Numismatics during economic downturn...
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64 posts in this topic

On 7/10/2022 at 7:02 PM, EagleRJO said:

I am a newer member/collector who is missing quite a number of less common or rarer coins for some sets I am working on, so I have been watching prices pretty closely and I noticed that starting around the beginning of this year to February the Greysheet values for those coins (mostly US dollar coins) have been dropping.  Don't know about the overall coin market, but it would stand to reason that as there are downturns in the economy, and pull-backs on discretionary spending, that coin values in general will drop.

Just my 2 (indian head) cents ;-)

Price values may drop but coin sale prices will likely stay the same just not go up again until the market gets better. In most cases a dealer is not going to sell that ASE for any less than what he has been asking for it just because the price of silver went down. There is no profit in that only loss. Now if you have a silver tongue that may be worth something in this market.lol.

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On 7/10/2022 at 8:51 PM, GoldFinger1969 said:

Yeah, I don't know if millionaire would mean EARNS $1 MM...or has a net worth of $1 MM (including homes)...or a liquid financial net worth or easily-liquidated assets that comfortably exceeds $1 MM even if given a haircut.

Sometimes the term is used interchangeably but to use it accurately, it has to be based upon net worth.  I have also seen it used as total net worth including primary residence or liquid net worth, but the source often isn't clear which one is being used.  I don't recall the definition ever being easily liquidated.

In the context of this discussion, what really matters is whether the owner is a "strong hand" or a "weak hand" which I'd use in two contexts.  First, real collectors are a lot less motivated to dump their collections in (anticipation of) a falling market.  That's what happened starting in 2012 in South Africa causing the price crash, though that market is a tiny fraction of the US.  Same thing in 1990 during the TPG bubble.

Second, whether the owner can afford to keep what they have or must sell under adverse personal circumstances.  That's what I was getting at earlier with employment and financial conditions.  Many US coin prices have crashed in both of our lifetimes, but I don't believe it's because the owner usually had to do it, only in relatively low proportion.  They just didn't like their coins enough to own it at a big unrealized loss.

The US price level in particular is at risk of both in an extended bad economy.  The only reason so many (US) coins sell for the current and prior price is due to the belief that the owner can get most of their money back at resale.  I state this obvious truism because the prices of the highest grades (and sometimes lower) are (totally) disproportionate to the merits as a collectible.

If it ever gets to the point where the public has to (or chooses to) conduct a "fire sale", the prices of a noticeable proportion of particularly US coins will completely collapse and never recover, adjusted for price changes.  An example is the 16-D Mercury in the lowest grades.

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@J P Mashoke I was referring more so to auctioned prices, and not dealer prices which I haven't really been following.  And is that silver tongue 99.9% fine silver ;-)

Also, one more question ... does ASE refer to American Silver Eagle's in general, or just to the proof coins?

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On 7/11/2022 at 8:20 AM, J P Mashoke said:

Price values may drop but coin sale prices will likely stay the same just not go up again until the market gets better. In most cases a dealer is not going to sell that ASE for any less than what he has been asking for it just because the price of silver went down. There is no profit in that only loss. Now if you have a silver tongue that may be worth something in this market.lol.

Any dealer using this business model in an extended market decline risks involuntarily running an uninteresting coin museum or going bankrupt, especially now in the internet age.  Few dealers offer compelling enough inventory where the (prospective) buyer can't buy the (exact) same thing somewhere else.

Most dealers predominantly sell "widgets".

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On 7/11/2022 at 11:14 AM, World Colonial said:

Sometimes the term is used interchangeably but to use it accurately, it has to be based upon net worth.  I have also seen it used as total net worth including primary residence or liquid net worth, but the source often isn't clear which one is being used.  I don't recall the definition ever being easily liquidated.  

I would use total net worth -- excluding debt (a house worth $500,000 isn't worth that in the calculation if there's a $400,000 mortgage on it) -- including INCOME streams.

