Seventh Annual Market Review (Part 2)
Posted on 1/4/2018
Happy 2018, my friends! Although the unpredictable climate in New England can be referred to as “wait a minute” weather, we have been living through the longest sustained cold snap I can ever recall!
Since a heavy, wet snow graced us on Christmas Eve and all Christmas Day (I felt like Santa up on the roof — not delivering gifts, but shoveling off snow all day), it has been two weeks and counting, without a hint of a reprieve from these frigid conditions. As this article posts, we are expecting a stimulating low of -15 F tonight and still no sign of anything approaching just the freezing mark! Brrr… baby, it’s cold outside!
|Jim Bisognani, on his roof in New England on Christmas Day.|
Hey, at least the metals market has started the new year with a bit of a spark and is generating some heat. Gold has received considerable attention since mid-December, and has driven well over $1,300 per ounce. Spot prices last seen in this neighborhood were posted late September 2017.
As I attempt to keep my fingers warm typing, it is time for my market experts to field and answer questions and wrap up Part 2 of my Annual Numismatic Market Review! (Read Part 1 here.)
Since the business of numismatics — or any other hobby, for that matter — depends on drawing and sustaining new collectors, my next topic for my elite panel is…
Suggestions on how to encourage and attract new collectors to the hobby
Steve Roach, Coin World editor: “I think the US Mint is headed in the right direction with smaller-sized gold coins — the 2016 gold ‘Winged Liberty’ dime is relatively affordable and beautiful. Not everyone can afford half-ounce First Spouse gold coins, so smaller gold coins make great collectibles at more accessible price points. The Mint largely has its hands tied when it comes to commemorative programs, as the subjects of those come from Congress, so it's been encouraging to see the Mint being more creative with the things that it can control.”
Brian Hodge, Partner, Minshull Trading: “Coin shows need to get a lot more exciting. No show is an absolute must-go for me anymore, other than FUN. Collectors can simply sit in the comfort of their own homes, shopping or bidding online. I think a lot more energy has to be placed into advertising.”
John Brush, President, DLRC: “Collectors come to the hobby for many different reasons. As a collector, I can see it from a financial standpoint (a hobby that is an investment!), from a desire to acquire pieces of history that are obtainable and historically interesting, and from a background in something that is much larger than one’s self. Collectors need to be treated honestly and fairly. When looking at coin collectors, the overall viewpoint of dealers needs to look at the longevity of the hobby and the relationship with the customer, not for the immediate financial return. We have to make money to stay in business, but relationships are important to cultivate and education is vital.”
Ian Russell, President, Great Collections: “I know for certain that our client base is much younger on average compared to what you see at a coin show; we have many younger clients who started buying coins online five or ten years ago — and have grown into significant collectors who buy rare coins on a weekly basis now. But those clients don't ever step foot in a coin show. They don't need to. They can buy their coins online from the comfort of their own home in their own time.
“That being said, the more collectors the better — and I would love to see a real follow-up to the successful State Quarter program from the US Mint. Perhaps another series of quarter on a different topic — the National Parks are nice, but it's not going to attract anywhere near the interest the State Quarters did. That is something that would generate collectors in the 2020s and beyond.”
Charles Morgan, Editor, CoinWeek: “First and foremost, the industry needs to put out great products and market them effectively. The major stakeholders need to understand that an actively engaged and educated customer is going to collect coins for the long term. Another thing that is equally important is an understanding that numismatics is happening in the now, and that we have to treat recent developments and future developments in the coin minting industry as the significant events that they are. Dealers also need to infuse the professional ranks of the hobby with young people who can build relationships with collectors in the hobby's key demographic, which is 30-to-50-year-olds.”
Jim Halperin, Co-Chairman, Heritage: “We remain optimistic that the allure and value of rare coins will continue to draw future collectors into the hobby. The entire hobby could do a better job promoting today’s market as a tremendous opportunity for novice collectors. We need to remind people that coin collecting is not always about a “rate of return,” but also an appreciation of history and making friends who are interested in the same corner of the hobby. Weekly Internet Auctions on HA.com offer graded coins across every conceivable category at virtually any price point. Collectors can transition easily to better and better quality as their knowledge grows and their investment threshold and passion for collecting increase.
