I can’t keep up!
I am sure many of you have noticed how insanely active the world coin market is lately. Even the super common coins that I could have picked by the dozens for a few hundred dollars are suddenly selling for 2-3 times what they were. This usually translates into me picking up my jaw off the keyboard as I watch otherwise unremarkable pieces fetch extremely strong prices auction after auction. This, of course, is expected for the truly exceptional pieces, but geez, when did the dredge become so desirable?
Maybe it is time to break out the old blue plastic Whitman box and start sending stuff in to take advantage of this market. Some of the pieces that I might have $100 in are now demanding upwards of $300-400 so long as it is certified and at least average grade. Part of me wants to cash in, but even if I do, I very well may end up swapping coins for cash with little luck of being able to use that cash to fund future purchases as prices for more desirable coins are way out of whack. Even if I had the funds, I think I would be hesitant to pull the trigger and bid.
So this makes me wonder what is driving the current market for world coins. I can think of a few factors that are undoubtedly influencing the stronger prices.
- The pandemic: There is little doubt that the events over the past year have, in the most general sense, had a positive impact on the current market. The most encountered argument is that people who were holed up at home had more time on their hands to devote to hobbies. The extra time paired with the money saved from not vacationing, eating out, or paying for entertainment and the stimulus checks influenced an increase in hobby-related spending. This is primarily speculative, but it does not seem too outlandish and justifies the resources needed to increase demand.
- So did demand actually increase? In the most general sense, the world coin market was not nearly as in demand relative to the U.S. coin market, so the threshold was pretty low. It is not surprising that prices realized would increase as demand continued to grow. This assumes that demand has increased and is not some odd instance in which the same number of bidders are suddenly willing to pay substantially more for somewhat common pieces. Based on the increase in both the number of bids and the number of active registered bidders for some of the more common pieces, it appears that demand has increased. So maybe the world coin market is finally realizing the upward adjustment that so many speculated would eventually occur.
- With an increase in demand, what influence does that, in turn, have on the supply? The easy argument would be that an increase in demand reduces the overall availability as collectors snap up pieces to add to their collection, which further escalates prices. As it relates to my niche area, availability only seems to be reduced in terms of graded material. It appears most major European dealers still have a healthy supply of raw material, but the majority never had much in the way of graded coins. This suggests that the increase in demand does not generalize to the entire spectrum of these coins but only to the tiny fraction that is graded. In some instances, even for very common world coins, there may only be a couple hundred (more often even less) graded examples but thousands of nice raw examples. This disproportionate demand artificially restricts perceived availability as buyers do not seem willing to pursue similar raw pieces of the same quality. This might also help explain the current backlog at the TPGs as people aim to cash in on this craziness. I think this is a bit ridiculous, but I also collect coins and not plastic.
- People are crazy.
There are few other factors that I can think of that are likely driving this market, but the ones above seem to be the most obvious. I guess I will keep pursuing pretty inexpensive trinkets to hone my photography skills while I patiently await the next “must-have item” to hit the market. For now, my blue Whitman box will stay where it is until I am willing to go all-in on something exceptional.
I assume I am not the only one who has been utterly destroyed in recent auctions. For me, it has now become the norm as I slowly try to adjust to this craziness. Who else has had similar experiences lately?