The 100 Year Test

[kidrootbeer]

12 hours ago, World Colonial said:

I'm not trying to conduct a logical argument.

then you're right at home here, with the rest of us

[World Colonial]

On ‎7‎/‎13‎/‎2017 at 4:33 PM, LINCOLNMAN said:

Sadly, it may be the case that the poorer the population becomes, the more susceptible they may be to "desperate" investment vehicles. Just a guess, but I would bet that the buyers of common coins from the TV and other hucksters are those least able to afford the ultimate hit, once these programs run out of steam. Of course, these schemes are blips, but they are repeated. One can't ignore manipulation, ignorance and greed as factors.

In the future that I see, all economic groups are going to become poorer or a lot poorer for as long as I will be alive.  It won't literally impact every individual and it won't be a linear trend but I expect it to be persistent, just as it has been since at least 1999 when under the more optimistic interpretation, median household income peaked.

In this thread, I singled out 20th century coins but I don't expect it to be limited to this segment, not by a long shot.

At the upper end, I will use the 1822 half eagle as an example, since it's my #1 US regular issue coin and unlike many other examples I could use, it won't bring out the forum police when someone takes offense to my .assessment.

This coin last sold in 1982 (Eliasberg sale) for $687,500.  Purportedly,  JP Morgan offered $35,000 sometime around 1940 for one of the then two privately owned specimens (the other being the Amon G. Carter coin later bought by Josiah Lilly and subsequently donated to the Smithsonian).  The last time I reviewed the "PCGS Million Dollar Club", it was valued at $6MM.  The Pogues didn't sell their coin, so we don't have a more recent sale.

Depending upon one's interpretation, most of the increase from either 1982 or 1940 can be attributed to financialization.  It certainly isn't general inflation or even increased "wealth" because the supply of aggregate credit (which is what makes these inflated prices even possible) has vastly outstripped any actual increase in the "real economy". I'd say all of the increase and more since 1982 has been the result of financialization with the balance (a very low percentage of the current value) due to inflation and increased real economic production.

The end of the financial levitation act will ultimately result in a crash landing even in the prices of "ultra elite" coins, at least in "real value".

I expect the same outcome for lower and much lower priced coins, except maybe for bullion substitutes such as common Morgan dollars and generic classic gold, with the caveat that I still expect the premiums to spot to decrease and historically, gold spot is very expensive versus other commodities which represent the physical goods people need to buy to survive.

I expect it to be worst for actually common but highest TPG graded coins (those with a contrived scarcity) with the widest spreads, whether modern or classic.  This is presumably the opposite of what most who post here and on PCGS expect but the fact is, these coins are disproportionately inflated value wise versus their actual numismatic merits.  I don't believe most of these coins are bought as "investments" but financial buying undoubtedly still explains their inflated prices.  Otherwise, the overwhelming percentage of collectors would buy slightly lower grades specimens for a fraction of the price, just as they did before.

The apparent narrowing of the market (per posts here and on PCGS) reminds me of a weakening advance/decline ratio in the stock market.  Registry set buying, "eye appeal" and CAC beans will provide little if any downside financial protection when the tide turns.

[kidrootbeer]

4 hours ago, World Colonial said:

Depending upon one's interpretation, most of the increase from either 1982 or 1940 can be attributed to financialization.  It certainly isn't general inflation or even increased "wealth" because the supply of aggregate credit (which is what makes these inflated prices even possible) has vastly outstripped any actual increase in the "real economy". I'd say all of the increase and more since 1982 has been the result of financialization with the balance (a very low percentage of the current value) due to inflation and increased real economic production.

simply, I know people who have more money than stuff-and they want stuff; you have the stuff and the money's no problem (think Dorothy P. who offered a NYC Townhouse for an NC  Large Cent). And that will always be the case.

[World Colonial]

7 hours ago, allmine said:

simply, I know people who have more money than stuff-and they want stuff; you have the stuff and the money's no problem (think Dorothy P. who offered a NYC Townhouse for an NC  Large Cent). And that will always be the case.

Not anywhere near current prices under the circumstances I am describing.  That is my whole point which you do not seem to understand.  Most "money" isn't money at all but debt.  If you don't believe me, go look at your agreement with your bank, the fine print.  You don't have a deposit with your bank, but have made a loan. 

