Jim Bisognani: Ninth Annual Market Review – Part 2
Posted on 1/9/2020
Welcome to 2020 my friends! In its first week, the new decade is akin to its predecessor of a century ago and is certainly roaring. Indeed, the metal markets have been ablaze, albeit with an unwanted assist courtesy of heightened world tensions. On the first Monday of 2020, gold was trading at nearly $1,600. The last time the yellow metal was trading at this level was way back in early April 2013!
I always report: Any action in the metals arena is a positive force for the numismatic market. With a tremendous two weeks ahead of us on the coin show circuit, significant momentum and motivation can be expected.
As we go to press, the bellwether 65th Annual FUN convention and mega auctions are underway in Orlando. Then next week, the Big Apple will host the 48th New York International Numismatic Convention (NYINC). This is the first time in recent memory that this influential show won’t have to share the spotlight with FUN, so attendance and floor traffic should be optimal.
Yet, before we dive headfirst into the Roaring Twenties – Part 2, it is time to wrap up the Ninth Annual Market Review – Part 2, and it is a doozy…
(To read Part 1, click here.)
I am a novice collector on a set budget of $150 per month. What coins are good values for me?
John Brush – President, DLRC
“I love classic coin designs in circulated grades. I’m a firm believer in buying collector-type coins and not modern issues.”
Ian Russell – President and Owner, GreatCollections
“Circulated 20th century coinage is my pick, or classic silver commemoratives. You can buy a number of coins from these series at under $150.”
Lianna Spurrier – Numismatist, Author and Videographer, CoinMediaByLianna.com
“Most of my collecting experience has been on a budget of this or smaller, so there are certainly ways to go about it. My first suggestion for any novice is a type set; it will give you a broad overview of what’s out there in American numismatics and expose you to a lot of different areas. You can then branch out into specializing in your favorites from the set. With a couple exceptions, a basic Dansco 7070 raw type set won’t be out of reach. This may not be the best investment because you won’t be able to afford many high grades or rare dates, but in terms of the knowledge you gain from assembling the set, it’s priceless.
“If you’re more concerned in an investment, world coins are an underappreciated market. There are so few collectors compared to the US sector that rarities are much more affordable. If you specialize in a series and become an expert, you’ll find that there are still opportunities to acquire rare varieties unattributed and offered significantly below their book value. High-grade pieces can be found raw, and even top pops may be affordable in common dates.
“In summary, either focus on the knowledge you’ll gain with a broad set, or focus heavily on something foreign and unusual to build a specialized, high-quality collection.”
Bob Green – Owner, Park Avenue Numismatics
“I started my career over 35 years ago setting up customers with a coin of the month program that we called a continuity program. It was $99 per month, and the customer would get a coin in the mail every month. We still do this today and are one of the few firms that welcome the opportunity. If you ask a coin dealer to start you on that program, he/she would be a fool to say no. Some of my smallest monthly clients from 35 years ago have turned into my largest clients today. I’ll take those newcomer buyer phone calls anytime. I hope anyone looking to get started at $150 per month will call me at 1-888-419-7136.”
Jim Stoutjesdyk – Vice President of Numismatics, Heritage Auctions
“I generally always tell people to buy the best that they can afford. So, a novice collector on a budget of $150 per month would be wise to buy one or two coins every month or every few months, rather than buying a lot of inexpensive coins. For example, assembling a set of Barber Half Dollars in and around Very Fine to Extra Fine grade would be a challenging, yet affordable, goal that would allow the collector to buy a few coins some months and one coin every few months as the tougher coins were needed. The result after a few years would be a very impressive set that would give the owner much satisfaction.”
Adam Biagi – Owner, Pacifica Trading Company
“Stick with the old adage buy quality. Do not go for quantity. There are so many educational resources available now that were not available 20 years ago. It is so easy to buy coins compared to 20 years ago. Find a niche that is within your price range and research rather than buying impulsively.”
Brian Hodge – Partner, LMRC
“Buy a nice Silver Eagle, or maybe a couple different dates of Silver Eagles. You can build a set relatively quickly, and that feeling of accomplishment will propel your future endeavors.”
I have done well with stocks and just cashed in $1 million to invest long term. A friend advised me to invest in certified coins. What kind of portfolio would you recommend to this well-heeled numismatic newcomer? (Complete sets, key dates, classic rarities…?)
“I would put together a diverse portfolio of coins that have great eye appeal and are solid to above average for the grade. I would include things such as a complete set of gold and silver classic commemoratives in MS 65 or MS 66, a selection of proof Barber and Seated coins in PF 65 or higher, a selection of Mint State Barber and Seated coins in MS 65 or higher, and type coins such as MS 66 Twenty Cent pieces (which seem like a steal when you can buy CAC-approved coins for $6,000-$7,000) and CAC-approved MS 65 Trade Dollars (also a good value at $7,500-$9,000).
