Jeff Garrett: Ten Reasons Coin Prices are Going Up

As Senior Editor of the Guide Book of United States Coins (The Red Book), and owner of Mid-American Rare Coin Galleries, I find that rare coin prices are a central focus of my numismatic interest. Pricing rare coins is a complicated endeavor, as coins sell at auction for widely different prices even when encapsulated and with the same grade. The Red Book tries to give the retail price for theoretically average coins for the grade. The annual guide is also just a snapshot of pricing that we all know changes constantly.

When buying and selling rare coins for my company, it is my job to accurately determine the value of said coins. Working on close margins requires considerable skill, especially when selling large volumes. I have often told people that really skillful coin dealers are those who know enough to buy a coin to make 5%. Anyone can figure out when a coin is grossly underpriced or overpriced. It's knowing with certainty that a coin can be bought and sold on close margins that's tricky.

As a close observer of rare coin pricing, I can with great confidence state that rare coin prices are going to rise, and for many reasons. There have been some fundamental changes and events lately that will greatly affect the supply and demand for rare coins. Here are a few things I have observed:

Streaming auctions

Currently, the No. 1 development in the rare coin market has been the advent of streaming auctions. These are real-time bidding sales where an auctioneer conducts a sale while broadcasting live video and audio over the internet. The barrier to entry for these platforms is minimal, and anyone with a smartphone and computer can start a business. These auctions are rapid fire with large doses of entertainment thrown in. Whatnot was one of the first platforms to introduce livestreaming sales, and it has now become a multi-billion dollar company. eBay has launched eBay Live to compete, and more recently TikTok Live Auctions has entered the fray with great successes. There are several sellers on these platforms selling millions of dollars’ worth of coins each month. Their biggest problem — finding inventory to sell. Many of the biggest sellers are devouring everything they can find. The demand for rare coins from these sellers is insatiable.

Gamification

The next big development in the rare coin market has been the gamification of buying rare coins. A few years ago, Vault Box launched the sale of mystery boxes, which are modeled after sports card "breaks." Buyers purchase a mystery box of graded coins, with the chance of pulling a high value "hit." The idea has taken off, and more and more companies are getting into the "coin break" game. These companies' biggest struggle has been finding enough coins for the mystery boxes. Buyers employed by these companies are offering well over Greysheet bid for coins they need for these programs, primarily United States coins under $1,000.

Precious metals prices

Meanwhile, precious metals have skyrocketed in the last year or two. Silver has more than doubled and seems to have found a solid trading range of $70 to $85 per ounce. No one seems to think silver and gold will fall to the price levels of a few years ago. Premiums for many rare coins have fallen to historic lows, with some vintage Silver Dollars and Double Eagles being melted for the first time in a generation. If silver and gold prices stabilize, and current levels become the "new normal," a lot of coins (which are currently underpriced) will begin to rise. Mint condition Morgan Silver Dollars can be bought for under $80. The supply and demand for these — and other coins — will eventually lead to higher prices.

Billionaire interest

There are now almost 1,000 billionaires in the United States, and more than a few like to collect rare coins. The staggering wealth that many people accumulated in the US has greatly increased the demand for "trophy coins." New auction records are seen whenever amazing coins cross the auction block. Million-dollar coin sales are no longer front-page news like they once were. It's not only billionaires buying rare coins, though. Many other wealthy individuals are looking for alternative investments, especially ones that offer the portable wealth aspect that numismatics offers.

Low inventories

Rare coin dealers' inventories are at historic lows. Many of my closest associates in the rare coin business have told me that their inventory of rare coins is the lowest it’s ever been. This includes some of the largest rare coin companies in the US. It's a simple fact that rare coin dealers cannot make money if they do not have inventory. Many will now have to pay considerably more for coins they sold last year to replace them. I know that my company is having to stretch on prices to keep coins in stock. There is no doubt that many other dealers are in the same boat.

Undervalued series

A lot of rare coins are grossly undervalued. There are several categories of rare coins that have seen stagnant prices for decades. Classic commemorative coinage issued from 1892 to 1954 has been at the same prices for what seems like forever. Mint State and Proof Type coins are also at levels far below what they were in 1990. With demand increasing from the above-mentioned selling platforms, these areas of the market are ripe for sharp increases.

Exciting new coins

The United States' celebration of its 250th birthday has generated a lot of interest in numismatics. The new coins that the US Mint has issued for the Semiquincentennial celebration have been well received, especially the Emerging Liberty Dime. When these coins enter circulation, there should be a rush of new collectors who discover the hobby.

US Mint leadership

For the first time in recent memory, the Director of the US Mint is a devoted collector with a deep understanding of the hobby. Mint Director Paul Hollis has already been working hard to interact with collectors and dealers across the country. He will bring exciting energy to the United States Mint that will almost certainly grow the hobby. There are lots of really cool coins being released this year, including restrikes of the 1804 Silver Dollar and 1907 High Relief.

The AI revolution

The world is now bracing for the impact that artificial intelligence (AI) will have on everyone's lives. Many have touted AI as being more profound that then creation of the internet or the Industrial Revolution. The rare coin business — like every other business in the world — will be impacted. I have had many very interesting conversations with dealers around the country about how they are using these new tools. Rare coin companies will become more efficient and use AI to increase sales. Regardless of the power of AI, dealers will need more inventory to feed the machine.

An inflation hedge

The US national deficit is now running almost $2 trillion per year. Inflation concerns are on the minds of nearly every consumer and investor as accumulated deficits of the US seem to rise unabated. Rare coins, especially gold- and silver-related issues are seen by many as a hedge against financial calamity. Gold and silver have been a favorite hedge against inflation for years, and this trend will most likely continue.

If you have been thinking about buying a rare coin you've always wanted, you might consider acting sooner rather than later. In my opinion, a lot of rare coins are going to be going up in price very soon.

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