part 2-- determining the strength of coin mkt. and how to specifically do this!!

[michael]

http://www.coinraritiesonline.com/index.php?page=mkt

[physics-fan3.14]

I think the conclusion he came to was interesting, and can only wonder how it was influenced by the unique series of events that were transpiring at the time. It would be interesting to see a similar study done, with the benefit of modern technology, over a longer time period, to include both booms and busts. Of course, I don't want to relegate numismatics to simply another commodity, but the fact that it tracks closely with silver is not surprising, given that a good bit of the activity you see in coins is bulk silver.

[michael]

sweet.........................................

 

 

[supertooth]

michael---- Thanks for posting this. If one but takes the time to read it---and learn from it. What an excellent read. Bob [supertooth]

[Zoins]

If you step back from the study and go one step higher, the general conclusion shouldn't be about the price of silver, it's about where the money was coming from to buy coins and whether that money supply would suddenly disappear.

 

To apply this to today's market, just think about where the money is coming from to finance coin purchases and if that source could suddenly disappear.

[World Colonial]

That is an interesting article, so interesting in fact that I bookmarked it. I find his comment about people borrowing money to buy coins using home equity lines of credit particularly relevant. I definitely believe that some of this has been happening (though have no proof) because during the (now ended) housing mania, people were using mortgage debt to buy something of everything. What will now be interesting to see is, what is the impact on coin prices going to be as people see their home equity shrink or completely evaporate. Also, how many coins will either need to be sold to try to prevent foreclosures or through forced liquididation in the likely wave of upcoming bankruptcies.

[Zoins]

Are increasing talk and articles about coin market corrections a leading indicator for coin market corrections?

[ant]

the whole page is awsome!

 

January 18, 2007: Should Coins be Purchased as an Investment?

 

"DW: What I am saying is that people who approach numismatics with an investor mentality have very little chance of actually making any money. "

 

now that is eye opening!

 

thanks for the read!

 

 

[World Colonial]

Are increasing talk and articles about coin market corrections a leading indicator for coin market corrections?

 

Today, if anyone wants to know what is a leading indicator of the coin market think liquidity which for the recent past has meant credit and debt. This is not specifically in coins but in the economy as a whole. The expansion of credit and debt has made possible the price increases in all asset classes since 2003, something which has been a mystery to conventional market analysts. This is how it is possible for the modern "art" works in the David Rockefeller collection to sell for $100 million and for US conditional rarities to sell from the $10,000's to over $1 million.

 

The credit/debt bubble is not just any mania but THE greatest mania EVER. (The subprime mortgage market implosion is one MINOR manifestation of it.) And when or if it is over, the coin market will fall or crash with it. The reason for this is simple. A reduction in liquidity, that is credit and debt, will reduce purchasing power for everything or almost everything, including coins. And since coins are a purely discretionary purchase, they will be impacted though we do not know how much or how widespread it will or can be.

 

What I will say is that the most speculative and over-extended portions of the coin market should fall the hardest and take the longest to recover. To me, that is still ridiculously priced modern US coinage, conditional rarities of all types and generics such as Morgans and common date gold.

 

World coins also have the potential to fall but I do not believe as much. Same applies to scarcer US classics. Aside from being scarcer and not having risen as much, I believe (but cannot prove) that at least in some cases, the owners represent "old" money in the US and places such as Europe and therefore, they can afford to wait it out if they choose.

 

The typical US collector probably does not have those options. If the economy runs into trouble (and at least some segments of it are almost guaranteed to do so given the housing problems), then given the precarious financial condition of many US households, there is going to be at least some need to sell assets (for those who have any) to raise cash. I believe the typical US collector to be in better shape than the typical US household, but that will be tested if the job market worsens which will happen if the credit crunch gets worse.