“I would also include a selection of eye appealing Seated Dollars in Mint State grades (a very underrated series) and a group of MS 65 Red Brown copper coins that are mostly red, such as Two Cent pieces and Indian Cents from the 1860s and 1870s. For gold coins, I would add some MS 66 $20 Liberties (bargain priced in today’s market and always in demand) and a MS 66 CAC $3 gold piece. I would round it off with a few six-figure coins such as an 1893-S Morgan Dollar in Mint State (if possible to locate) and a classic rarity such as a 1794 Dollar in Choice Fine or Very Fine with a strong date, a perennial favorite among collectors.”
“With that kind of capitalization, the best investment out there is probably PQ (premium quality) world coins. US coins are fairly stagnant whereas world coins have a stronger upside and significantly lower downside. Stick with items that are of the utmost quality. Certain countries are vastly underpriced or underappreciated at the moment. It would take significantly more research but would pay off higher dividends in the long run.”
Dave Bowers – Numismatist, Author and Co-Founder, Stack’s Bowers Galleries
“There are many series that I would recommend, especially those collected by die varieties. Capped Bust silver coins are a good example; they are stronger and higher than they were a generation ago. Colonial and early American coins are strong at current levels, yet often lower than a decade ago.
“Selected early American medals are as hot as a firecracker, as exemplified by John W. Adams’ set of Comitia Americana medals crossing the block for an astounding $1.4 million at the Whitman Coin Expo in October. Popular paper money ‘type’ notes such as the 1896 ‘Educational’ $1, $2 and $5 in high grades are selling for record prices and in great demand.
“Another option: Registry set coins are a phenomenon in themselves, with coins that are super common in MS 65 grade selling in the thousands of dollars if they are only one or two in an ultra-high grade such as MS 68.”
“First of all, I would want to know more about the goals of this person before they spend a dollar. If the goal is to invest for profits over the long term, I would stick with rare coins rather than generic coins. In addition, unless the buyer plans to complete a collection, I’d recommend elusive key dates.”
“I would recommend buying classic US coins. Look for coins that are attractive, perhaps toned examples, and coins with real history. I like coins that rarely trade because that usually means they are truly rare as well. Look at 1909-S VDB Lincolns, a key date that is always popular — many consider rare — although I do not. If you needed 100 of these tomorrow, you could call a few dealers and put together 100 coins.
“But what about an 1888-S Dime in Mint State condition? It’s difficult to find two or three coins, let alone 100. I don't even think 100 coins are known in Mint State condition. Even at MS 63, it is about a $500 coin. In all Mint State grades, maybe 10 coins have sold in major auctions in the past decade! Compare that to 1909-S VDBs in Mint State, where 100+ coins have traded in the past year in major auctions.”
“I said this last year and I’ll say it again, be a contrarian. The greatest collections were built when few others were paying attention. This market seems to be ripe for that kind of collector looking to put a little money into the certified coin market. I love Proof gold right now.”
“I’ve always been a fan of quality, eye appealing key dates. They don’t have to be the highest graded (although they certainly could be), but these coins have long held their values, and we never lose money when we buy a ‘16-D dime or a ‘95 Proof Morgan. The blue chips are always the most solid bet in my eyes.”
World and ancient coins have been attracting much more attention and bringing record prices at major auctions. Will you be adding world coins to augment your inventories?
“I am not a dealer, so “inventory” isn’t quite the right word, but the primary focus of my collection actually is world coins. An obscure series from pre-Meiji Japan caught my eye, and it’s now my specialty. I’ve found that coins of comparable rarity are infinitely more affordable than in any US series, and it allows me to build a registry-level set on a modest budget. I think it’s great that more dealers and collectors are paying attention to different world coins and giving them the attention they deserve. Ancient coins, in particular, are a fascinating sector of the hobby and one that I hope continues to grow.”
“The world coin department at Heritage Auctions has experienced robust growth in recent years. Internet auctions with high-quality digital images and certified coins providing a level of comfort to the buyer have completely revolutionized the world coin market and enabled Heritage to do business in 195 countries worldwide. I only see this business getting stronger as countries such as China, India and Mexico develop a bigger middle class with more collectors.”
“We've always offered world and ancients coins in our weekly auctions, and it's an area that is growing very quickly. We probably received the most publicity all year for the Cherrywood Collection of Chinese coins, all graded by NGC, that sold for over $1 million earlier this year. A single coin from the collection realized over $500,000. We also auctioned the Patterson Collection of ancients, all graded by NGC, for about $400,000 earlier this year.”
|The Year 3 (1911) Large-Tailed Dragon Silver Dollar Pattern, L&M 33, graded NGC PF 65 that realized $511,875 Click to enlarge|
“Well, we focus primarily on foreign to start with, but I am seeing this trend with many other dealers.”
