When will the coin market rebound???

[MikeKing]

The market, for coins, is terrible right now.

At least, that's what my observation is, despite statements to the contrary.

And I'm not talking ultra-rarities that 90% of us cannot afford...

 

What do you think?

 

And if you think the opposite, please encourage me to believe it, after all, I am a collector.

[MorganMan]

I say it is a good buying opportunity....

 

MM

[me0505]

Hopefully not for awhile! I have been able to pick up some nice coins at nice prices!

 

I NEED MORE.

[World Colonial]

There are several markets within the coin market but I presume you are referring to US coins.

 

Coins are a luxury discretionary item and given that we are experiencing the worst financial crisis since the Great Depression (something which many, most or all have heard but which for once is actually correct) and the economy is going to follow, it should be weak for at least several years.

 

For the coins I collect which are all foreign series, I have not noticed any difference except for one of them, South Africa Union and ZAR. The primary reason for this based upon my recent sales on eBay appears to be the Rand/USD exchange rate. That is, I see no evidence (yet) that local currency prices are going lower (though I believe they will when the South African economy gets hammered) but since most buyers are from South Africa, they either cannot or will not pay the previous USD prices. I do not know about the rest of my series because they come up for sale even less.

 

As for US coins, I do not follow them very closely but my opinion was and still is that on balance, they either are or are among the most overpriced coins in the world based upon their relative scarcity and availability. And yes, I am aware that there is more demand for them than either the coins I collect or other non-US coins but almost all of them are readily available though this varies with the particular issue.

 

On their future prospects, I will repeat what I have said before. Those that are the most common, have the less established collector bases, have experienced the sharpest price increases and are owned by "weak hands" who cannot afford to keep them in an economic recession or depression will lose the most value. The most overpriced coins I believe to be:

 

Modern US conditional rarities by a lopsided margin: business strikes, proofs, commemoratives and bullion (ASE and GSE). Examples of these include the 1995-W ASE, that PR-70 AGE that sold for $36,000 on Teletrade a few years ago and the PR or MS-70 Lincoln cents. I expect these coins to lose 95% (or even more) of their peak prices.

 

US generic type coins such as higher end (MS-65 or above) Morgan Dollars. Possibly classic commemoratives also fall into this category.

 

Many rarities or supposed rarities are also relatively overpriced or absurdly overpriced. The 1879 Flowing Hair gold Stella which I believe has a mintage of 400 is one that fits this category in my opinion. I consider it a relatively common pattern but I presume it sells for its current price because it is in the "Red Book". Many "key" dates from popular series are similar, especially in higher grade. They are scarce or "rare" but only as conditional rarities.

 

There are also potentially several or even many foreign issues that are vulnerable. Two that come to mind are the UK and Australia. These economies are even more overleveraged than the US, at least at the consumer level, and their coins are very expensive versus other world coins.

 

If the USD continues to rise as I expect it will for a year or two, then both the USD price and even the local currency prices of most world issues will decline, though I still expect less than US coins on average because they are so much cheaper. This is what I expect for at least some of the coins I own which is why I have started to sell them. I will buy them back for less if I am correct and if not, then maybe something else.

 

In addition to economic considerations, my expectations are also driven by my outlook for metal prices. I still think that after 9 years of a bull market (until recently), that both gold and silver will experience weakness for several years from the recent peaks and historically, coin prices are highly correlated to both silver and gold, especially for "investment" coins. If this turns out to be wrong, then my expectations will also likely prove wrong though this in and of itself would probably not be enough to resume the bull market for most or all coins in a weak economy.

 

The advice that I can offer to any reader of my post is this. If you are over-exposed to coins financially OR either will or may not be able to keep them under adverse financial circumstances, then you are better off reducing your exposure now as a precautionary measure than adopting a "hold and hope" approach. And even if you are not over-exposed, it is still likely to be a prudent approach. The first "shoe to drop" so to speak in this financial crisis has been in the financial sector. In 2009, it will almost certainly spread to the '"real" economy as this is already happening now as evidenced by the recent employment statistics.

 

[RWB]

Slabbed pocket change and “graded” bullion pieces have never had much of an investment future. If you enjoy collecting them, do so with the understanding that they have little resale value.

