Posted on 12/1/2005
Yes, it is nice to make profits in numismatics and we are sure that is what most of today's collectors are driven to accomplish. Many of the new collectors are interested in coins because of the mass marketing that is being done around the world, advocating U.S. coins especially, as FMV prices continue to rise. The majority of these collectors feel that prices can only go one way, and that is up. Don't be fooled, that is not always the case and there will be some downturns or market corrections in most areas. Supply and demand dictates market cycles.
What is most interesting at this time is that many astute dealers and collectors are "going after" true rarities. This is the main reason we have seen so many million dollar coins sell in the past two years. There are collectors who have the ability to buy these rarities and put them away for their legacy. Further, we are seeing some dealers with the cash reserves and knowledge to purchase any and all known rarities that may have an FMV of $20,000 up to $500,000. These dealers have been trying to purchase these coins and basically not having much success. Why? Because there are very few of these coins actually available in the marketplace. We are seeing massive increases in some of these issues because sellers are not willing to part with the coins they have in their collections. There is something to be said about a business where a collector can make tremendous profits, yet, is not willing to sell these rarities because they have become so attached to them. A further explanation of this holding pattern theory may well be that there is no better place to put your money at this time.
Many of the rarities we refer to are early coinage around the 1800 era. First of all, most of the coins in this timeframe began with low mintages. The survival rate cuts down availability and then you have coins that simply lack eye appeal for the grade. These kinds of coins require discounts of our FMV because they do not express the most important rule in numismatics, "Buy me!" Without this precept, a collector has no guidelines on when and how to purchase coins. Your own personal set of rules is really what takes so long for some numismatists to develop. It is not an overnight sensation. It actually takes some mistakes along the way to advance to the hierarchy of numismatic ability. As a collector, if you think you are the only one that makes errors in buying, you are sadly mistaken. Dealers have become what they are through a long history of trial and error. Many have survived the major adjustments in numismatic grading since the 1960s and we are here today with a better marketplace which has been accepted by a majority of today's knowledgeable numismatists.
Before we go any further, we would be remiss if we did not mention the metals and where they are headed. Well, where are they headed? We are not sure, but we suspect they are headed upward. They have already moved to levels we have not seen in over 20 years. Many analysts believe that there is a lot more room for advances, but you as a dealer or collector have to be aware of this market whenever you are buying or selling your coins. Make sure you know what the current market is before you make any important transactions and commitments.
So, what are the early rarities that seem to be causing an FMV price shattering war between potential buyers and not-too-interested sellers? Early Half Dollars and Dollars from 1794 to 1803; throw in the Bust Quarters, especially the 1796 and then discard the dates where there are way too many in dealer inventories. This is kind of an oxymoron as there are not a lot of most of these dates anyway. However, the buyers are actually looking more for the issues where the available population may be fewer than five coins in a specific grade. When you consider the many collectors of these early rarities you quickly realize that competition will ultimately force these prices to levels where the actual number of competitive buyers is more compatible with the available supplies. What are these FMV levels? It is difficult to say at this time, but what we do know is dealers in this market are not locating enough at current FMV levels to satisfy their aggressive buyers.
FMV levels for Early $5 and $10 Gold are increasing at an even more dramatic rate. The Small Eagle Bust $5 has jumped about 10% since June of this year, with some grades up as much as 20%. If you want more evidence of these advances the Early $10 Gold issues are up as much as 50% over this same timeframe. All of the Capped Bust $10s from 1795 to 1797 have advanced in all grades. The AU50 was $34,200 in June and is now reported at an FMV of $48,130. The MS60 was $58,750 and currently lists at $85,630. The Heraldic Eagle $10 is only up about 25% in AU50, but the MS60 has increased from $23,130 in June to its current $30,630, which is a little over 30%. The expression "it's a sellers market" comes to mind here in determining how much is enough for some of these prices to rise. When sellers decide they have made enough profits, then the advances will subside. However, as a seller, we will reiterate, where do you put your excess profits?
Next month we will report on the overall market compared to last year.
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