The Rise and Fall of Coin Values - Causes, Effects and Signals

[rbrown4]

Sorry for the length of this post but I am very interested in learning more about the causes and effects of rising and/or falling coin prices, and the what signals should one be aware related to changing conditions.

 

I realize the prices generally rise as a result of a few common occurences:

 

An inflationary economic trend.

Speculators looking for tangible assets as a hedge.

Number of collectors increases while coin supplies remain stationary or decrease.

Dealers replinish their inventory of coins form other dealers or collectors who are expecting a profit.

Speculators try to influence the market through selective buying,

Bullion prices rise.

 

And decline as a result of;

 

Changes in collecting habits.

Economic conditions change the demand for tangible assets such as coins.

Sepculators sell in large quantities.

Hoards of large holdings are released and may not be quickly absorbed by the normal market.

Bullion prices decline.

 

What are other reasons for rising or declining prices for coins?

 

What are good indicators can one look for or monitor to predict or verify a change?

 

In general what is the market like now?

 

How can one stay reasonably abreast of the coin market conditions?

 

Rey

 

 

 

 

 

 

 

 

[rbrown4]

I am a little surprised that no one has replied to this post with any thoughts, opinions, etc. I thought that it would create at least some sort of interesting and positive discussions.

 

Changes in the coin market affect and influence me as well as everyone else in different ways and to different degrees or levels. Learning to understand the hows and whys can only benefit a collector I would assume.

 

Another memeber just recently posted a message about the recent rise in values of later date three cent pieces. Why is this, what is driving it? Hopefully this will get some dialogue flowing.

 

Or here's another one, I notice in many coin publications that articles appear explaining why someone thinks a certain coin, type, series etc. may be a "sleeper" or may be looking to or is due for a postive or negative change. Do articles like these make a difference in the market eventually?

 

Rey

[zrlevin]

Hi Rey,

 

Have you read "The expert's guide" by QDB? It has good information on the coin market in general, along with other important info.

 

Zach

[ziggy29]

I think the ease of buying coins online has also increased the activity in the coin market and brings more people into it.

[bsshog40]

Hey Rey, the coin program I use, uses PCGS value guides as thier value guide for calculating the coin values in my collection. Eevn if it doesn't have that grade in PCGS,. it will take the value of the next grade up and calculate what it's value is. To make a long story short, I just did a values updates for my collections and noticed alot of jeffersons had dropped almost by 50%, Sacs by about 35%, and a few other misc types dropping. Now alot of these are just circulated album coins so I can't see market fluctuations for them. I'm wondering if this would have alot to do with just normal metal prices?

[DaveG]

Personally, I collect coins because of their history, so I'm not that interested in the "coin market."

 

For me, it's pretty simple: supply and demand drive coin prices. Demand was pretty weak in the early 90s, so coin prices fell. The coin shows I went to from late '92 to about '94 were pretty empty. Starting about the mid-90s, demand started picking up - the coin shows started getting more and more crowded and they're still crowded.

 

Also, the rise of eBay is a big factor - all of a sudden, everyone's a dealer and lots of people buy coins on eBay.

 

I meet a lot of people who "want to get into coins" - whatever that means. I figure they'll buy a bunch of coin and flip them on eBay. If they make money, they'll be happy, if not, they'll try something else. People hear about other people making money in "coins" and they want to get in on it, too. If there are enough of those people, coin shows get crowded and there are lots of coins for sale on eBay.

 

When/If those people go elsewhere, the "coin market" will drop - leaving a lot of coins in people's sock drawers, just like there are a lot of coins there from the last time the "coin market" was hot.

 

As far as three-cent pieces go: they're not that widely collected, so they're undervalued. They'll stay undervalued until more people collect them, regardless of how many articles there are in coin publications that call them "sleepers."

[jtryka]

I think you hit on a lot of the more basic and fundamentally sound reasons for market gains, such as increases in inflation/tangible assets, increases in collector base etc. But one of the biggest issues for a rise and potential dangers for a fall are speculative bubbles. These have been going on in coins since there have been collectors. In recent decades we saw the bubble in commemorative halves in the 1930s, the craze over 1950-D nickels in the 1950s, the uncirculated roll craze in the 1960s, the metals boom of the late 1970s, the certified investor craze in high grade Morgan dollars in the 1980s and today we seems to be having a similar craze in high-grade moderns and anything low mintage from the mint. Now no one involved in these bubbles will ever admit there is a bubble (just talk to any modern uber-grade registry collector), but no one ever admitted it in any of the other bubbles before (at least not until the roll collectors deposited their rolls in their local banks, and I think those who bought rolls of 50-D nickels at the peak are just now breaking even). Anytime you have a craze like that where everyone seems to be buying and no one sees any end in sight, that's when you need to worry!