 

Same for hyped rarities (Stellas would sell for only a small multiple of metric and Goloid dollars if it weren’t for the silly myths) and oxymoronic “condition rarities.” Solid condition coins that appeal to a variety of collectors will do OK, but the bottom line is that coin collecting is a hobby for most. Don’t spend the mortgage money on a coin. (Jay Pittman not excluded.)

 

Just a thought…

 

[physics-fan3.14]

Very detailed and well thought out post, colonial. I agree.

 

I am looking at this as a buying opportunity, for coins as well as stocks. I'm pumping everything I've got into them right now.

[World Colonial]

Thanks for your compliments but I would advice caution. I still consider it way to early to buy either stocks or coins with any "real" money, except as a short term speculative opportunity.

 

For coins, buying and selling most of them as a short term hold is not a viable option because of transactional costs and resale risk; this is particularly true for the most common and illiquid issues. I'm not aware that it has happened (yet) but the bottom could fall out of coin prices a lot faster than many of us believe. To use a basis of comparison, though I have been bullish on the USD (and wrong until recently) I never would have imagined that it would rise 25% in about three months. Concurrently, the Australian Dollar fell from 98 to 60 cents, a breathtaking collapse for a major currency.

 

With stocks, the long term bear market which started in January/March 2000 (yes, this is a continuation of that bear market) is not even close to being over based upon historical precendent. Stocks may look "cheap" now on lagging indicators such as the P/E ratio but are in actuality historically overpriced and are a value trap.

 

The reasons why most people do not see this are several. One is because they still have a false sense of confidence in the ability of the government to contain the current deflationary financial implosion. I do not expect that confidence to evaporate completely at the current time because no market rises or falls in a straight line. I am expecting a temporary recovery in Q1 2009 which could last 6 to 12 months. If what I anticipate happens, the real crsis of confidence will happen in the next phase NO MATTER WHAT the government does or does not do.

 

On the valuations, P/E ratios look "low" only because the typical investor has either no or almost no historical context. This ignorance of history is the other reason why they are fooled.

 

By the most objective measure of valuation, the dividend yield, US stocks are absurdly overpriced. The yield on the Dow is a paltry 3.50% even after the recent debacle. Before the mid-1990's, it was lower on only three or four occasions in the PRIOR CENTURY.

 

The best comparison to the current environment is either 1929 or 1930 regardless of what happens next. On September 3, 1929, the Dow peaked at 381. It subsequently lost 89% of its value to 41 on July 8, 1932. Also, the Japanese Nikkei Dow peaked at 38,000 on December 31, 1989, It hit a 26 YEAR LOW about two weeks ago for a loss of 80%. Most people may not see it because it has taken so long and we are in the middle of it, but there has NEVER been a period in the history of financial markets which has had more speculative excess than what we have just experienced.

 

What is most likely to happen with stocks is that the current "low" P/E ratios (which are actually about or slightly higher than the long-term trend) will rise significantly as earnings collapse. That is what happens in every bear market. First prices fall, then earnings and then in this case, dividend cuts. This is the opposite of what happened between 1982-2000/2007 and if it does, stocks will gyrate between looking cheap and expensive even as prices fall significantly.

 

As a short to intermediate term opportunity, I believe that stocks are nearing a bottom (or may have) and there are some that I am looking myself to buy. These are all large company high dividend yield stocks (5% or more) with strong balance sheets but none of them are "growth" companies. If I was going to be a long term buyer now (and I am not), these are the ones I would focus on even though an extended contraction could place the payouts at risk.

 

I'll close this post by giving you a personal example on the treachery and danger which exists today. A week ago Tuesday, my company anounced 14 job cuts in my department (out of 7,000 for the company). I am still here but my boss will not be. The day before the announcement, he told me that he was invested using the equivalent of modern portfolio theory, what I consider to be the mindless diversification approach which is fine for an institution but can be a disaster for an individual. He did not tell me how much he had lost but said it would take him 10 years to recover from it. Well, now not only has his portfolio taken a major hit but he is going to be unemployed in the worst job market in 25 years. Fortunately, he will get paid for about 15 months but most others will not be so lucky. I do not want that to happen to anyone else.

 

 

 

 

 

 

 

 

[physics-fan3.14]

I hate to hijack the thread like this, but so be it. I think we agree on most points economic, so I am only going to comment on a few things.