I never said there won't be any wealthy people. What I am telling you is that when the value of their assets crashes, the currently wealthy will both be a lot less able (the majority won't be anymore) and willing to pay current prices.  Most increased "wealth" since 1971 is fake because it isn't real.  It came from nowhere due to the credit bubble and that's exactly where most of it will eventually return. 

[kidrootbeer]

a) who uses Banks?
b) you have the "Right Deal" and 20M can be at your doorstep; these are the guys I know

[Afterword]

The bubble has and always will eventually burst, and there will always be one to take its place. The ultra-wealthy know this. To them it is like a field of corn that must first be seeded and then watered and eventually harvested. They know it will end and prepare for that eventuality, and make plans for the new seeds that must be sown for the season of plenty yet to come.

Not that I know anything about this subject, and would therefore recommend a second or perhaps even a third opinion regarding the matter.

[World Colonial]

6 hours ago, Afterword said:

The bubble has and always will eventually burst, and there will always be one to take its place. The ultra-wealthy know this. To them it is like a field of corn that must first be seeded and then watered and eventually harvested. They know it will end and prepare for that eventuality, and make plans for the new seeds that must be sown for the season of plenty yet to come.

Not that I know anything about this subject, and would therefore recommend a second or perhaps even a third opinion regarding the matter.

I am not predicting the "end of civilization",  At the same time, today and the recent past is not just an ordinary bubble.  When I say it is the greatest asset, credit and debt mania in the history of civilization, it is not an exaggeration.

The level of speculation particularly since the late 1990's dwarfs anything before it.  So does the level of overvaluation, despite misleading indicators such as the P/E in the US stock market.  For anyone who ever read "Extraordinary Popular Delusions and the Madness of Crowds" or "Manias, Panics and Crashes", the speculation described in those books was a pittance compared to what exists now.  The closest analogy is probably the late 1920's because that was the first worldwide bubble but at least then, credit standards were much stricter and governments, corporations and households didn't have stable rags for balance sheets.

[World Colonial]

8 hours ago, allmine said:

a) who uses Banks?
b) you have the "Right Deal" and 20M can be at your doorstep; these are the guys I know

It is apparent that no matter how much I explain this to you, you just do not get it.  What I described to you about your bank account was an example. 

What I was trying to explain to you is that most people do not have hardly any "money".  Even the wealthiest mostly own someone else's debt and their other wealth disproportionately consists of absurdly overpriced assets such as stocks or real estate whose value is entirely dependent on the credit bubble and all of it is subject to "revaluation" from credit deflation when lenders wake up and realize that borrowers can't pay them back and the government won't be able to bail them out either..

Or, you just might disagree with me and choose to believe in the fantasy that continued and increasing prosperity is in store for a society which has lived beyond its means and exponentially expanded its leverage for the last 35+ years.  Good luck with that.

 

[kidrootbeer]

1 hour ago, World Colonial said:

It is apparent that no matter how much I explain this to you, you just do not get it.  What I described to you about your bank account was an example. 

What I was trying to explain to you is that most people do not have hardly any "money".  Even the wealthiest mostly own someone else's debt and their other wealth disproportionately consists of absurdly overpriced assets such as stocks or real estate whose value is entirely dependent on the credit bubble and all of it is subject to "revaluation" from credit deflation when lenders wake up and realize that borrowers can't pay them back and the government won't be able to bail them out either..

Or, you just might disagree with me and choose to believe in the fantasy that continued and increasing prosperity is in store for a society which has lived beyond its means and exponentially expanded its leverage for the last 35+ years.  Good luck with that.

 

what I "get" is, I'm not a "Chicken Little"... no Fantasy. I Buy and Sell. I sell to people who have more money than stuff, and they want stuff. Maybe I'm jaded, but most of my customers made their fortunes that Hard Way: they Built their livlihoods from the ground up

[World Colonial]

9 minutes ago, allmine said:

what I "get" is, I'm not a "Chicken Little"... no Fantasy. I Buy and Sell. I sell to people who have more money than stuff, and they want stuff

I have already explained myself enough.  There is a difference between "Chicken Little" and believing the existing hugely inflated prices for coins are sustainable.

I took this thread somewhat off topic but the themes I brought are certainly a lot more relevant to future prices than say, whether Registry sets or TPG grading will change.