Also, to be fair, a house can NOT be monetized into an income stream because you are living there.  If you sold it tomorrow you'd need to buy a new one or pay rent.  Now, if you own a $1 MM home free-and-clear....and you are gonna downsize to a 1-BR condo that costs $400,000....then I would say that $600,000 could be added to your (liquid) net worth.

Pensions -- even Social Security -- could be added as I said before.

On 7/11/2022 at 11:14 AM, World Colonial said:

what really matters is whether the owner is a "strong hand" or a "weak hand" which I'd use in two contexts.  First, real collectors are a lot less motivated to dump their collections in (anticipation of) a falling market.  That's what happened starting in 2012 in South Africa causing the price crash, though that market is a tiny fraction of the US.  Same thing in 1990 during the TPG bubble.

Well said.  (thumbsu

On 7/11/2022 at 11:14 AM, World Colonial said:

The US price level in particular is at risk of both in an extended bad economy.  The only reason so many (US) coins sell for the current and prior price is due to the belief that the owner can get most of their money back at resale.  I state this obvious truism because the prices of the highest grades (and sometimes lower) are (totally) disproportionate to the merits as a collectible.  If it ever gets to the point where the public has to (or chooses to) conduct a "fire sale", the prices of a noticeable proportion of particularly US coins will completely collapse and never recover, adjusted for price changes.  An example is the 16-D Mercury in the lowest grades.

WC, I don't see a bubble in today's coin prices.  Maybe longer-term demographic headwinds impact the prices for those most inflated but even these came down sharply from 2012-20.  Remember the recent rise in the PCGS 3000 index is in the context of a huge drop from 1989.  Sort of like the Japanese stock market. xD

Edited by GoldFinger1969
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On 7/11/2022 at 1:31 PM, GoldFinger1969 said:

WC, I don't see a bubble in today's coin prices.  Maybe longer-term demographic headwinds impact the prices for those most inflated but even these came down sharply from 2012-20.  Remember the recent rise in the PCGS 3000 index is in the context of a huge drop from 1989.  Sort of like the Japanese stock market. xD

No, not because of a bubble.  I agree there is no bubble in the traditional sense, but there is a hugely inflated price level anyway due to credit expansion and the asset mania.  It also depends upon the time horizon but here are the factors I have provided before:

One: Competition from alternative recreational opportunities.  This is coin or series specific.  It applies to US collector coins under 60's collecting practices most.  It doesn't apply to gold or metal substitutes (hardly) at all, like modern NCLT, common generic pre-1933 US gold, or the most common Morgan dollars.  It's an on-going consideration but mostly a long(er) term issue for the price level, as in multiple decades.

Two: The end of the asset mania and much tighter credit conditions.  I'm not trying to get into the details again but much lower prices in the major asset classes will undoubtedly hit the upper end, hard.  Much tighter credit conditions will hammer coin prices across the board.  The two go together.  There won't be an end of the asset mania without much tighter credit and unlikely vice versa.  The tighter credit conditions I am describing aren't just the result of FRB monetary policy either (now or later), but much broader.  This could be "soon", or not.

This is what I am referring to when I said prices could crash and it doesn't matter if coins aren't in a bubble either.  The prices of so many US coins in particular are so detached from any "reasonable" assessment of the collectible merits primarily due to marketing and financialization. 

Three: Negative demographics due to a change in the population composition, ethnicity and not aging.  This is longer term and should affect US coinage the most.

Four: Changes in collecting practices from the internet.  This is on-going and an example is (noticeably) reduced set collecting.

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WC, great points. (thumbsu

I don't collect recent or post-WW II U.S. coinage or pre-WW II small-coinage....but my understanding from reading ATS was that prices for stuff like Franklins, GW Quarters, etc.....got slammed after 2012.  Huge declines that you didn't see in the bullion or quasi-bullion pre-1933 gold or silver stuff.