 

First, drawing a comparison between this and the Great Depression is a good one for a couple of reasons. There was a period of wild speculation, followed by a crash, followed by strong government intervention. It was the government intervention and resulting Socialist policies that made the Great Depression "Great". I think we are seeing a strong correlation to this with the recent government bailouts, nationalization, and big brother mentality. The government will try to rescue everyone and everything, but will only make the situation worse. Nationalizing large sectors of the economy, such as the banks, insurance agencies, and now automakers, is not the solution. Add to this the recently elected President's avowed policies of rasing taxes, redistribution of wealth, and strongly socialist government programs, and you have the potential for the Great Depression II.

 

However, I still see this as a great buying opportunity. If you are young, like me (only 23) and have a relatively secure job, then you can afford to think in the extremely long term (20+ years). If you bought at the bottom of the depression, 20 or 30 years later you would have been doing pretty well. While I am somewhat concerned about my job in the oilfield with the new president (everyone out here is nervously updating their resume), I am still somewhat secure due to the dependence on oil that economy has, and will continue to have for many years despite the best efforts of Al Gore. With that preface and explanation, I am looking at the very long term, and I am dollar cost averaging down. Yes, I might have bought Bank of America stock at $30, but I also bought at $25 and $19, to give me an average price per share of roughly $24.

 

There are still some sectors of the economy that are overvalued or have very high risk, yes. Bank stocks would of course fall into that category. But many stocks are so low right now that you cannot pass up the opportunity. You cannot rely on just P/E, which is a flawed guide to value in the long term. Instead, I look at things like ROE, ROA, and annualized growth. If the company is a good company, then I try and buy at a good value, but that is secondary. Yes, the past few years have been highly speculatory and have inflated values to far beyond what they are worth, but at what point are they back at a good value? For many stocks, that point is now.

 

Finally, would you care to elaborate further on your opinion of modern portfolio theory and diversification? I just recently finished reading the excellent books "A Random Walk Down Wall Street" and "The Intelligent Asset Allocator" and they make very good sense to me.

 

I'm sure we can bring this back around to coins eventually. Sorry Mike for hijacking.

[James_OldeTowne]

The coin market is clearly not what it has been the past several years, but who really expected it to remain "hot" forever? I do think it is still relatively strong, however. This seems especially evident by comparison to the really bad market of the early 1980s.

 

Overall, I do not think coins have been hit hard by the economy .... yet.

 

My general advice: hang tight both buying and selling until perhaps the middle of next year. Great opportunities for buyers may be in place by then.

[World Colonial]

I do not remember all of the specifics of modern portfolio theory so perhaps I used the wrong term. But what I was alluding to is the idea of always being fully invested whether fully in stocks or in an alphabet soup of asset classes such as stocks, bonds, commodities and anything else. This is what I call conventional divesification or diversification for its own sake.

 

The reason I disagree with it as a strategy for an individual is because unless you are wealthy, you may not be able to withstand the financial damage to your finances in a bear market. The example I gave about my boss is typical. I would actually consider him more knowledgeable in many ways than the "average" investor (whom I consider to be completely clueless) but he is at significant long-term risk if these problems last longer than he anticipates and is concurrently impacted by the current labor market. He is older than both of us but still better off than the typical American (he certainly makes more).

 

An institution like a pension fund or mutual fund is different. Pension funds have fixed liabilities (hence the term "defined benefit") so it makes sense for them to use historical averages and probabilities because if they are wrong, the portfolio manager or company management may get fired, but they do not have to worry about paying the light bill. A mutual fund exists to permit the investor to take a speculative position as a strategy. So it also makes sense for them to be fully invested if that is what their prospectus permits.

 

For the individual, using this methodology (diversification) will "work" until it doesn't. Like now when an outcome using a "Monte Carlo Simulation" would have never predicted or calculated as 1/10000 (million) happens anyway. Then you are possibly ruined.

 

As for Random Walk, correct me if I am wrong but I believe this is related to the so-called "Efficient Market Hypothesis" and if so, I consider it to be complete nonsense. I took an investment class as a college senior six months before the 1987 crash. If markets were either "efficient" or random, that event would be impossible and so would other things such as arbitrage, the discounts on closed-end mutual funds, long term strategies such as the Value Line Investment Survey methodology and the consistent superior performance of individuals like Warren Buffet or Jimmy Rogers would also not be possible.