[kidrootbeer]

"I have already explained myself enough.  There is a difference between "Chicken Little" and believing the existing hugely inflated prices for coins are sustainable. "

Which coins? a Unique newly-discovered CT colonial? an 1884-O M$D in MS62? a 1793 Chain Cent in SP65? a pile of 1840 Dimes from "over there" that came back MS66 x 1 MS65 x 3 MS64 x 2? Anything is worth what someone is willing to pay for it, at any given time. Simple as that.

[World Colonial]

18 minutes ago, allmine said:

"I have already explained myself enough.  There is a difference between "Chicken Little" and believing the existing hugely inflated prices for coins are sustainable. "

Which coins? a Unique newly-discovered CT colonial? an 1884-O M$D in MS62? a 1793 Chain Cent in SP65? a pile of 1840 Dimes from "over there" that came back MS66 x 1 MS65 x 3 MS64 x 2? Anything is worth what someone is willing to pay for it, at any given time. Simple as that.

I am aware something is worth what anyone is willing to pay.  I am also not claiming that whatever you sell (which apparently is on the higher end) won't be in demand in the future, whether in 100 years (per the OP) or otherwise.

What I am attempting to explain in my posts here is given the factors I originally listed which are hardly "Chicken Little" (since I can support every single one of them), I expect the prices of practically all coins to be a lot lower than today many years from now, adjusted for price changes. 

There's hardly anything extraordinary in this claim.

I previously listed the coins I believe will do worst, though I admit it probably got lost in the length of my posts.  These are first, common (mostly 20th century to date) coins especially in the highest grades.  And second, any coins with prices which are disproportionate to their relative numismatic merits, though this is subjective. 

The series I expect to do worst generically are Lincoln cents, Buffalo Nickels, Mercury dimes, SLQ, WLH, and Franklin halves. 

If you disagree with me which apparently you, then you do.  Most here presumably do though it hasn't been stated.  It certainly isn't the first time.

[LINCOLNMAN]

16 minutes ago, World Colonial said:

The series I expect to do worst generically are Lincoln cents, Buffalo Nickels, Mercury dimes, SLQ, WLH, and Franklin halves

Some of our more artistically-rendered coins. Too generational? Too many?

[Afterword]

When a bubble bursts, given the right circumstances, it could very well bring about the demise of civilization as we know it - even on a global scale. Civilizations have risen and fallen many times over the centuries. Before that species have risen to dominance and fallen. It is the natural order of things.

It is not something that can be avoided, given the nature of man and the nature of the world where we live. We are driven by instincts that cannot be denied, unless we someday evolve beyond what we are at present.

Depressing, is it not? That is, if it is true.

[kidrootbeer]

"If you disagree with me which apparently you, then you do.  Most here presumably do though it hasn't been stated.  It certainly isn't the first time"

I don't disagree at all; just that a Blanket Statement about the Future is interesting, and open for discussion

[World Colonial]

13 minutes ago, LINCOLNMAN said:

Some of our more artistically-rendered coins. Too generational? Too many?

Sort of.

The generational aspect is true in the sense that many of these collectors (the older ones in particular) grew up with these coins, including a still decent number who collected them out of circulation.  However, I don't believe it has anything to do with when these collectors were born but to the extent it does, it has no demonstrated general predictability on how much they will pay, only anecdotally. 

First, it is the internet.  In the pre-internet age, most collectors had far fewer choices available to them.  Travel was also a lot less affordable.  This limited most collectors to what they could buy from local dealers or  trading with other collectors.  With the internet, there is no reason to limit yourself and I don't believe these series ever would have been as popular as they were because they aren't exactly numismatically competitive for their prices (now or before).  I also don't believe these series were preferred.  Collectors liked them (as now) but couldn't buy much else because of communication limitations.  I previously explained this in multiple posts.