“I think many world coins represent great values, as long as you can maintain a focus. We have enjoyed being market makers in ancient coins for a while now. They reach customers all over the globe, and really tell the story of human civilization throughout the ages.”
Do you have any concerns about the present state of the hobby and the coin business?
Ira Goldberg – Co-Owner, Goldberg Coins & Collectibles
“It is noticeable that liquidity is becoming the most valuable advantage in a market where coins are traded much more frequently. And of course, the fewer coins you are holding, the more liquidity you have. What I am really concerned about is the collapse of the role of old-time dealers and the coin market built by them. We rely on dealers for stabilizing the market, but dealers stock coins only based on their advantages in knowledge and retail powers to potentially re-sell the coins for profit. Once these advantages are challenged by part-time dealers or even collectors retailing/auctioning on the internet or on social media platforms, they will be forced to change their ways of doing business.
“Many dealers and collectors are becoming extremely cash flow-oriented. Instead of budgeting for the coin show/auction seasons, they need to have cash flow for daily/hourly competition. More people are buying only the coins they have to buy. At the same time, however, we’re seeing more and more coins that dealers/collectors simply won’t buy for any price.
“Coins are being traded much faster than 10 years ago, and it seems they will be traded 10 times faster in only the next couple years through social media. In order to catch up with the market, many dealers will need to eliminate their inventory to the minimum scale, while others may find it’s simply easier to avoid buying/selling and start a new social media group to have others sell in it.
“All these factors may potentially slow the market from recovering. In addition, there are multiple problems because of lack of regulation and standards on these non-traditional sources of trading that will have to be dealt with, for example, taxes.
“Nonetheless, major auctions will always attract attention when named collections enter the market. That is why Larry, Ivan and I are still here.”
“I believe the primary challenge facing the hobby is finding a way to attract more young people and, therefore, modernizing ourselves. The recent embracing of social media and online venues is very encouraging and something I believe we need to continue in order to help the hobby grow going forward. For the most part, we seem to be acknowledging the need to modernize fairly well, but there’s still quite a bit of room for improvement in the execution.
“A lack of recent circulating rarities is another concern, since many people originally get into coin collecting through searching change for valuable coins. The W quarter program was definitely a step in the right direction, and I hope to see continued innovation and acknowledgement of this need from the US Mint.”
|2019-W Quarter - Lowell Historical Park, graded NGC MS 67
Click images to enlarge.
“One of my biggest concerns is the influx of counterfeit coins coming into the market, particularly the counterfeits being made in China. The technology being used to make these counterfeits seems to keep getting better and better and more and more collectors, and even dealers, are falling victim to these very deceptive fakes. I recently saw a counterfeit GSA dollar where the coin, holder, box and certificate were all counterfeit!
“Another concern often raised is that the coin market is slowly dying and not enough new collectors are coming into the market. However, I attended a symposium at the ANA convention this summer about the future of the rare coin hobby and Heritage President Greg Rohan pointed out that the rare coin market is alive and well. In the past few years, collections belonging to Newman, Pogue, Partrick, Gardner and other major collectors were sold, and hundreds of millions of dollars’ worth of rare coins were absorbed into the market without any problem.”
“My biggest concern would probably be online auction scams. They're becoming more prevalent and more sophisticated.”
“We’re different than most coin shops and shows that see declining visitors. Our business is mostly online (although we welcome visitors to our office by appointment), and we have a much younger average age than what you will see at the ANA or FUN shows. Many younger clients have no interest in going to coin shows.”
“As mentioned previously, the health of retail outlets is of upmost importance to me. It’s difficult to survive selling from one dealer to another without end users. We need to reach more customers and not push them away with conflicting information. I also think younger people are spending their money in different ways than ever before. There seems to be a new focus on buying experiences rather than goods. I think that if we can make collecting an “experience” again it would help immensely.”
“I don’t think there is a problem with the present state of the hobby and the coin business. Speaking only for my company, business has never been better. There’s an old axiom: The harder we work the luckier we seem to be. Any numismatist dedicated to his trade is not complaining. Although we do have to work more hours and attend more coin shows.”
“I worry about the tax impact on collectors in the long term.”
Are the US and world mints producing too many special editions and commemoratives for the hobby to absorb?
“It really depends on the subject matter. The European nations have put out truckloads of commemoratives that are very poorly designed and poorly produced. Almost everything issued by Western Europe in the last 10 years is down to melt value. Conversely, I've seen unusual or quite artistic designs issued by private mints or smaller countries that not only maintain their value, but have risen considerably above issue price. Well-designed, popular designs and limited issues tend to do best.”