It is also important for experienced collectors to recognize the impact they can have on future generations. Proof sets and Mint sets are ideal gifts, as are birth-year sets and even interesting world coins and notes.”
Q David Bowers, Co-Founder, Stack’s Bowers: “In any market, those who study a numismatic specialty tend to remain for a long time. I and the Whitman staff are working on the 4th edition of the Deluxe Guide Book of US Coins (or Mega Red) of over 1,500 pages. There will be a large section devoted to dimes. (In the last edition, it was nickels.)
“That said, there are indeed new collectors and buyers coming into the market. Those who buy books, read them and study carefully can become knowledgeable, aggressive buyers. Now, indeed is a good time to buy. At the same time, as I expect the market to be level for some time, it is my view that anyone who contemplates selling a fine collection has a good opportunity — as I see that across-the-board market increases are not in the immediate offing. Overall, the 2018 market, in my view, will be very stable — with buyers and sellers both doing well.”
Considering that winter FUN, the first bellwether show of 2018, is underway as this article posts ...
What are the greatest options for the well-heeled numismatist?
Steve Roach: “With the number of auctions increasing and a lot of major collections coming to market in the past few years, there are coins that have been very well-traveled over the past few years — appearing year-after-year at auctions. Some of these coins are wonderful and of solid quality; others, not as much so. Work with a dealer you trust to find some of these coins that have been quickly re-offered in multiple sales. There can be a bit of a stigma attached to these coins that will wear off in time. Of course, ask yourself this: Is there a reason why people don't want it. The reach of even smaller auctions is broad, so if a coin keeps trading hands, ask a lot of questions to figure out why.”
Brian Hodge: “Story coins at the top of the condition census are doing incredibly well.”
John Brush: “Quality and eye appeal are of the utmost importance. The finest-graded item is not necessarily the best buy. Eye appeal is also very important, and when you’re searching for the perfect coin, sometimes it’s best not to rush into a transaction.”
Ian Russell: “I continue to like Seated material in higher grades. The market has been weak — although it's definitely stronger today than a year ago. I still believe there is further room for increases. Low-mintage world coins — coins where there are only 1,000 or 2,000 minted (or less) that have been graded/certified in high grade. We recently sold a modern British gold set graded NGC Proof-70 UC. We had estimated it internally at $8,500 and it brought over $18,000. The set was only issued in 2013 by the Royal Mint.”
Charles Morgan: “You know, the well-heeled numismatist should already know this, but I say find that handful of great dealers — the ones who you can talk coins for hours with — and get them on your speed dial. There are four or five dealers who I know personally who come to mind for me and what I like. I would say to them, “Do you want to have some fun spending money on coins?" and then set down your parameters of what you like and what you expect. If they are 100% bought in on the project, then they will have a pride of accomplishment that goes well beyond taking their cut. While there is truly no area of the "mature" coin market that is dirt cheap these days, many opportunities exist for the knowledgeable collector of rare world and ancient coins. US coins, despite dipping in price in recent years, are still expensive relative to their scarcity and condition.”
Jim Halperin: “Longtime collectors are ready to pass on their treasures to a new generation. For example, we are offering the US Coin collection of baseball great Lou Piniella during our January 2018 FUN Auction. Most serious collectors started small and “traded up” during their lifetimes. Coins that are generally difficult to acquire (including keys, condition rarities and even those – such as Peace dollars and Saint-Gaudens double eagles – which are regarded in the hobby as works of art) are likely to hold collector demand over the long term. Regardless of the category, condition and rarity have to be the first factors any collector considers before making a purchase. We advise collectors big and small to purchase the best quality coins they can afford. Doing so offers the greatest odds of an optimal return on their purchases whenever the decision is made to sell. Quality and beauty also maximize the enjoyment collectors experience while they own their coins.”
Q David Bowers: “In today’s market or during any other level period in the past, true rarities with great pedigrees from great collections have always done well. I remember in 1979 when the Johns Hopkins University consigned the Garrett Collection to us. It had been appraised for $8.9 million. The first of four sales was in the autumn of 1979. The market was hot and prices were strong. Then came one of the sharpest crashes in coin market history, comparable to that of late 1964. The market ran out of buyers, especially newcomers who were mainly interested in quick profits from investment. The price of gold and silver fell, and there were bankruptcies. Not to worry. The Garrett coins continued to do well, brought record prices, and the collection, after the last sale in 1981, totaled $25 million!