[cladking]

Obviously supply and demand are huge components of collectibles prices. This goes about ten times over for demand. No matter how rare a coin is it can't get a premium until a few people want it. No matter how common a coin is it will soar if the demand is higher.

 

A great deal of the direct cause in price changes is a sort of self fullfilling prophesy: if a coin is expected to go up then the demand increases and the owners (supply) are reluctant to sell at current price. Promotions can also have dramatic effects on a coin if it's common enough for dealers to lay in large quantities. These are a sort of managed self fullfilling prophesy.

 

Ultimately it always comes back to supply and demand but in the short term there are a lot of perturbations in a lot of areas of the market.

[just-john]

I think the high-grade moderns will make the loudest POP

[rbrown4]

Zach, you mention The Experts Guide by QDB, may I ask who QDB is? Also, I wanted to clarify that my purpose in trying to understand the market in general is just that. I too, as Dave indicated am interested in more than just the value of a coin, however those values do influence what I may be looking to acquire now or in the future.

 

Thanks for these replies, to me it is interesting to figure out how a market such as this is influenced.

 

Rey

[cpm9ball]

Zach, you mention The Experts Guide by QDB, may I ask who QDB is? Also, I wanted to clarify that my purpose in trying to understand the market in general is just that. I too, as Dave indicated am interested in more than just the value of a coin, however those values do influence what I may be looking to acquire now or in the future.

 

Thanks for these replies, to me it is interesting to figure out how a market such as this is influenced.

 

Rey

 

Q. David Bowers

[MAULEMALL]

Q David Bowers

[ldhair]

I have probably read most every book Q.David Bowers has wrote.

He has wrote a lot about how the market has cycles.

I won't even suggest that I understand it. It's a giant subject.

 

I have noticed over the years that anything new can change things.

It might be a new book on a series or something new from the mint.

These new things seem to pump things up a bit and later cycle back down over time. Just a few thoughts.

 

[TomB]

You may have received so few replies initially because you posted your thread during the Consortium tornado and it was just about the only thread within this board that did not deal with that subject.

 

Some changes in coin prices may be due to nothing more than technology and its implementation. For many years the collector standard for pricing was the Red Book and the prices published in this book were, from my understanding of the history, obtained from dealers active in certain markets. It was in the dealer's best interest to show low risk, steady performance, modest gains or optimistic price levels. Later, the Greysheet started to take on a much greater role for not only dealers, but also collectors. The pricing was more in line with real time, but was not perfect, and many issues were priced using thin data sets. The embrace of the internet is less than a decade old and has provided access to immense piles of traditional auction records, fixed prices lists and ebay transactions. However, this data does nothing if there is not someone who will accumulate it and interpret the sales. I believe what we are seeing in the last two or three years is a greater effort to collect and analyze sales for issues that were largely ignored in previous years. This may mean that some issues will have "new" price levels once the data is worked. Such examples might be circulated three cent nickels, uncirculated clad Roosevelt dimes, EF Barber quarters and others. These new prices may be based more upon a wide array of sales and less upon the influence of a few dealers or collectors. Additionally, with the market primed for paid subscriptions to price guides there are no doubt a number of paradigms for interpreting data and each of these will have different weighting schemes in order to forecast value. Such use of technology is likely to end up with continuously refined price levels that may or may not increase in accuracy upon each iteration. However, the velocity of change should be much greater than the past.

 

[astrostu]

I think another reason is any significant change in the way people collect, or even coin "fads." For example, when the whole Registry Set thing came to be, that created an entirely new type of collecting for people ... and for me at least, it's something that I consider a fad and don't want to be drawn into.

[bsshog40]

I think another reason is any significant change in the way people collect, or even coin "fads." For example, when the whole Registry Set thing came to be, that created an entirely new type of collecting for people ... and for me at least, it's something that I consider a fad and don't want to be drawn into.

 

You may have a small point here astro. I don't think it can be considered as a fad tho'. I started mine by accident but it has really made me seek for more knowledge of the type coin. I think the registries are good as to being able to know what and how many varieties there are just to one type coin series. When I started my jefferson registry, I never knew what a "Specimen" jefferson was. Now I do. There is learning to all of it whether it's the Presidential bandwagon, album filling, or registry sets. I don't know how this would effect the price variance tho' unless there are more coins being graded to fill registries.