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On 7/11/2022 at 11:18 AM, EagleRJO said:

@J P Mashoke I was referring more so to auctioned prices, and not dealer prices which I haven't really been following.  And is that silver tongue 99.9% fine silver ;-)

Also, one more question ... does ASE refer to American Silver Eagle's in general, or just to the proof coins?

Yes ASE is in reference to any American Silver Eagle in general .  As for auction prices I have been finding people are just bidding like it does not matter. I think the bids are going to high on a lot of items in my opinion. 

Edited by J P Mashoke
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On 7/11/2022 at 5:49 PM, GoldFinger1969 said:

WC, great points. (thumbsu

I don't collect recent or post-WW II U.S. coinage or pre-WW II small-coinage....but my understanding from reading ATS was that prices for stuff like Franklins, GW Quarters, etc.....got slammed after 2012.  Huge declines that you didn't see in the bullion or quasi-bullion pre-1933 gold or silver stuff.

Given the source, probably in the highest grades and near it.

Give it enough time and I expect most post 1933 US coinage to sell for less than the grading fee or nominal premiums to silver spot, even in grades of MS-66.  Outside of specialization (die varieties, errors, recognized strikes), none of this stuff is even close to scarce except based upon the TPG label.

Similar principle for common "investment" widgets like the 1881-S Morgan dollar.  Heritage sold an MS-65 on June 29th for $180.  Combined pop in this grade is about 115,000 (yes, for this one grade) with I'd guess almost no duplicates (proportionately).

That's nuts.  It's a bullion coin selling for about 10X spot.  It's a classic example of how collecting has been financialized.  With somewhere in the vicinity of 1MM estimated to still exist and maybe around 75% owned by non-collectors, its price is almost certainly predominantly due to financially motivated buying, since the supply exceeds the demand by those who actually want it as a collectible by a substantial margin.  It's so common and the difference between one point MS increments is so minor, as a collectible, $25 is a generous price with current silver spot at $19.

 For really common coinage like these, it doesn't take that much demand change and unlike scarcer coins with a much higher preference, it's not like the owners will hold it off market in large numbers. I've read similar sentiments to yours and I'd attribute the price movement in the two series you named mostly to displacement by (world) NCLT.

Even without any economic headwinds, reduced set collecting alone is enough to create the outcome in my post.  It's not like there aren't many better options to buy.  A collector can buy one very nice example at a moderate price (if they want it at all) and do without the rest.

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On 7/11/2022 at 11:20 AM, World Colonial said:

Any dealer using this business model in an extended market decline risks involuntarily running an uninteresting coin museum or going bankrupt, especially now in the internet age.  Few dealers offer compelling enough inventory where the (prospective) buyer can't buy the (exact) same thing somewhere else.

Most dealers predominantly sell "widgets".

I agree in the long run they will have to come down if silver stays low for to long. I think most will wait it out until there is no choice. It is sad the small shop is becoming a thing of the past. It is hard to compete with the internet stuff out there.  

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On 7/11/2022 at 7:33 PM, World Colonial said:

Similar principle for common "investment" widgets like the 1881-S Morgan dollar.  Heritage sold an MS-65 on June 29th for $180.  Combined pop in this grade is about 115,000 (yes, for this one grade) with I'd guess almost no duplicates (proportionately).  That's nuts.  It's a bullion coin selling for about 10X spot.  It's a classic example of how collecting has been financialized.  With somewhere in the vicinity of 1MM estimated to still exist and maybe around 75% owned by non-collectors, its price is almost certainly predominantly due to financially motivated buying, since the supply exceeds the demand by those who actually want it as a collectible by a substantial margin.  It's so common and the difference between one point MS increments is so minor, as a collectible, $25 is a generous price with current silver spot at $19.

But demand is pretty high for coins like that....from collectors and folks who can afford a quasi-bullion coin.  Who knows how many people own it such that if silver goes to $50 or $100 an ounce....this coin doubles or triples, even if it lags bullion in appreciation percentage.