"Mirroring this in a way has been the recent Stack’s Bowers Galleries series of sales presenting the D. Brent Pogue Collection: carefully cataloged coins in amazing grades with great pedigrees have established record prices, totaling $107 million. The key element to the Garrett Collection, the Pogue Collection, and other “name” collections brought to market by my firm and our fine competitors has been that the buyers have been dedicated numismatists, who have studied coins carefully and are not just looking for quick investments.”
Your mild or bold prognostication for 2018
Brian Hodge: “I think we should have a similar cycle to 2017, perhaps with more trickle-down economics in play. The market got soft in 2016, which pushed a lot of the ‘middle class’ collectors out. But with the high-end sector performing so well, I think the slightly less-heeled collectors will regain some confidence.”
John Brush: “Mild: Classic silver commemoratives will finally gain in popularity at the expense of modern items (I hope!). Bold: A new massive hoard of rare US coins will be found in Miami, Florida.”
Charles Morgan: “For most of 2018, the modern coin segment of the hobby's attention will be on the 2019 Apollo Coins. For those interested in classic material, the Tyrant Collection and the (hopeful) appearance of the second tranche of SS Central America coins will be a huge deal.”
Jim Halperin: “While I suspect the market will resemble 2017, we will see more high-profile collections come to auction in 2018. These collections will release special coins to the numismatic community, high-grade classics and rarities with important historical significance.”
Q David Bowers: “Contemplating the coin market is always enjoyable, and I thank NGC for giving me this opportunity to comment on it. I first became interested in the market and market cycles in the 1950s after studying economics and finance. In the early 1960s, I published the first study of coin market cycles, which have taken place regularly ever since the first one that began in 1859 (and which concentrated on, believe it or not, tokens and medals of George Washington).
“There are certain other aspects of the market that require comment. Going back a generation, common-date double eagles in grades such as MS 63 were in great demand from those who wanted to hold gold bullion and at the same time form a collection. Liberty Head and Saint-Gaudens $20 pieces sold at a nice premium for this reason. I often recommended that someone interested in holding gold would do well to acquire one of each date and mintmark that could be acquired for a modest premium over gold value, which would result in a collection of many dozens of coins. This was a popular pursuit, and many clients did this.
“Today in 2018, the situation has changed dramatically. The advent of gold Eagles in 1986 and their continuing popularity has made it possible for those interested in gold to purchase Gem coins directly from the Mint for little over bullion value. The same goes for silver Eagles. Different world mints have aggressively marketed gold coins, ranging from Pandas in China to the popular Maple Leafs from Canada. The idea of focusing on Liberty Head and Saint-Gaudens double eagles as a way to hold gold has faded, and today the premium is a slighter percentage than I have seen in many years. However, I do remember as a teenager in the 1950s, common $20 coins in Uncirculated grades could be purchased for $38 to $40 in large quantities, from dealers or from banks in Switzerland. That was before there was a wide numismatic interest.
“An elephant in the room, so to speak, is the ETF, or Exchange-Traded Fund, which enables a buyer to call a stockbroker and trade in gold without having to hold any metal at all. This adds to a mixed outlook for common gold. As to rare gold, as I see it, the market for traditional early series from 1796 through 1834 remains strong and dynamic with high demand, although prices adjust now and then. Charlotte and Dahlonega gold, in particular, continues to be popular, as do the later Carson City issues.
“Coming up and quickly is a second round of gold coins and ingots from the S.S. Central America. I and associates in the California Gold Marketing Group, headed by Dwight N. Manley, are contemplating what to publish — possibly an updated version of my 2002 A California Gold Rush History: Featuring the treasure from the S.S. Central America.”
Once again, I thank all for participating!
Until next time, happy collecting!
Jim Bisognani is an NGC Price Guide Analyst, having previously served for many years as an analyst and writer for another major price guide. He has written extensively on US coin market trends and values.
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