Second, my observations indicate that most collectors have a preference for their home country coinage or their country of family origin.  The ethnic composition of the population is changing and projected to change to fewer Caucasians and a larger representation for other ethnic groups.  Everything I know indicates the participation rate of these groups is much lower than Caucasians.  I expect the collector base to shrink for this reason alone but even if not, I don't see Hispanics, Asians or even African Americans having any strong preference for these series at all.  I consider it likely that a noticeable minority (disproportionately from this ethnic change) to buy something else

Third, I believe the supply is a lot higher than many (maybe most) believe, even for the current collector base and even in higher grades.  Earlier, I mentioned the PCGS Coin Facts estimates.  I don't place much reliance on them but for these coins, the gap with the population reports is huge and I believe is larger or much larger than the collector base for it, especially at current prices.  The only reason this isn't apparent is because the coins are "hoarded", by both collector and non-collector.  The passing of the baby boomers will increase the supply but the collector base is likely to be smaller than now,

Fourth, even if financial conditions don't deteriorate as much as I believe, I still expect most people to be worse off.  I don't believe most coins will be able to maintain their prices under adverse economic conditions but even if the higher profile scarcer ones do, I consider it unrealistic to expect coins which are so common as these are to do so, despite their likely continuing popularity.  There are likely to be fewer or far fewer collectors who are able or willing to pay current prices, never mind higher ones.

[World Colonial]

13 minutes ago, allmine said:

"If you disagree with me which apparently you, then you do.  Most here presumably do though it hasn't been stated.  It certainly isn't the first time"

I don't disagree at all; just that a Blanket Statement about the Future is interesting, and open for discussion

OK, thanks for the clarification.

[kidrootbeer]

sold my first coin for a profit in 1972 (BIG mistake, but it taught me); I remember The Great Grading Shift of the mid-1980's, I remember when THAT happened one fine day Grey Sheet Bids were dropping like Flies... I remember a guy from R.I. selling what were technically Unregistered Securities masquerading as GEM BU Rolls of Silver Dollars (and that was One Big Reason TPG started), I remember the guard at my dad's bank (West Roxbury, MA)telling me he returned a brand new roll of 1955 pennies he bought for his daughter's birthday party,  because they were all weird (double struck, he said)... so, yeah, World Colonial we've seen it all and can guess the rest

[kidrootbeer]

true 1955 Double Die Story:
remember, Boston was a distribution point for them... my friend owned a Texaco gas station on the typical tumble-weeded bypassed old highway that dot some older Massachusetts towns. Underneath the Texaco sign, was a "We Buy Old Coins" sign. Texaco told him time and again to remove it, yuh, right... So, one hot, dry and dusty Sunday afternoon we were looking at some Large Cents, when this old red battered pickup pulled in, and this guy out of L'il Abner pokes his head in and asks: "Do you buy them double struck 1955 pennies?" We looked at each other, and we both nodded even though it was my friend's place. "How much they wort?" he asked, and my friend replied that it depended on the condition, blahblahblah.
"Well, my brother 'n me have a bunch all brand new." 
"Well, in that case they're worth 20-30K each" and we started to giggle
"You callin' me a liar?" he bellowed
"Of course not! Have a nice day!" and with that he stomped off.
I don't mean 20 minutes later he roared back in and slammed his truck into Park, and came into the station
"See" and with that he unclosed his hand and in there were 5 Red BU 1955 Double Die cents.
"We have more of them. We woulda sold these to you but you can go..." and you can guess the rest

True Story. I was there.

[barney11]

On 7/13/2017 at 8:59 AM, allmine said:

anyone remember the Roll Craze of 1964?

Wow I guess, just opening some rolls that were put away in those years.  Sort of crazy opening 55 year old rolls of Lincolns and Franklins.

[kidrootbeer]

21 minutes ago, barney11 said:

Wow I guess, just opening some rolls that were put away in those years.  Sort of crazy opening 55 year old rolls of Lincolns and Franklins.

even older than that... my friend had an Original Bankwrapped Roll of 1935-S Nickels he bought at a yard sale

[numisport]

100 year speculation is all well and fine. But nobody will be here to confirm any of it. This is how liberal politicians gain popularity. They throw stuff out there knowing full well they wont be around to receive criticism for their ill managed comments. And we all pay for it don't we.

[kidrootbeer]

4 hours ago, numisport said:

100 year speculation is all well and fine. But nobody will be here to confirm any of it...

Be Careful if you want to "Teddy Ballgame" yourself for future interest:
http://www.nydailynews.com/news/national/ted-williams-frozen-head-batting-practice-cryogenics-lab-book-article-1.381985

[Six Mile Rick]

I LOVE my modern U.S. collection!!!

It is absolutely fun to build the sets and I also enjoy helping others as they get into the modern quest. Who cares what they will be worth in 100 years???  I will be dead and they will survive, somewhere in my family or world. I just know that I am enjoying putting the sets together while I am here, alive , and having a great time with MOST of U-guys!!