Also...lots of people can afford a $200 coin.  It's a lot different than what I see for Saints with plenty of supply and folks have to fork over $2,500 or $3,000.

I have an 1879-S in MS-67 (CAC, I think, too)....I think I paid about $700 for it.  Some of these Morgans, you really have to go up in grade to have a low pop number and jack up the price to where you see demand destruction.

$200 doesn't do it.  $700 does. (thumbsu

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On 7/11/2022 at 7:33 PM, World Colonial said:

It's so common and the difference between one point MS increments is so minor, as a collectible, $25 is a generous price with current silver spot at $19.

I'd be curious to see the price going back decades relative to silver.  That said, I still think expecting it to sell for $25 is way too low.  $50 would be cheap....$100 might be "fair value" or something like that.

Again...the coin is AFFORDABLE which means alot.  The average person can afford 1....and if you want 2 or 3 or 4 you can even stretch for that and it will be 1/3rd what a Saint would cost you in average grade.

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On 7/11/2022 at 11:51 PM, GoldFinger1969 said:

I'd be curious to see the price going back decades relative to silver.  That said, I still think expecting it to sell for $25 is way too low.  $50 would be cheap....$100 might be "fair value" or something like that.

In the pre-financialization era, this coin was worth FV or a few dollars; in the 60's.

In late 1975 when my family first returned to the US, I had an 1880 VF Morgan dollar with a Red Book list of $7.  "UNC" was probably in the range of $15 but it's a noticeably "scarcer" date.  Silver was $5.25 in February 1976.  But by then or very shortly after, coins were already being widely bought as "investments".  You can confirm this by comparing the 1977 or 1978 Red Book and earlier editions in the decade when prices exploded, even for common "collector" coins like the Capped Bust half in "UNC" where the most common dates listed for $450 in 1977 (or 1978) versus $75 in 1970 (or near it).

On 7/11/2022 at 11:51 PM, GoldFinger1969 said:

Again...the coin is AFFORDABLE which means alot.  The average person can afford 1....and if you want 2 or 3 or 4 you can even stretch for that and it will be 1/3rd what a Saint would cost you in average grade.

I understand your point, but you are completely missing mine.

The only reasons this coin sells for current price is due to #1, "investment" buying.  #2, because of it, the vast majority of this date (and any others like it) are "off market" owned by non-collectors or in dealer inventory.  And #3, because buyers expect to recover most or all of their money.  I make this obvious statement because there is no basis to believe there are anywhere near 1MM (TPG count is 550,000 now) who want it as a collectible.  I have estimated 2MM collectors in the past which many think is (far) too high, but regardless of the actual number, a large majority never paid for and don't own coins anywhere near $180 for the reasons we've discussed elsewhere.

To my recollection, it sold for slightly over $100 pre-COVID which corresponds to your "fair value".

I'm also aware that there is no possibility for it to be valued at $25 now while (most) everything else sells for (near) current prices.  That's what you are implying.  It was an example to illustrate how inflated the price level is generally.  The price is totally disproportionate to the scarcity and collectible merits.  It's a practically common as dirt "widget".

It's no different for at least practically all post -1933 US.  For classics, the supply likely vastly outstrips current or likely future demand across practically all of the grade distribution, though I know all prices are set at the margin.

Go look at Coin Facts estimates.  I consider it wrong in many instances (probably most of the time) but can see it being "directionally" accurate here.  The TPG data don't reflect it for reasons discussed here before, mostly by me.

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On 7/11/2022 at 11:46 PM, GoldFinger1969 said:

But demand is pretty high for coins like that....from collectors and folks who can afford a quasi-bullion coin.  Who knows how many people own it such that if silver goes to $50 or $100 an ounce....this coin doubles or triples, even if it lags bullion in appreciation percentage.

