Larger Inventories Create Buyer Opportunities

Posted on 11/18/2008

Rising coin dealer inventories create opportunities for those with money to spend on their collections.

A guest article from NumisMedia

There have been many developments in the coin business over the last couple of months. Possibly, the most important is the fact that there are now fewer buyers in the market for new acquisitions. The economy has temporarily reduced the number of active collectors and created an excess of supplies in specific areas of numismatics. With most Americans concerned with finances, some have seen their homes go into foreclosure, or even worse, lost their jobs, many collectors have had to sell portions or all of their collections, which puts a sizable amount of new inventory on the market for slightly fewer buyers. What does this mean for the immediate future of numismatics? It creates buying opportunities for those who still have money to spend. We have been finding numerous better date coins offered for sale at discounts of previous FMV levels.

Buffalo Nickels and Mercury Dimes are always popular. However, these are two series where high-grade better dates can be somewhat expensive. If a collector needs to raise capital, these may be the first to go. In the past month, we have seen the following coins decline slightly due to discounted sales. The 1913 S TII Buffalo Nickel has a new FMV of $10,080 in MS66, down from the previous $10,730; the 1915 S fell from $3,450 in MS65 to a new FMV of $3,280; and the 1917 S in MS66 declined to a new FMV of $12,810, from last month’s $13,650. In the Mercury Dime series, the 1918 D FB in MS64 dropped from $4,310 to the new FMV of $3,940; the 1920 D FB in MS66 fell from an FMV of $9,040 to the current $8,780; and the 1920 S FB in MS65 declined from $8,440 to $8,060. On a positive note, there are ready buyers eager to take advantage of these economically forced opportunities.

What is even more encouraging is the fact that not all of the coins currently marketed are necessarily offered at big discounts or even discounted at all. It is more of a matter of sellers being more realistic in their asking prices. Prior to the summer months and in the last 3 years, sellers of rare coins were nearly always asking high premiums of the current FMV prices. In our current market, prices realized are much closer to the real value of the coin. In some cases, prices have been discounted to hasten transactions and increase inventory liquidity. Many sellers are repositioning their inventories to diversify and gain a better balance with Gold and Silver related items. In addition, the demand for Gold and Silver has increased three-fold over the last two months thus putting pressure on current physical supplies. Premiums on bullion related coins have increased with this constant demand despite the fact that Gold and Silver paper contracts have retreated substantially.

The shortage in physical silver has temporarily created a very strong premium for Silver Eagles. Supplies are so short that premiums are about $7 over the spot price for the most common dates, typically the 2008. With the recessed economy and a lack of confidence in banks, stocks, or even cash, buyers are not as concerned about the cost of acquiring gold and silver as much as they desire to have real value in their hands.

While gold bullion has fallen over the last month, US Gold has remained steady due to increased demand. In fact, the higher Mint State grades have increased. The following chart shows the increase in FMV for US Gold in several grades.

Denomination   Grade   Oct. 2008   Nov. 2008
$5 Gold W/M   MS63   $1,160   $1,290
$5 Gold W/M   MS64   $1,500   $1,690
$5 Gold Indian   MS63   $2,330   $2,630
$5 Gold Indian   MS64   $4,470   $4,660
$10 Gold W/M   MS63   $1,180   $1,460
$10 Gold W/M   MS64   $2,280   $2,450
$10 Gold W/M   MS65   $6,660   $6,720
$10 Gold Indian   MS63   $1,280   $1,500
$10 Gold Indian   MS64   $2,180   $2,340
$10 Gold Indian   MS65   $6,560   $6,630
$20 Gold TIII   MS63   $1,630   $1,780
$20 Gold TIII   MS64   $2,130   $2,250
$20 St. Gaudens   MS63   $1,370   $1,500
$20 St. Gaudens   MS64   $1,440   $1,620
$20 St. Gaudens   MS65   $1,710   $1,800
$20 St. Gaudens   MS66   $2,940   $3,130

There is somewhat of a shift in demand to US Gold, though this is generally created by fringe collectors and investors. Advanced collectors continue to search and acquire accurately graded rarities. Those dealing in high-end rarities remain very aggressive because of the many collector customers looking to acquire these coins. The competition may not be as severe as it was the last couple of years, but there are still knowledgeable collectors of top-quality coins that have the means to pursue these rarities. The only limit now is that dealers may not be able to make as much profit as they did previously.

Seated Dimes, Quarters and Halves continue to be favorites in most grades. There are numerous increases to the FMV in all three series this month. What may be most interesting is that some of these dates in the higher grades will trade for strong premiums of previous FMV prices. This is mainly due to a very limited population in the specific grade and the fact that one has not traded in a long time. When there are multiple buyers for any of these rarities, the premiums tend to increase very quickly. For example, the 1852 O Seated Quarter in MS61 jumped from $9,060 to a higher FMV of $18,130; this is a very rare date with very low populations in all Mint State grades. Another example is the 1852 Seated Half Dollar in MS67 which had an FMV of $29,380 last month and is now at $30,310. This may not be much of a jump but it does indicate how a rarity can advance when there are just a few available in the highest grades.

This article is a guest article written by:

NumisMedia

The thoughts and opinions in the piece are those of their author and are not necessarily the thoughts of the Certified Collectibles Group.