume. 

 

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.

On 8/9/2021 at 10:24 PM, bernard55 said:

not at all... just pointing out that it aligns with @World Colonial 's gloomy outlook... :-)

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.

On 8/9/2021 at 10:15 PM, GoldFinger1969 said:

Stocks aren't cheap -- but they aren't at bubble-like valuations, either.  And U.S. stocks encompass some of the best companies in the world.

Don't discount private property rights and the rule of law (as long as Bernie and AOC aren't in charge).  If you doubt their importance, go talk to an investor in Chinese education stocks. 

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.

On 8/9/2021 at 6:28 PM, GoldFinger1969 said:

"Two of the most unique coins recently purchased and sold -- the 1933 Saint-Gaudens Double Eagle and the 1908-S  MS67 CAC Norweb Saint -- each returned about 5% a year.

So these 2 super-unique coins were purchased by the types of people (ultra-rich) who are price insensitive and for whom the expenditure won't change their lifestyle at all...and even these well-heeled "investors" only got 5% a year when even owning the S&P 500 index would have beaten that handily. 

You would need to buy bullion coins or numismatic coins where bullion was a good portion of the value....then have gold (or silver) skyrocket in the next few years....and then the return would be comparable to stocks.  You'd have to buy LOW and sell HIGH -- either one is tough to do, to do both will make someone one-in-a-million.  And you'd have to stay out of coins/the asset class for years (decades ?) so as not to lose $$$ if you sold into or at the top of another bubble.  

That is why I say just enjoy the damn collecting....enjoy the coins....and if you make $$$, great...if not, who cares....and if you die with them, your heirs will learn a bit about why you held 'em. 

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.

On 8/9/2021 at 9:05 PM, GoldFinger1969 said:

"The market can remain irrational longer than you can remain solvent" -- John Maynard Keynes

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.

On 8/9/2021 at 8:40 PM, bernard55 said:

there has to be a more solid answer for why this bubble didn't bleed over into coins... My gut tells me that it's because cards had the GaryVee factor and there is a tight coupling between sports and gambling...  but that is my bias stepping in...

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".

On 8/9/2021 at 7:52 PM, zadok said:

there is always a pathway to wealth thru good times n bad times....regardless of any of the economical/financial influences over the past 50 years real or fake there was wealth to be made n those who were committed to make it....there have been collectors, coins n otherwise, over the past 200 years in the US n the past several hundred years in europe who endeavored to continue to collect even in the worst of times...the wealth just wasnt so spread around in those periods as it is now....collecting isnt going to go away, it may diminish but not thru lack of resources thru lack of interest....all of the principals should dedicate some of their efforts n resources to maintaining that interest n not just to the money the hobby generates.....

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?

On 8/9/2021 at 5:22 PM, zadok said:

i would attribute asset mania to a commodity bubble n i personally dont think the current coin collecting increases in prices or numbers r indicative of a bubble nor do i view coin collecting as a commodity even though some have intrinsic gold n silver value....non-collector speculation does fit ur definition but i dont consider that to be coin collecting....the biggest threat to coin collecting is generational...in my opinion the upcoming generation doesnt collect anything....

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.