Future silver spot is the only justification I can come up with for why the price won't eventually crash.

On 7/11/2022 at 11:46 PM, GoldFinger1969 said:

Also...lots of people can afford a $200 coin.  It's a lot different than what I see for Saints with plenty of supply and folks have to fork over $2,500 or $3,000.

A lot of people can afford it, but the evidence better illustrates that only a rather low proportion do so.

In the past, a dealer posting ATS estimated 80% don't spend more than $300 on a single coin.  This is also the cut-off for the large coin show "budget" sections, so I think it's "ballpark" accurate.

Maybe 100,000 collectors and "investor" types collect Morgans as a series.  Add type collectors, random buyers, and those who collect short versions (like one from each mint or all dates from one mint) and maybe it's up to 250,000.  I don't think it's much more.

Edited by World Colonial
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WC, you make some excellent points.  I just think that with other coins collapsing in price at various times -- commemoratives, Franklin Halfs, etc. -- if these coins were substantially overpriced the price would come down.  I don't think a coin could stay at 6x fair value for years and years unless it DESERVED to.

I agree with you on the number of collectors.  It's tough to deciper "strong" from "weak" hands.  But again, with so much supply...what do you think is holding up the price if in fact it is overvalued ? 

If it is investor demand holding the coin -- and not coin collectors -- it is STILL someone who wants the coin.  Not sure why since you would think they'd prefer low-premium bullion coins.

Edited by GoldFinger1969
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On 7/12/2022 at 9:22 AM, GoldFinger1969 said:

WC, you make some excellent points.  I just think that with other coins collapsing in price at various times -- commemoratives, Franklin Halfs, etc. -- if these coins were substantially overpriced the price would come down.  I don't think a coin could stay at 6x fair value for years and years unless it DESERVED to.

It's the financialization of "collecting", pure and simple.  There is some financialization (and marketing due to TPG) with the two series you mentioned but not nearly as much.  Those are also the two US series which I believe have been displaced most by (world) NCLT, where the "collecting" is also substantially driven by financialization and where it isn't, still by financially motivated buying by those who are most interested in getting their money back.

On 7/12/2022 at 9:22 AM, GoldFinger1969 said:

I agree with you on the number of collectors.  It's tough to deciper "strong" from "weak" hands.  But again, with so much supply...what do you think is holding up the price if in fact it is overvalued ? 

Primarily the loosest credit conditions in the history of civilization.  What I am telling you now (and in the past) is not something you are likely to ever hear from anyone else, both because they aren't even aware of it and second, because the alternate outcome is contrary to their personal preference.

Think of it another way.  It's likely (very likely) that there are more "high quality" 1881-S Morgans (or other common Morgan and Peace dollar dates) than all world silver crowns, combined.  If this isn't true, it certainly is excluding Canada and China which probably have the largest supply outside the US.

You see that?

One date has more supply than all non-US comparable coins put together and probably by a huge margin, as in multiples.  That's how common these coins are now.

But to get from current value to where I consider fair value will require extended economic conditions where it's bad enough to make people sell stuff they normally wouldn't, not just coins but other things too.  

Unlike you, I think that will happen but not before silver spot moves a lot higher.  So, I expect the market price to fall a lot less or stagnate even as the inflation adjusted price collapses.

On 7/12/2022 at 9:22 AM, GoldFinger1969 said:

If it is investor demand holding the coin -- and not coin collectors -- it is STILL someone who wants the coin.  Not sure why since you would think they'd prefer low-premium bullion coins.

I'll admit I can't explain it.  All I know is that there seems to be no possibility that there are anywhere near enough actual collectors who want it as a collectible.  Many collectors may also own these dates in large numbers but still for financial reasons.  Some collectors own multiples but no one owns dozens, hundreds, or thousands for their "collection". 

It's either that or the actual collector base is much larger than practically everyone believes.

