Collect Today, Profit Tomorrow
Posted on 5/14/2009
If you have followed the coin market over the last 10 years, you are keenly aware that prior to 2008 there were few bargains on the market. Yes, there were quality coins available and rarities as well, but competition was so fierce, these kinds of coins were surely trading for premiums of the FMV at that time. Furthermore, the coins you were able to acquire, that climbed remarkably in price over a period of time, were most likely purchased at competitive levels, minimizing potential profits. In today's market, coins are available that appear to be bargains compared to the FMV we reported over the last year. We cite the following examples. The 1794 Flowing Hair Dollar in Extra Fine was $275,000 in April of last year and today the FMV is $250,000. In Fine, the FMV has fallen from $146,880 to the current $135,000. This is a truly rare date and coins that are problem-free will always attract potential buyers.
A year ago, the 1854 TII $1 Gold enjoyed an FMV of $20,160 in MS 64, while today it is just $15,000. There are hundreds of examples like this and they are enticing collectors and investors every day. In this type of coin market it is important to know that there is still demand for rare coins, it is the amount of demand that has fallen over the last year. Because the economy has influenced the everyday lives of so many people, many collectors have had to not only stop buying coins, but they have had to sell into a softening market as well. As the recession worsened, certain areas of the coin market actually weakened and prices fell dramatically for some issues. This is both good and bad for those who are still able to purchase coins for their collections. The FMV may be lower for coins they already own, but they are also able to purchase new coins at lower FMV levels.
There are countless potential bargains available today because dealers are intent on buying and selling at new market levels; even if this means taking some losses on specific coins in inventory. Some dealers feel that quick early losses will help avoid major losses down the road and propel the market on its way to stability. Most dealers have lowered their buy prices in conjunction with the current market cycle. This strategy appears to be working for many dealers because they have seen an improvement in their sales volume and profits as of late. With all the discounting we have reported in the last several months, we are beginning to see a reduction in the number of decreases to the FMV. There are more increases throughout most series as collectors take advantage of lower levels and a larger selection of coins for their collections. In this buyer's market, "quality and eye appeal" become the key to most sales.
Two important series that always seem to be popular have suffered the last several months. Buffalo Nickels and Mercury Dimes have a tremendous following, but with FMV prices rising for the last few years, many collectors were able to sell coins and make a profit. Add to this the collectors who were forced into selling coins, this put excess inventory into the marketplace. Since many of these hard-line collectors became sellers, it reduced the number of competitive buyers in the overall market and prices fell, even on many of the very scarce coins. The following charts show where the FMV was last April versus where the FMV is this issue.
|Mercury Dimes||FMV April 2008||FMV May 2009|
|1916-S MS 66 FB||$1,420||$1,250|
|1918-D MS 64 FB||$4,560||$3,940|
|1918-D MS 65 FB||$37,380||$33,150|
|1919-D MS 65||$1,790||$1,500|
|1920-S MS 64 FB||$2,560||$2,280|
|1926-D MS 65 FB||$2,800||$2,210|
|1927-D MS 66||$2,760||$2,310|
|Buffalo Nickels||FMV April 2008||FMV May 2009|
|1913-D TII MS 67||$20,150||$17,550|
|1913-S TII MS 66||$10,400||$8,650|
|1914-S MS 66||$6,500||$5,690|
|1916 MS 67||$8,320||$6,830|
|1917-D MS 66||$17,550||$15,280|
|1918-S MS 64||$8,440||$6,410|
|1919-S MS 65||$18,850||$14,630|
|1920 MS 67||$13,650||$11,510|
|1920-D MS 65||$8,000||$6,270|
|1925 MS 67||$26,000||$18,850|
|1925-D MS 65||$7,350||$6,050|
|1929 MS 66||$1,720||$1,040|
|1934-D MS 66||$5,200||$2,960|
The most important point here is that as prices fall, at some point confidence is created and stability prevails. Once this occurs, more buyers enter this area of the market and increased demand forces FMV prices to higher levels. Keep in mind that some of these declines may be a result of a sizable increase in population for that particular grade. One additional coin may not have much influence on prices, but if the population doubles for a high-grade coin, the current group of collectors may not be willing to handle more coins at the same FMV.
The past month has brought a drop in the premiums for common US Gold coins. The FMV lists a substantial amount of decreases for $5, $10 and $20 Gold in Very Fine through MS 64. This will allow collectors and investors to purchase more coins for their money in this troubled economy. While the premiums have fallen, the amount of activity is nearly the same; it is just less fear-driven. The 2009 Ultra High Relief is beginning to adjust to lower values due to more coins arriving in the marketplace. The FMV for original coin and packaging is $1625; MS 70 coins have an FMV of $2,225.
This article is a guest article written by:
The thoughts and opinions in the piece are those of their author and are not necessarily the thoughts of the Certified Collectibles Group.