“Particular foreign mints, yes, plus some major countries now produce exclusive issues, so a collector has no chance to buy every issue directly from that mint. I personally believe all issues from major mints around the world should be available to all collectors directly from the mint.”
“The US Mint and world mints do a fabulous job creating new opportunities for collectors and, therefore, new opportunities for dealers to work with these new collectors. The issue that I’ve seen is that when these coins, which are generally flawless when struck nowadays, are graded PF 70 or MS 70, they are being sold for huge premiums that may not withstand the test of time. Premiums erode if the coin is not rare enough. Time will tell on this.”
“It can feel that way at times. Often there isn’t enough time to absorb one product into the market before another is released. There is certainly some amount of guesswork when deciding which programs to take on and which ones we won’t tackle as hard.”
“I’m not a huge supporter of modern items. I like when the limited mintage issues (such as the 2019-S Enhanced Proof Silver Eagle) are really limited. That builds excitement amongst collectors and dealers. I also think that limiting the designs is always a good thing as it keeps the focus on pieces that collectors actually want.”
|The 2019-S Enhanced Reverse Proof Silver Eagle with NGC special labels and designations
Click images to enlarge.
Will and/or how do you think the 2020 US presidential election results may impact the coin market?
“On this subject I can speak volumes about what we call the presidential election year bull market. It’s like clockwork. Democratic spending equals higher metals values, which leads to more interested buyers, and GOP reelection generally creates less opportunity for those who want to hedge against inflation. As money exits our market and goes to equities dealers, businesses tend to slow down, but it does create an opportunity for buyers to acquire rare coins at great prices.”
“I think 2020 has a certain ‘ring’ to it, and I also think the uncertainty of election years has historically been positive for the coin market.”
“I can only see the uncertainty as helping the rare coin and bullion market.”
“I learned long ago not to discuss religion or politics in mixed company. The partners at Heritage range from conservative Republicans to liberal Democrats, so it’s a losing proposition for me to discuss politics. However, against my better judgement, I’ll stick my neck out and make my prediction.
“No one can deny that the economy has drastically improved with Trump as president. The stock market is at an all-time high, unemployment is at a 50-year low and people generally feel good about the economy. I suspect that if Trump gets reelected we’ll see a continuation of this trend.
“When people feel comfortable with the economy and their 401(k)s or other stock investments have increased substantially in value, they tend to feel comfortable spending money on rare coins. If a Democratic president takes over I would expect to see a sharp decline in the stock market. This will probably result in a higher gold price, which generally is also good for the coin market. So regardless of the outcome of the presidential election, I think the coin market with continue to thrive.”
And of course, your mild or bold prognostication for 2020!
“For GreatCollections, we're predicting a very strong year in 2020. We have the best old holder collection to ever be auctioned featured in January, and two other important collections following up in February and March. It's sure to keep us all busy!”
“I honestly think we're going to see an overall downturn in US coins but an uptick in programs that are similar to the West Point State Quarters or the Enhanced Reverse Proof San Francisco Eagle. While these may be momentary, they do bring attention to the hobby! I do believe there will be various course corrections in the next year or two. Whether it's prices or material coming out of the woodwork. I do see some changes, but I can't specifically say what we're going to see.”
“Well, I personally take life a day at a time, but I think 2020 will be the start of another metals run, and ultimately the fledgling stages of the next bull market.”
“I am very optimistic and bullish about the coin market in 2020. The market experienced some pain in the past few years, and prices probably dropped 20-30 % for many series. The last year or two saw prices stabilizing and people beginning to accept and trade at the new levels. With the economy and stock market strong and people feeling confident about their finances, I see more collectors returning to the market. At the recent Michigan State coin show (one of my barometers of the coin market), I saw crowds of collectors attending the show like I haven’t seen in five years. If that’s any indication of the market, I think there’s going to be robust and active business to be done in 2020.”
“I think it will be a great year. Many values seem to have hit their relative bottoms for some issues this year, and I believe something has to give at some point where people pull more money out of other ventures and get it back into this great hobby again. I think we’ve seen so many new and young coin dealers begin to thrive recently and that invigorates me. Many of them may go on to build great coin empires of their own.”
“I believe the numismatic market will remain strong in many sectors in 2020. Opportunities abound for those who explore niches and specialties, and I see much enthusiasm in the air. It is a great time to be a numismatist! The Guide Book of United States Coins (Red Book) is, of course, the passport to numismatics, updated each year, that countless thousands of collectors and dealers use. Recently, and for the first time in recent memory, an extra press run was ordered for the current 2020 edition — certainly a harbinger of the enthusiasm that the new year is expected to bring.”
Thanks again to all my contributors for their insights and opinions. May 2020 be a wonderful and prosperous year for all!
Until next time, happy collecting!
Jim Bisognani is an NGC Price Guide Analyst. He has written extensively on US coin market trends and values.
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