Edited by World Colonial
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On 7/12/2022 at 10:14 AM, World Colonial said:

It's the financialization of "collecting", pure and simple. 

Then maybe we have to accept "financialization" of coins and collecting.  As transparency and information has increased in the present relative to 40 years ago (TPGs, internet, online auctions, etc.), perhaps the price for these coins SHOULD increase from both higher demand and a reduced "risk premium."

I can tell you in the stock market, comparisions to the P/E for the stock market during the 1920's, 1950's, or even 1980's is ludicrous (and I'm more of a value/GARP guy).  As transparency and information have increased exponentially over the decades, the normalized P/E of the stock market has gone up.  Where stocks used to trade anywhere from 6-15 times earnings....today it is closer to 15-25 times earnings.

Food for thought.

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On 7/12/2022 at 12:16 PM, GoldFinger1969 said:

Then maybe we have to accept "financialization" of coins and collecting.  As transparency and information has increased in the present relative to 40 years ago (TPGs, internet, online auctions, etc.), perhaps the price for these coins SHOULD increase from both higher demand and a reduced "risk premium."

I can tell you in the stock market, comparisions to the P/E for the stock market during the 1920's, 1950's, or even 1980's is ludicrous (and I'm more of a value/GARP guy).  As transparency and information have increased exponentially over the decades, the normalized P/E of the stock market has gone up.  Where stocks used to trade anywhere from 6-15 times earnings....today it is closer to 15-25 times earnings.

Food for thought.

It's all part of the asset mania and the loosest financial conditions in history. 

I can't explain any potential preference for higher premium numismatic coins over bullion coins.  This doesn't mean I can't explain that collecting has been financialized and the increased price level isn't caused by a collective epiphany.  The fact that collecting elsewhere (outside the US) today overwhelmingly resembles US collecting half a century ago is proof of it.

It also isn't a coincidence that what I am describing correlates to the loosest credit conditions ever and the most inflated asset markets in history.  I also know that this isn't "normal", but the result of an extremely long credit cycle predominantly caused by inflated psychology.

It's what I have posted here before, though I know you substantially disagree with me on this subject.

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On 7/12/2022 at 3:51 PM, World Colonial said:

It's all part of the asset mania and the loosest financial conditions in history.....It's what I have posted here before, though I know you substantially disagree with me on this subject.

No, actually I think I agree with the bulk of your sentiments.  I just do not think that coins are going to get slammed by a 4% Fed Funds rate.....they might not be HELPED and even go down....but not like these phony baloney Crypto currencies and other assets that went up TONS more than coins.

Had coins had anything like a 1979-80 or 1989-90 move in price, I'd totally agree with you.  But let's face it....the rise in gold/silver probably helped most coins that we track/collect more than easy Fed policy.

I guess the good thing for coin collectors is.....we may go down but we'll lose alot less than other inflated assets that are junk. xD

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On 7/12/2022 at 4:17 PM, GoldFinger1969 said:

No, actually I think I agree with the bulk of your sentiments.  I just do not think that coins are going to get slammed by a 4% Fed Funds rate.....they might not be HELPED and even go down....but not like these phony baloney Crypto currencies and other assets that went up TONS more than coins.

Let me clarify one thing.  My claims in this thread are a longer-term view, unless the financial markets totally crash very soon and don't recover.  I don't think the (US) coin price level is at risk of imminent "collapse".

I do think it is at substantial risk of having all post-COVID gains reversed and more, though it's going to vary noticeably by coin.

On 7/12/2022 at 4:17 PM, GoldFinger1969 said:

I guess the good thing for coin collectors is.....we may go down but we'll lose alot less than other inflated assets that are junk. xD

I don't think falling prices are "bad".  I am a collector, not buying for financial reasons.  I am interested in paying less, not more. 

If I cared that much about losing money on my coins, I wouldn't buy what I do, spend much less, or not be a collector at all. It's all also why I don't buy what most others do, because like them, I would mind losing money on those coins.

