Turn in the market

[libertycoins-migration]

Would a slumping coin market affect the prices of key date coins? Also, who would like to see a turn in the market. After all, it leaves us collectors paying significantly less for some items. Isn't that a good thing?

[supertooth]

Sure, coins that are overgraded in slabs won"t bring nearly as much. And rare coins that someone is trying to make a killing on will undoubtedly be reduced in price. But the solid graded key and semi-key coins will hold their own. For example----if I see a nice "early" Walker [say a 1919] in "original" Au condition----my first thought is WOW---this is rare. If I get a chance to purchase it anywhere near greysheet [bid or ask], I am on it like bees to honey. Why?? Because I might not see another one for 5 years---regardless of where the market is. Same with almost any decent not messed-with "original" coins in their respective series. I just believe that we have such a base of "serious" collectors that they will not allow these coins to really drop in value because the demand for them has outpaced their availability. Do you believe people will pass on a 1916 D Merc dime in a nice VF NGC holder? How about a 32D Quarter in the same grade and NGC holder? Or those coins in AU?? They won"t stay out there long at all. And if they were on Ebay----do you really think that they wouldn"t sell----at a really decent price?? Now the moderns---well they will probably suffer some. Why?? Too many out there. But any coin that you can check the population reports and see very few graded over the last 18 years---those coins will be a steady investment because there are too few of them. Only if they would be in overgraded slabs would it matter. And then they would still sell---just at the price that the coin actually grades. Bob [supertooth]

[libertycoins-migration]

Thanks Bob for your comments. I see what you are saying with the key and semi-key date coins. But what about the average collectors coin. Let's say I am putting together a set of Morgan's, will the avg. MS 65 price drop considerably w/ a lull in the market? I am only 19, so I have not been around too long to see the coin market fluctuate in 2 ways. I began collecting at the start of this bull market. I would not mind seeing some relief on the prices. Thanks.

[supertooth]

If the market really takes a dive, And notice I said "if", then your common MS65 coins----say an 1889 Morgan will drop. Anything that is readily available will sit or get reduced in price so that it will sell. But a 1904S Morgan, lets say in NGC Au58, will probably not be bothered at all. Why?? Cause there are not that many around. As soon as it makes it to the marketplace---someone will snatch it up---why? ---cause he knows it is not available and he will not wait for fear that someone else will do it before he does. So it always goes back to supply and demand. The 1889 Morgan is available. You can afford to sit and wait for the price to drop. But put a nice "original" not so common a date---say even a 1901 in MS63 NGC out there and watch the competition to get it. Why?? It is not common and mostly unavailable. So buy coins that are at least semi--rare---even if you have to save up for them---they will stay stable. I have a philosophy----buy only what you can honestly afford and only buy it if you can afford to hold onto it for at least 10 years. If you add---only get it in an NGC or PCGS or an ANACS holder---YOU SHOULD MAKE MONEY IN 10 YEARS. Bob [supertooth]

[TomB]

All downturns are different yet they share many of the same casualties. Among these are very common coins, coins with low eye appeal and those that are not solid for the grade. Bob has given you excellent information regarding some safer issues in a downturn, though nothing can be absolutely immune.

 

In your series of choice, Morgan dollars, there are a very high number of coins with extraordinarily high populations in MS65+ and these are often viewed as generics. This isn't too say that any paper loss you might receive cannot be overcome, but I would expect this series to take a substantial percentage hit in your grade range for the common coins. If you successfully wade through a downturn, and buy superior coins throughout, then you will be well positioned when and if the market recovers.

 

This is very similar to stocks in many ways.

[libertycoins-migration]

The Morgan was simply an example. I think that the price for a generic 65 is a good way to gauge the strength of the market. My area of expertise is the $2.5 liberty series. This series is somewhat dependent on the spot of gold, however, not as much as the $20s and $10s are. So far, I have been concentrating on $2.5s prior 1891. This eliminates many of the larger populations like the 1900s. I have accumlated a few of the harder dates so far, with mintages well below 5,000 (1867, 1872, 1882, 1886) pieces. See these goin anywhere substantial w/ a poor market? Thanks again for your comments.

[CTcollector]

My experience on coin cycles is that in an advancing and brisk market there are more opportunities to acquire nice coins for your collection. As collectors or investors are more incented to sell at a profit. You will no doubt pay more, but you will see much more opportunities. In a declining and stagnant market you will get a chance to pick off a nice piece here and there at a decent price. But those opportunities will be less frequent than in a bull market. You will have less sellers incented to part with nice coins, particularly in a financially losing proposition. They would rather hold and wait for better days (providing they are not leveraged over their head) My approach has been to buy coins in both markets as I figure I will even out in the end while my collection keeps moving forward. To have this approach work its important to avoid the over hype on the way up and the over grades on the way down.

 

As far as how pre 1891 quarter eagles will fare in a down market - I can't give an honest opinion as I am not familiar with the collector base. The fact that you are sticking to low pops vs generic dates is smart as it should limit any down side.

[TomB]

The problem you may have with low mintage quarter eagles is if they are an especially thinly traded series. If they are primarily purchased as either type coins or as bullion pieces, and not as date-specific coins, then the collector/investor base of tough dates will be very thin. In a down market the thinly traded issues also have a tendancy to take a hit.

[DaveG]

My own experience with a down coin market (I got back into collecting in 1993) is that "problem" coins (poor eye appeal, cleaning, etc.) freeze solid - dealers don't want them at any price because collectors won't buy them - and really desirable coins disappear because collectors won't sell what they own at the low prices they're offered.

 

Also, I agree that thinly traded series take a hit in a down market, so it's usually a good time to go looking if you collect that series.

 

I also noticed that the material available at smaller shows dries up and gets really stale, so you have to go to the largest shows to find nicer (and fresher) coins.

[libertycoins-migration]

I am relatively young compared to many of the posters out here. I am not really planning on selling my coins anytime soon (my goal is to finish the set someday). I see your points about turns in the market affecting thinly traded series and poorer coins. But do you think I will be fine if holding coins for an excess amount of time (10+ years at least). Thanks for all of your posts.

 

Nick

[CTcollector]

I am relatively young compared to many of the posters out here. I am not really planning on selling my coins anytime soon (my goal is to finish the set someday). I see your points about turns in the market affecting thinly traded series and poorer coins. But do you think I will be fine if holding coins for an excess amount of time (10+ years at least). Thanks for all of your posts.

 

Nick

 

Generally speaking, advice from honest and respected professionals (QDB, etc...) consistenly state that it is more finacially beneficial to collect coins for the long term (5/10 years or so). Its been fairly good advice to date - whether that holds true for the future is anyones guess. The key is to buy the right coins QUALITY WISE for the grade you are collecting. Barring any major catastrophes to the coin market, quality coins will hold their value better than the rest of the pack in down turns and advance better in up turns providing there is sufficient collector interest in the coins. One thing that is for certain is the supply of accurately graded original coins is drying up more and more each year.

 

I suggest you get your hands on QDB's book on common sense rare coin investment ( I believe thats the title). Its a small paper back. It can't be more than $5-10. I read this when I was your about your age. I still remember some of the basic principles he spoke about on coin cycles/holding periods, etc,,,,