 

Not only are markets not "random", there is more evidence that they are patterned though there is dispute over this. For example, both the 1929 and 1987 crashes occured a Fibonacci 55 days after the all-time highs. No, this is not statistically significant but there also other examples of this though I do not remember them from memory.

 

The fact of the matter is that markets are controlled by psychology. That is what makes manias like the Dutch Tulip Mania (1600's), English South Sea Bubble (1720), French Mississippi River Sceme (1719), 1929 Crash, Japanese Bubble Economy (1989), the 1979-1980 precious metals boom and the recently ended "dot-com"/real estate and worldwide credit bubble possible. Though there is always a "fundamental" RATIONALIZATION behind every one, if psychology were not the driving force, then prices would never exceed their "real" value and no one could outperform the averages on a long-term basis.

 

On P/E ratios, I agree with you. It is the worst (or one of the worst) measures of value because of the arbitrary and lagging nature of earnings. I mentioned it because it is the one that most investors use as a valuation reference point.

 

But to bring this discussion back to coins, I am not saying that anyone should not buy coins if they want to or advising them not to if they can afford to do so. I am warning those who are over-exposed or cannot affford to do so either now or under adverse financial circumstances.

 

I also believe that there will be better opportunities for many or most coins down the road, possibly for longer than any of us may currently believe. To the extent that the coin market is showing weakness, it is almost certainly behind the curve. Most other markets have been weak up to three years (such as real estate) while this is only or has only occurred with coins in the last few months.

[physics-fan3.14]

I do not remember all of the specifics of modern portfolio theory so perhaps I used the wrong term. But what I was alluding to is the idea of always being fully invested whether fully in stocks or in an alphabet soup of asset classes such as stocks, bonds, commodities and anything else. This is what I call conventional divesification or diversification for its own sake.

 

The reason I disagree with it as a strategy for an individual is because unless you are wealthy, you may not be able to withstand the financial damage to your finances in a bear market. The example I gave about my boss is typical. I would actually consider him more knowledgeable in many ways than the "average" investor (whom I consider to be completely clueless) but he is at significant long-term risk if these problems last longer than he anticipates and is concurrently impacted by the current labor market. He is older than both of us but still better off than the typical American (he certainly makes more).

 

Ok, I get what you are saying (and I agree about the typical investor. They should buy a total stock market index fund and a bond fund and leave it at that.) I used to think that staying fully invested at all times was the best approach, and there are certainly good arguments for this. It is impossible to correctly time the market, and those who do have been scientifically proven to earn a smaller return. The tendency is to buy when its going up and sell when its going down. And for the common investor, avoiding market timing is a good idea.

 

However, an investor with a higher level of sophistication might want to increase their cash holdings in certain times. This is what I think you are advocating. Unless I am misinterpreting, you are in no way denying the power of proper asset allocation. The problem with getting out of the market is that you often cannot react quickly enough to a reversal. The largest increases usually happen right after the bottom, and no one knows when the bottom is.

 

This is why I have stayed in the market. It hurts sometimes to check my balances, but as I mentioned earlier, I am dollar cost averaging down. A couple of books on my reading list are "Irrational Exuberance" about market bubbles and such, and "The Black Swan: The Impact of the Highly Improbable."

[World Colonial]

Partly yes and partly no. I do not have a solution for the typical or average investor because I actually believe that someone who is not knowledgeable and is not willing to become so is better off not being in the stock market at all. Most of the time, they would be fine buying an index fund (like the S&P 500) but I can tell you from the limited interactions I have with others that this is not what actually happens.

 

Most of the time that is, except times like the last 10 years. In the last 10 years, the total return for the S&P 500 has been a big fat ZERO because of the absurd and unprecedented historical overvaluations. And as I mentioned before, despite a decline of about 40% in the last year, US (and most global) stocks are STILL historically overpriced. And for the US market, this return has been in USD which has declined substantially.

 

In the prior examples I gave on manias, all of them fell below the starting point. The starting point for the US stock market mania is debatable but it is no higher than Dow 3570 or 3675 which occurred on April 20, 1994 or that November. That is my ultimate minimum downside target.

 

And even if I am wrong on this, I am still expecting the "real" Dow in terms of gold, foreign currencies or purchasing power to decline substantilaly. The Dow bought 43 ounces of gold in 1999. It bought approximately one ounce in 1979. I expect it to fall to that level or less which if it happens will probably be achieved by both a combination of rising gold and falling stock prices.