This is another aspect of my viewpoint which differs noticeably or radically from most collectors who have anywhere near what I have "invested".  I don't consider myself a "pessimist", as I am mostly indifferent to the financial outcome.

That's why I can write impartially with this "negativity" while almost no one else will because this outcome is contrary to their personal preference.

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I was at a window dealer the other day, and when I arrived, I was waiting while listening to a guy describe a NJ shore property being fixed up, owned by someone else, and before it was done, someone offered $2.2 MM.  The owner refused the offer even though a handsome profit would have been made.  The story continued that when it was finally ready to go on the market, it listed for $4.4 MM.

Finally it sells… $6.6 MM.

The guy telling the story then said, "You watch, in a few years it will be lucky to be worth $350 K."

Another guy, listening to the story as I had been listening — a salesman — looks at me and say something like, "We should be so well off, have problems like this!"

I agreed, but I found it interesting, the potential boom and bust of real estate.  And I did think of coins in the back of my mind, and what happens when things maybe become dire in the next couple of years.

I'll just ride out the market… spend stock dividends along with my Social Security to weather the storm.

"What, Me Worry?"

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On 7/12/2022 at 6:03 PM, USAuPzlBxBob said:

I was at a window dealer the other day, and when I arrived, I was waiting while listening to a guy describe a NJ shore property being fixed up, owned by someone else, and before it was done, someone offered $2.2 MM.  The owner refused the offer even though a handsome profit would have been made.  The story continued that when it was finally ready to go on the market, it listed for $4.4 MM.  Finally it sells… $6.6 MM.  The guy telling the story then said, "You watch, in a few years it will be lucky to be worth $350 K."

I had a friend of someone in the family tell me that a friend-of-a-friend earlier this year or last Summer (can't remember) had a home that was worth maybe $2 MM or so on the Jersey Shore.  House was not for sale.  Then a walk-up buyer offered $4 MM in cash.  SOLD !!! (thumbsu

This being said.....beach front property is limited (ask Lex Luthor about that xD ).  The NJ Shore is super-popular and my sister's in-law own a 1-floor, 1,100 sq. foot shack 1 block from the ocean that is probably worth $600,000.  No way these houses are collapsing by any large percentage.  You have 2 huge metropolitan areas -- NY/NJ and Philly -- fighting for the valuable land.

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Where I live the average bad fixer upper in a old area on a 1/4 acre is $400,000 the houses near the water are always 2 mil or more. Most are only bought for the land. The house is torn down and a new 6 mil house is built. That is just the way it is around here.

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On 7/13/2022 at 6:22 AM, J P Mashoke said:

Where I live the average bad fixer upper in a old area on a 1/4 acre is $400,000 the houses near the water are always 2 mil or more. Most are only bought for the land. The house is torn down and a new 6 mil house is built. That is just the way it is around here.

There are regional differences but the "wealth effect" and credit conditions still trump everything else. (Some increased real wealth from outside the US too depending upon the location but loose credit conditions and a fake "wealth effect" aren't limited to the US either.)

I see from your avatar you live in Cape Cod.  To my knowledge, it's been expensive for a long time and so has MA as a state vs. the rest of the US.  But by a "long time", predominantly resembling anything like it is now at most since the beginning or during the financialization era, starting in the 70's or later.  Most of the expensive areas in the US of today and the recent past were "reasonably" priced up to the 90's, not "stupidly" expensive like now or recently.  I'm not referring to Park Avenue in Manhattan or Beverly Hills (which were expensive long before this fake economy we have now) but where "ordinary" middle class or moderately affluent people used to live.

Never been to Cape Cod but think of it as a nice place.  Being non-urban, it's one I consider a candidate to remain desirable (and more expensive) despite my bearishness generally.  I expect most larger urban centers to visibly show the effects of the actual social decay which has already occurred but just isn't evident, yet.  This includes metro ATL where I live now.

