When The Market Fluctuates
Posted on 9/11/2014
Rare coin prices have been very solid for the better part of the last two decades. Many factors have contributed to steadily rising prices. Precious metals prices are much higher than ten years ago, the internet has attracted millions of new buyers, and low interest rates have driven many to hard assets. For the long term, rare coins seem poised for success. This does not, however, mean rare coins rise straight up without some adjustments along the way. Price fluctuations in the rare coin market do occur and should be expected.
The recent A.N.A convention in Chicago was a great success for most who attended. Rare coins were in strong demand, especially for fresh and attractive material. Dealers with minimal or old inventory might not have fared as well. The rare coin auction houses sold over $50,000,000 worth of rare coins and currency for the week. The US Mint conducted sales of Kennedy gold coins which, unfortunately, dominated much of the buzz for the show. Combined, these two events and other recent mega-auctions have taken a lot of capital out of the rare coin market. Currently, the market is a bit soft for some issues.
A study of recent auction results will reveal some examples of certain coins selling for less than a few years ago. A 1907 $20 High Relief NGC MS 65 sold at auction recently for $41,125. A few years ago, a similar coin brought around $49,000 at auction. For many collectors, this can be somewhat disconcerting. Price guides do not always reflect the true state of the rare coin market. From reading most price guides, a buyer would think prices rarely fluctuate. As anyone who buys and sells significant numbers of rare coins can tell you, that is not true. Rare coins prices do rise and fall with the current strength of the market.
Collectors should understand this and use it to their advantage. When rare coin prices soften somewhat, it can become a buyer’s market. Anyone with a want list and the cash can then purchase coins they have been looking for with substantial savings. Buyers should also not be too concerned with a low auction record for a coin they might have purchased in recent years at a higher price. The rare coin market is becoming very quality conscious, and coins with superior eye-appeal continue to sell well when offered. Less attractive coins sometimes need to be discounted to sell. Collectors and dealers can often use a low auction record as leverage when trying to purchase a rare coin.
Another factor that can have an important impact on rare coin prices is the popularity of a series. Several years ago there were quite a few serious collectors vying for the finest Lincoln Cents when they would come to market. Prices for anything approaching finest known where selling for record prices. Unfortunately, several of these collectors have left the market, and prices for many superb Lincoln cents have dropped considerably. Again, collectors should recognize this opportunity to assemble collections for much less than when competing against a large pool of buyers. The best rare coin investments are made when buying a series that others ignore.
Probably the biggest factor that has put pressure on the rare coin market in the last year or so is the huge rare coin auctions that have been conducted. Several lifetime collections of incredible coins have been sold. The Eric Newman collection is unbelievable, and sales are still being scheduled for the near future. There have also been an unusual number of eight figure collections sold recently. All of these sales add up to a lot of money coming out the rare coin market. Truly great coins continue to bring huge numbers when offered, yet less than stellar coins aren’t bringing in much. This “glut” of choice material is probably a short term issue and should be considered a buying opportunity. I remember years ago, worrying if the market could absorb the gigantic Eliasberg collection of copper and silver coins. Today, those coins are worth considerably more than ever.
Rare coins prices do move up and down, and the best protection as a collector is to fully understand the series you are collecting. This will provide you with the knowledge to recognize a bargain when you see one!
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