 

I have not read "Black Swan" but yes, this is what I was describing: the occurrence of an "unexpected" disaster. In this case, I consider this fiasco entirely predictable which is why I have been almost exclusively in cash for over 10 years. I simply did not know WHEN it was going to happen and some of it has even surprised me but I knew it was coming. I have taken positions here and there with more success than not, but have declined to be a "long term" investor in this absurdly overpriced market.

 

On the subject of diversification, my position is that sometimes it pays to be diversified and sometimes it does not. My goal is not to maximize my return or outperform the market. That approach is for institutions such as a hedge fund or mutual fund. The goal of every individual should be wealth preservation first which means making and keeping money.

 

No one will always be right but I disgree that though no one can time the market most or all of the time, that this means to be fully or mostly nvested at all times. That horrible risk management strategy was invented by self-serving financial industry professionals in search of fees, ivory tower academics and people who lack the historical context I just described.

 

What you say is correct that the largest gains come at major market bottoms. But what you did not include is that the greatest periods of volatility come during bear markets and at the end of bull markets. The only other period in financial market history for which comporable experience exists with today is the Great Depression. The largest rallies occurred in the early 1930's (larger than even recently) yet the Dow still lost 89% of its value. In actuality, the amount of money you can lose from a large decline happens much faster than on the way up.

 

Right now what you are saying is definitely correct which is one of the reasons I am still long-term bearish. More people are worried about the "risk" of "missing" gains in the next advance. If my expectations are remotely accurate, by the time this bear market is over (possibly over a decade from now or more), almost no one will hold that opinion.

 

What if I am wrong? I do not care. If my bearish position turns out to be incorrect, then yes I will "miss out" on the upcoming gains but then the economy will be better than I expect and I should remain employed. I also will not have to navigate the minefields from the limitless incompetent stupidity which the US Federal Reserve and Congress are going to create for us. If this bear market is what I expect it to be, many of you do not even have an idea of what politically created disasters might happen. I have contingencies for most of them but that is depedent upon my ability to implement them which today unfortunately is not the case for everything.

 

On the other hand, those who hold the conventional opinion will not only be spectacularly wrong but many will face major setbacks and some will be totally financially devastated. In our savings challenged debt flooded society, the typical individual cannot even afford to stand stock still (pun intended). At this point, the typical investor is on average no better off with their investments in nominal terms than 10 years ago. Given their financial position, this in itself is a disaster for their future financial prospects. I would say that they might be better off being just a little more concerned about this and the potential losses than any gains they are missing. But the reason they are not is because their "PLAN A" is to meet their financial goals through the stockmarket and if this fails, for most of them there is no "PLAN B".

[physics-fan3.14]

A few points...

In the prior examples I gave on manias, all of them fell below the starting point. The starting point for the US stock market mania is debatable but it is no higher than Dow 3570 or 3675 which occurred on April 20, 1994 or that November. That is my ultimate minimum downside target.

 

The biggest reason I disagree with you on this point is that, while I agree that there might be a bit of overpricing still built into the market, there has been real growth over the past 15 years. You cannot deny this. While much of it might have been fueled by inflation, mania, etc., that does not change the fact that somewhere underneath all that, the real economy has grown. I think your downside target is extremely pessimistic, and ignores everything that has happened in the last 15 years.

 

And even if I am wrong on this, I am still expecting the "real" Dow in terms of gold, foreign currencies or purchasing power to decline substantilaly. The Dow bought 43 ounces of gold in 1999. It bought approximately one ounce in 1979. I expect it to fall to that level or less which if it happens will probably be achieved by both a combination of rising gold and falling stock prices.

I don't understand this?

 

Regarding the rest of your post, and especially the part about staying out of the market for long periods of time... The risk you run here (and, its not a risk, its a reality) is inflation eating away your money. Yes, its only 3% or 5% a year, but at what point is 3% a year for ten years worse than 30% in one year? I have the advantage of dividends, dollar cost averaging, and being able to take advantage of the unknown.

