It's pretty clear that rare coins and currency is a multi-billion dollar a year business.
There is no doubt that the rare coin market in the United States has evolved considerably in recent decades. Twenty-five years ago when I operated an auction company my mailing list consisted of approximately 5,000 names. Of those customers, around 1,000 would participate in a given sale. My last FUN auction in the 1980s realized less than $5,000,000. Contrast this with the Heritage FUN sale that will be held in January 2014. The sale is estimated at over $75,000,000 and at least two lots will probably sell for close to $5,000,000 or more. Today, it is not unusual for 10,000 bidders to participate in an auction. Times have certainly changed!
A couple of years ago someone asked me to estimate the size of the rare coin market in the United States. This is a tricky task as there are no reporting requirements for numismatic sales in the United States. The government does not issue statistics for our business. People are not eagerly awaiting rare coin sales data from the government each month to judge whether the market is weak or hot. Most are probably happy the government does not collect this data, but it does leave one wondering how to estimate the size of the market. It’s pretty clear that rare coins and currency is a multi-billion dollar business.
The following numbers are rough estimates, but may prove helpful in understanding the size of the rare coin market. There are at least 5,000 active coin companies in the United States. They range in size from one-man operations to multi-national juggernauts with hundreds of employees. There are at least 10 companies with sales exceeding $100,000,000 per year. Heritage Auctions alone touts annual rare coin sales of over $500,000,000. The Professional Numismatic Guild has around 300 members, most of which have large annual sales of numismatic material. There are also quite a few mass marketing companies with annual sales of over $100,000,000. These companies specialize in modern and world coins. I think it is pretty safe to estimate the market for rare coins in the United States to be well over $3 billion dollars per year.
Why is this information important?
Anyone who collects rare coins or currency probably has at least some interest in the investment aspect. The overall size of the market is important to gauge how much new money is coming into our hobby. If the combined sales of every numismatic firm were to suddenly decrease each year, this would have a profound impact on prices. The opposite has been the case in the last two decades. The amount of money coming into the hobby each year must at least balance with the amount of fresh material offered. Recent auction results for high end coins demonstrate that there are plenty of new buyers for the material being offered. I have seen many new faces bidding in these sales. There has also been interest from international players for many of the classic “trophy” coins that have sold in recent months. For now, it seems the market for rare coins is expanding.
The rare coin market is clearly the beneficiary of the improved “wealth effect” that seems to be influencing buyers. After crashing just a few years ago, the stock market has soared to record levels. Home prices have recovered sharply and consumer confidence has been on the rise. There is no doubt the rich have gotten richer. Trillions of dollars in new wealth has been created in the United States in just a few short years. For many, the depths of the market crash of 2008/2009 seems like decades ago rather than just five years ago. Luckily, many of these newly confident buyers seem attracted to numismatics. This new influx of money clearly has been a huge factor in the growth of the market for rare coins.
The size of the rare coin market is also important when trying to understand the impact of new government regulations that may affect the business. Many are concerned about the collection of state sales taxes across state lines aimed to level the playing field between brick and mortar stores and Internet operations. If that occurs, it will have an impact on every company selling rare coins. Politicians are probably unaware of unintended consequences for an industry that is much larger than they realize. Hopefully, our industry group ICTA (Industry Council for Tangible Assets) will get the message out to those considering new laws that impact our markets. Fortunately, well over half the states do not charge sales taxes on rare coins (sometimes over a threshold amount).
For decades there has been intermittent interest from money managers in the rare coin industry. Currently there are at least a few funds with considerable capital devoted to trading rare coins from an investment standpoint. Understanding the size of the market for rare coins is an important element for anyone controlling funds that might be directed to numismatics. No one would be interested in investing in a thinly traded market. The fact that a multi-billion dollar market exists is critical for those looking into rare coins. The rare coin market is also among the most transparent of collectible fields. There is plentiful information available and third-party certification has added tremendous liquidity. Look for this trend to continue as wealthy investors are forced to seek alternative investments because of low fixed interest investments and record stock prices.
It is actually pretty funny how under the radar the rare coin business operates. I still get odd looks when I meet someone for the first time and they ask what I do for a living. More than once, people have asked me if you can make a living selling coins. Happily, I have been doing so for nearly 40 years!!!
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