Coin market is double nuclear, white hot......maybe.

[truthteller]

The Heritage CSNS auction is over and I observed something interesting. Over 6500 lots were offered for sale, while 1155 lots were bought back or did not meet reserve. This represents 18% of the auction which did not sell. Most major auctions have about 10% unsold, so 18% was unusually high. Did the owners get greedy? Or is the market place saturated? Specifically for US commems, 584 were offered and about 370 sold, which means 37% went unsold, a remarkably high number. In addition, I saw coins I used to own remain unsold or sell for LESS than what I sold them for 6 months ago. What do you think?

 

 

TRUTH

[thebeav]

Hi Truth,

Perhaps the seemingly bottomless bullion markets have taken some of the steam out of what was a white hot coin market. There always is a connection. Even if only psychological.

Paul

[GDJMSP]

I think it just one more indicator that we have seen the top. Perhaps not the top for select issues - but the top for the market in general. This is certainly not the first indicator either. At least in my opinion.

[cladking]

It seems unlikely we'll see a top until the number of collectors quits growing. A lull or a consolidation is possible perhaps, but not a top.

[chinook]

The stock market, especially the Nasdaq has been quite weak over the past month. That may have taken away some of the discretionary money used for coin purposes.

[DonHeath]

Truth,

 

I buy and sell high-line automobiles wholesale (dealer to dealer), and I see many parallels between the two business models. I spend many days attending large auctions trying to stay on top of the market, and over the last year I've had opportunity to observe an interesting phenomenon. Pretend if you will that I'm discussing the coin industry, and perhaps I can draw a useful parallel. As retail business has remained generally soft, the dealers as a group have decided they need to buy extreme quality to assure easy resale. At every major auction, there are a handful of easy to sell pieces that draw the attention of everyone in attendance. 99% of the dealers want 5% of the auction inventory because they're sure it's saleable. NO one wants the other 95% of the consignment unless it's priced to be foolproof. There's some buying in the 95% category to fill holes, or to fill an order, but because the interest is so intense for the 5%, one would believe the market was on fire. It is truly a Jeykl and Hyde market, with most dealers unwilling to gamble and seeking the absolute safety of very high quality. As crazy as this sounds, until the market warms enough that all boats rise, quality will continue to rise in price to the level it becomes unsaleable or unprofitable. The best sellers will outlast the others because they are able to pay more, and the market will consolidate. Like my primary business, it seems to me in the current coin market, collector grade stuff is pretty cheap, and registry quality stuff is extremely expensive. Perhaps I'm way off base but I don't think the current high price for quality reflects a strong market, but rather a very cautious one. I have no idea which way it will go from here, but should the quality pieces get too expensive to be resold, the market will correct. If the market strengthens, collector grades will heat up. I don't think one can learn much about the strength of the market from sure thing top 5%. I think a better measure of the health of the market is the 95% collector grade stuff. JMO

[EVillageProwler]

Did the owners get greedy? Or is the market place saturated?

 

Certainly this is a fair question. My guess is that the confidence of the market "players" in this current market is making them overly optimistic. In short, many of them are pricing ahead of the market in anticipation of things to come.

 

There is an ebb and flow of issues going on, some of them being:

 

* Those with coins know that there is strong demand for them and don't want to leave money on the table.

* Those who are buying don't want to contribute to the seemingly endless upward spiral in pricing for stuff that aren't truly special.

* It is a neverending battle between the (im)patience of buyers (dealers and collectors alike!) and the (over)optimism of sellers (again, dealers and collectors alike!).

 

EVP

[truthteller]

Don,

 

I think you are right on target with the analogy. BTW, I'm looking for a 1960 Mercury Comet in cherry condition. Color doesn't matter. What will it cost me?

 

 

EVP,

 

"In short, many of them are pricing ahead of the market in anticipation of things to come."

 

 

I have come to this conclusion also. In 1989, this happened about 3 months before the crash. Dealers were marking up inventory 30-40% more in anticipation of future growth. The fatal mistake came when marketmakers were not honoring their bids. This percoloated very, very quickly throughout the market. Boom!

 

 

TRUTH

[TomB]

Don and EVP make excellent points. Also, what Truth has written about the defaulted market makers slammed the entire market seemingly overnight. I seem to recall it happening right after a major auction when many of these folks had to shake out loose cash to pay for their lots, was it a Stack's sale?

[gmarguli]

Don and EVP make excellent points. Also, what Truth has written about the defaulted market makers slammed the entire market seemingly overnight. I seem to recall it happening right after a major auction when many of these folks had to shake out loose cash to pay for their lots, was it a Stack's sale?

 

I want to say it was a Superior sale, but I'm not positive.

[truthteller]

I remember the timing quite well, however, I don't recall as to the auction. I remember after an east coast show, possibly Baltimore, where the market makers were short of cash 30 days before 1989 Summer Long Beach. There were rumblings in the wholesale marketplace that the marketmakers where having a difficult paying for sight unseen trades, then the rumors became non payment. Then the rumors became dishonored bids, but there seemed to be dealers who would also pay quickly, so it was assumed that only some of the marketmakers had a cash flow crunch. In addition, bid remained posted on the ANE. So going into Long Beach, the second level marketmakers assumed everyone would recover their cash. Lo and Behold, the marketmakers were dumping, not trading. Dumping below sight unseen posted bids. It didn't take long(Thursday afternoon of that summer Long Beach) before everyone knew the market had crashed. Dealers were trying to unload to an unsuspecting public, but, as usual, the public doesn't make the market, the dealers do, so there wasn't enough cash from the public to stabilize the crash. By friday, as I recall, most smaller dealers were in an OK position. The larger dealers, however, were in a panic situation. I have never seen the big guys sweat so much. It was nasty.

 

 

TRUTH

[michael]

for me too too way too many of the same non special average so so just okie early commems in auction that was hyped to the limit

 

it does not make sence to me to have a buffet with average food and way too much of it and then to add insult to injury say it is the finest of foods with many gourmet offerings and tasty morsels prepaired by top chefs and all you are serving is again weiners and beans

 

what makes early commems great is the color a plus if great technical grade and color combined as there are so many high grade white plain coins out there and evenmoreso just plain ugly coins

 

what makes early commems great is color and certain coins have certain looks to them!

 

this is where you need to specialize specialize specialize

 

michael