 

My financial goal is not simply wealth preservation. This might be satisfactory if I were independently wealthy and only needed to maintain my capital, and could live off the interest. My goal is instead wealth building and to maximize my return. I do not see why this should not be the position of the individual? I use a diversified balance of index funds, and I do not pay fees at all. Those who pay large fees to buy a mutual fund are defeating the whole purpose in the first place, unless they are deluded into thinking that their manager can pick stocks better. But as has been proven time and again, no one can pick stocks correctly and beat the average for any length of time. Thus, investing in low cost index funds makes the most sense.

[Houston Investor]

I believe dealers will see a lot of poorly attended shows with people coming in for the most part who have little money. Retail will most definetely suffer (and already has) but he who has cash will get some really good buying opportunities for material walking up to his table. The question is - will the sellers sell it cheap enough to move it.

 

At a show I was set up last weekend some people shopping clad pf sets 1996-2007 around the bourse (probably about $350 CDN Bid Value) had a high offer of $120 (many made no offer) and ended up taking their pf sets back home. The show was slow with poor attendance and retail was zero. Such is the nature of the market these days. As we go into 2009 and the full impact of the economic mess hits, this will only get worse. I think most of the counrty is like the passengers of the titanic - they really have no idea what they are really going to be in for. Had the bailout been put to a vote by the people (or a govt that actually represented the people) it would have failed.

 

The harder it is for me to get retail, the more I lower my offer prices. Ebay has been horrible and with their high fees, I have to mark material up 15% just to break even. Hold on to your cash and steadily accumulate physical gold and silver if possible.

[MikeKing]

A few points...

In the prior examples I gave on manias, all of them fell below the starting point. The starting point for the US stock market mania is debatable but it is no higher than Dow 3570 or 3675 which occurred on April 20, 1994 or that November. That is my ultimate minimum downside target.

 

The biggest reason I disagree with you on this point is that, while I agree that there might be a bit of overpricing still built into the market, there has been real growth over the past 15 years. You cannot deny this. While much of it might have been fueled by inflation, mania, etc., that does not change the fact that somewhere underneath all that, the real economy has grown. I think your downside target is extremely pessimistic, and ignores everything that has happened in the last 15 years.

 

And even if I am wrong on this, I am still expecting the "real" Dow in terms of gold, foreign currencies or purchasing power to decline substantilaly. The Dow bought 43 ounces of gold in 1999. It bought approximately one ounce in 1979. I expect it to fall to that level or less which if it happens will probably be achieved by both a combination of rising gold and falling stock prices.

I don't understand this?

 

Regarding the rest of your post, and especially the part about staying out of the market for long periods of time... The risk you run here (and, its not a risk, its a reality) is inflation eating away your money. Yes, its only 3% or 5% a year, but at what point is 3% a year for ten years worse than 30% in one year? I have the advantage of dividends, dollar cost averaging, and being able to take advantage of the unknown.

 

My financial goal is not simply wealth preservation. This might be satisfactory if I were independently wealthy and only needed to maintain my capital, and could live off the interest. My goal is instead wealth building and to maximize my return. I do not see why this should not be the position of the individual? I use a diversified balance of index funds, and I do not pay fees at all. Those who pay large fees to buy a mutual fund are defeating the whole purpose in the first place, unless they are deluded into thinking that their manager can pick stocks better. But as has been proven time and again, no one can pick stocks correctly and beat the average for any length of time. Thus, investing in low cost index funds makes the most sense.

 

I agree with this. I also believe you can make your own index fund by looking around you and buying stock in the day to day occurrences we encounter. Cash machine? Diebold, home improvement, Home Depot, Internet, Google, Internet buying, UPS FEDEX, Supermarket, Verifone, Nuclear power plant USU etc...

 

 

[jackson64]

"the market for coins is terrible right now"

 

it is either a buyers market or sellers market..........as a buyer I think the market is just great right now !! I could see where a dealer could be feeling the opposite however ( in truth I have only seen a slight slow-down and not so much a bad market for selling)

[DirtyGoldMan]

Maybe I am missing something, but I am not seeing this terrible market of which you speak. In the areas that I participate, I think that activity has slowed a bit, but prices seem firm, especially for nice, scarce, and desirable material. Coins continue to change hands at a healthy pace.

[MarkFeld]

Maybe I am missing something, but I am not seeing this terrible market of which you speak. In the areas that I participate, I think that activity has slowed a bit, but prices seem firm, especially for nice, scarce, and desirable material. Coins continue to change hands at a healthy pace.