[World Colonial]

Sorry for the length of this post but I am very interested in learning more about the causes and effects of rising and/or falling coin prices, and the what signals should one be aware related to changing conditions.

 

I realize the prices generally rise as a result of a few common occurences:

 

An inflationary economic trend.

Speculators looking for tangible assets as a hedge.

Number of collectors increases while coin supplies remain stationary or decrease.

Dealers replinish their inventory of coins form other dealers or collectors who are expecting a profit.

Speculators try to influence the market through selective buying,

Bullion prices rise.

 

And decline as a result of;

 

Changes in collecting habits.

Economic conditions change the demand for tangible assets such as coins.

Sepculators sell in large quantities.

Hoards of large holdings are released and may not be quickly absorbed by the normal market.

Bullion prices decline.

 

What are other reasons for rising or declining prices for coins?

 

What are good indicators can one look for or monitor to predict or verify a change?

 

In general what is the market like now?

 

How can one stay reasonably abreast of the coin market conditions?

 

The items you list are some of the potential reasons why demand will increase or decrease over time. And at the same time, the absolute supply can only decrease from attrition or (for high quality coins) through mishandling.

 

One of the items that I do not see in your list is someone promoting a coin. B. Max Mehl did this with the 1913 Liberty Head Nickel and I read an article a few years ago where a current (or recent by now) owner of the 1861 Pacquet Double Eagle (the one with 2 known specimens) was trying to do the same thing by comparing it to the 1849 Double Eagle.

 

There are also some coins that have natural advantages over others. Gold over silver, silver over base metal, crowns over minors, US over world and more recent series over those that have been forgotten.

 

This accounts why a coin like the 1804 US Dollar is worth more than many other coins that have fewer specimens. It is a large US silver coin that has a well known and highly publicized history. And ironically, because it is more common and comes up for sale more often, that might actually increase its visibility.

 

It is a matter of opinion of course, but if I had this kind of money, there are many other coins that I would rather have if they were available for sale. The 1861 CSA issues, the 1792 federal patterns, the unique Spanish colonial Carlos & Joanna 8 reales and 1770G Pillar Gold 8 Escudos among them.

 

In the current market, high grade coins frequently also have an advantage over average or lower graded coins, even when the circulated coin is much rarer. An example is the 1802 half dime or 1796 half cent selling for less than a conditional rarity Morgan Dollar like the 1886-O.

 

As for keeping up with the market, I think that every collector needs to decide which part of the market they want to follow. There are too many different areas that not even a full-time dealer can keep up with everything. I specialize in five series of world coins. I know my areas well (or believe I do) but pay little or no attention to others. I track prices of public auctions, eBay and inventory offered by dealers on the few occasions when they have something to sell that I consider worth buying. And because I follow them closely, if I come across a coin I want, I know pretty much off hand what I am willing to pay for it. There is little or no need to refer to the (mostly incorrect) price guides most of the time.

[rbrown4]

Excellent thoughts and contributions by all, this is the type of information I am interested in hearing and learning about and am hoping it is beneficial to others. Having only been involved with coins for a short time, it is evident that we can learn a lot by others out here with much more experience and knowledge.

 

Thanks and keep the opinions coming.

 

Rey

[michael]

http://www.overstock.com/Books-Movies-Music-Games/Experts-Guide-to-Collecting-And-Investing-in-Rare-Coins/1721948/product.html?fp=F&cid=97227

 

look at this and buy it

 

======================================================

 

the below only applies to pre 1915 scarce to rare colonial federal and territorial coinage with extra special and extraordinary qualities with great eye appeal

also with values of coins it is a highly specialized field involving many years of study and understanding and even though knowledge is exytremely important the most important catalyst involving knowledge is prespective and this only comes with many decades in the trehches so to speak and many might have knowledghe as this is easy to get with the internet and going to shows but perspective well this only comes with deacdes of experience and few have this important point in combinaton with knowledge

 

overall pricing of falls effects and signals is mostly of one thing

 

DEMAND,.........................

 

now with regatrds to some hoards or coinage that promoter sellers can get their hands on in quantities like the ss central america coins, common datre morgans in ms 65 early commems in ms 65 66 .................. then it is not true demand it is markeitng and timing to create demand in the market so the promoters can get out and make money

 

and remember coins are a hobby to be used with discretionary funds and are a thinly traded undercapitalized market

 

 

 

 

[just-john]

we all lost in the last 5yrs when you take into account the dollars down 33% when compared to the euro.None of my coins went up 33% in the last 5 years .Most prices follow the economy. If the economy goes south then so do prices.Except the real high dollar stuff