Market Perks Up In The First Quarter of 2016

Posted on 3/24/2016

Rare coin market shows renewed signs of life.

The recently concluded ANA National Money Show in Dallas, Texas, did not have stellar public attendance. In spite of this, most of the dealers participating had a wonderful show. The market for rare coins seems to have come to life after several months of declining prices and slow sales. We had several serious collectors stop by our table to work on sets or to just buy a few nice coins. The ANA does offer a wonderful array of educational opportunities at these shows and the average collector perusing the bourse seemed more advanced than usual.

In our opinion, several other factors have led to this market pickup. The price of gold bottomed December 17, 2015 at around $1,050 per ounce. It has since rather rapidly climbed to over $1,270 per ounce in recent weeks. This 20% increase now places gold in an official bull market. The physical demand for precious metals has surged in 2016. The unprecedented demand for silver persuaded the US Mint to greatly increase production. The US Mint delivered 5,954,500 Silver Eagles in January, 4,782,000 in February, and over 2,000,000 halfway through March. Gold sales have been equally impressive this year.

Much of the impact for rare coins is psychological as the bullion content for most rare coins is not that important. For decades, the rare coin market has mirrored the rise and fall of bullion prices. The reasons for this are complex. The simplest explanation is that they both rise and fall for similar reasons. Both are hedges against inflation. Physical assets seems more attractive in a low interest rate environment. The stock and bond markets attract the vast share of investment dollars, but many are shaken by the sharp drops that sometimes occur.

The rare coin market also seems to be relieved that many of the gigantic collections that have crossed the auction blocks over the last few years are coming to an end. The sales of the Newman, Gardner, Partrick, Pogue and several other large collections have been a drag on the market. More coins simply seemed to be coming to market than going into collections. Coin dealers were becoming strapped for cash. Many of the coins from these great collections have now slowly disappeared into strong hands, and the overhang of material has declined significantly.

As mentioned earlier, the price for many rare coins has fallen in the last six months. Many savvy collectors have decided it is time to take advantage of this opportunity. Rare coin prices are like golf shots, someone is happy with every shot or price. If a golfer misses a shot, his opponent is happy; if a rare coin price drops, the new buyers are happy. Many issues are near historic lows. The prices for Proof type coins are about the lowest in my 40 career. Collectors with patience and an eye for quality can now assemble sets of Seated and Barber coinage for astoundingly low prices. The same can be said for sets of Indian gold coins, generic gold and many other series.

Another factor that seems to be stimulating the market is the announcements from the US Mint about exciting new products scheduled for 2016. The Mint will be issuing a 30th year Anniversary Silver Eagle set, and producing gold versions of the 1916 Mercury Dime, Standing Quarter and Walking Liberty designs. These will surely create many new collectors and attention for the hobby. I will examine these new issues in my next article.

2016 should be a great year for the hobby. There are many exciting numismatic developments, and the market is finally showing renewed signs of life. Whether you collect bullion related coins or major rarities, this year could be the start of something big!

Jeff Garrett bio

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