Same here, but I expect at least a little more negative impact later, if not sooner.

 

This serves as another reminder that for the most part, each of us operates in our own part of the coin universe, that different market segments perform differently and that we perceive things differently, based on our personal experiences.

[Gary L Hausman]

I'm new to sending coins to NGC for grading and have a question about sending the 2008 Bald Eagle Commemorative 3 Coin Proof Set to them for grading. Would it be better for me to keep the set intact (not graded) or to have the coins graded?

 

[michael]

keep set intact

[Oldtrader3]

I saw it coming and sold all my widgets along with some classic coins that I wanted to sell also.

[michael]

Maybe I am missing something, but I am not seeing this terrible market of which you speak. In the areas that I participate, I think that activity has stayed the course and demand is actually up and coins cant be found to buy, BUT only for especially for nice, scarce, and desirable material. Coins continue to change hands at a healthy pace.

 

[World Colonial]

There is no one right way or wrong one to make these decisions and I am not trying to imply that there is. And of course, anyone is free to disagree with me for any reason they choose.

 

But to answer your last post, in recent times, there has been more than a"little" overpricing into both stocks and many other asset classes, including coins. That is what a maina is. And this was not just any mania, but the greatest mania EVER due to the unprecendented expansion of credit. Most people do not see this because they are not aware of historical precendent as I tried to expain earlier in this thread.

 

As for my forecast, of course it is pessimistic and no, I would not expect most people to agree with it. And whether it turns out to be correct or not and if so when, is an entirely different issue. If it does, it is possible or likely that one or both of us may not be around on these boards to discuss it.

 

It has taken 26 years for Japan to return to the starting point of the post-1982 global bull market and and 18 years to lose 80% from its 1989 peak, which it did a few weeks ago. But since what we have experinced is a mania (which is undeniably true) and this and other historical precedents support the position I described, it is a reasonable and realistic expectation even though it seems impossible or most people believe it to be so.

 

There has been much growth in the world economy since that time but it was irrelevant in Japan. It still fell that far anyway. And there are many other examples available that I can also provide to you though the time periods vary. For example, Malaysian stocks were lower in 1997 than 1970. Stock prices in Thailand are about 60% lower now than 1994. Taiwan is also over 50% below its 1989 peak. The US, all the major Europen indexes and Hong Kong all were lower a month or are lower now than 10 years ago. Every one of these markets experienced growth during this period.

 

On the risk of inflation eating away your capital, yes that is true and has been true, but the immediate risk is not inflation but deflation though most people (presumably including those on this board based upon other posts) do not think so Inflation is a longer term problem but given the credit contraction now, it is likely to be less so for at least a few years.

 

Ultimately, everyone needs to make and live with their own decisions. There are those like me who are a little older and whose temperament is not consistent with the general opinion of the typical individual. Then there are others like you who are younger and who feel more comfortable with a more aggressive posture. Depending upon the circumstances, both can work as long as an appropriate risk management strategy is used and the person (or their financial manager) know what they are doing. Unfortunately, most individuals have taken what will (or already have taken) positions from a standpoint of ignorance that will in retrospect look reckless. But this will only be apparent after they have already lost substantial amounts of money.

[World Colonial]

I cannot be sure but I believe your experience to be representative of the typical collector and the generic run-of-the-mill coins.

 

But what I expect to see as the economy weakens is many of the people you saw who tried to sell their coins but declined to do so will sell them anyway, regardless of what price they can get. Some will be novice collectors who will do so out of disgust as their "investment" continues to lose value but others will sell out of necessity. As the financial markets, real estate and the job market get worse, more and more people will be forced to sell ANYTHING and EVERYTHING they can in a mad dash to generate liquidity and stay solvent.

 

I have already heard anecdotal reports and seen some commercials on TV related to selling gold jewelry and scrap for cash. Whether this is widespread or not, I do not know.

 

If this is correct reflection of what is going to happen, the wild card in this scenario is how bad will it get and who owns what coins. Those owned by "weak hands" will suffer the greatest liquidation. I think the coins listed in my first post here - US moderns and genric type coins - will fare the worst but few to none will be spared.

 

Eventually though I think it will take longer than most do, it will represent a real buying opportunity, so keep your powder dry for a future day.