Edited by World Colonial
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Whenever I hear ANYBODY whine on incessantly about “easy credit”, I expect to next hear about praexology, and malinvestment and all the loony Austrian School garbage. Sorry, WC, not buying’ it. It’s all snakeoil from Mises. 

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On 7/13/2022 at 12:32 PM, VKurtB said:

Whenever I hear ANYBODY whine on incessantly about “easy credit”, I expect to next hear about praexology, and malinvestment and all the loony Austrian School garbage. Sorry, WC, not buying’ it. It’s all snakeoil from Mises. 

I haven't read Mises, so don't know how much I agree with him or not.

It's that I don't believe in something for nothing, not just because of economics or finance, but physics.  That's what modern economics effectively believes (including reflected in government policy).  I call this political math where 1+1 supposedly = 3 and its nonsense.  

Debasing the currency (monetary policy), borrowing from the future (fiscal policy) and government loan guarantees (a form of Congressional "pork") doesn't magically make the US (or any country) wealthier and doesn't create permanent increased prosperity either. There is no economic order (like the Jesuits) within the Materialist Secular Priesthood with the power to manage collective outcomes this way.

It's my belief the credit cycle, the primary enabler of the unprecedented credit mania which still exists now, ended in 2020.  If it did or when it finally does, the artificial prosperity that went with will be mostly or entirely reversed.

The actual macro fundamentals in place now in the US, the West collectively, and much of the world generally are far from positive.  It isn't evident yet because we're still near a market peak.  What most people call the negative fundamentals will become obviously evident later or toward the bottom.  That's what always happens.

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On 7/13/2022 at 1:32 PM, World Colonial said:

t's that I don't believe in something for nothing, not just because of economics or finance, but physics. 

That’s the problem then, isn’t it? The fact is that in macroeconomics, you actually CAN get something for nothing, and you can KEEP getting something for nothing quite literally for GENERATIONS. People like to say the house of cards simply has to collapse eventually. But it really doesn’t. It can go on indefinitely. The only part that’s finite is the length of the human life 

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On 7/13/2022 at 2:37 PM, VKurtB said:

That’s the problem then, isn’t it? The fact is that in macroeconomics, you actually CAN get something for nothing, and you can KEEP getting something for nothing quite literally for GENERATIONS. 

What's your actual claim?  That it's temporary but just long term?  Or permanent?

If temporary, I attribute it to a very long cycle, one I might add which our generation benefited mightily from at the expense of the next one or two.   The credit cycle I referenced started in 1981.  The prior one was from 1946-1981.

What the consensus calls or implies as "permanent", I call financial leverage on steroids + unprecedented mostly government created moral hazard = a future "fail tail" catastrophic systemic failure.

When will it happen?  Well, almost certainly no later than when the US loses its leading geopolitical role which no one in their right mind can claim will last forever.  Given that US foreign policy has completely gone off the rails in the 21st century along with fiscal and monetary policy, I anticipate it's going to be nasty.

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Meanwhile, inflation continues to soar but the dollar is the best house in a lousy neighborhood and this is impacting gold negatively as the Dollar and Euro hit parity.

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On 7/13/2022 at 1:51 PM, World Colonial said:

What's your actual claim?  That it's temporary but just long term?  Or permanent?

If temporary, I attribute it to a very long cycle, one I might add which our generation benefited mightily from at the expense of the next one or two.   The credit cycle I referenced started in 1981.  The prior one was from 1946-1981.

What the consensus calls or implies as "permanent", I call financial leverage on steroids + unprecedented mostly government created moral hazard = a future "fail tail" catastrophic systemic failure.

When will it happen?  Well, almost certainly no later than when the US loses its leading geopolitical role which no one in their right mind can claim will last forever.  Given that US foreign policy has completely gone off the rails in the 21st century along with fiscal and monetary policy, I anticipate it's going to be nasty.

My point is credit is irrelevant. 

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