Jeff Garrett: The Long and Short of Collecting in Times of Uncertainty

Posted on 3/12/2020

Exercise patience and think long-term to avoid losses — and even make gains.

There is no denying that we in America are currently consumed by media coverage of coronavirus. The slow drip of bad news accelerated last week when the stock market plunged due to fears of shutdowns and deep economic damage. Anyone with a retirement account is now trying to determine how to react wisely. For most of us, doing nothing is probably the best course of action. Indeed, entrepreneur and investor Mark Cuban recently stated, “When you don’t know what to do, do nothing.”

Generally, selling during or after a market crash is not a good idea. One thing for sure, however, is that I am not an economist or Wall Street trader. I can give excellent numismatic advice, but my investing advice is strictly based on personal experience. My basic view on investing has always been to think long-term and not be swayed by short-term news events. By the time most of the general population (this includes me) hears news, the highly skilled professionals have already made their moves.

Impact on the numismatic market

Most major news events of the last several years had little or no impact on the numismatic market. This time is definitely different for several reasons. The spread of coronavirus — and the fear associated with it — will have an impact on anyone trying to conduct business.

For example, a major numismatic coin convention was cancelled last week in Munich. Many dealers from around the world had already traveled to Germany for the show. A lot of dealers in the United States are anxiously waiting to see if the Baltimore convention takes place next week. Whitman plans to hold the show at this point, but obviously the situation could change.

Stack’s Bowers has a major auction planned for next week that includes an amazing group of coins from the collection of Brent Pogue. In April, Heritage Auctions will hopefully be conducting the Central States Numismatic Association auction in Schaumburg, Illinois. These two sales probably contain over $50 million worth of coins. Cancelation or delay of these sales will have economic consequences for the companies, consignors and potential buyers.

A Morgan Dollar in the Stack's Bowers auction (left) and a vintage English coin in the Heritage Auctions sale (right)
Click images to enlarge.

The deep plunge in equity prices will undoubtedly cause a negative wealth effect for a large swath of Americans and numismatic buyers. Even though the stock market is not much lower than it was 12 months ago, many potential buyers will probably curb spending on everything in the short term. This negative sentiment will probably spill over into our hobby.

The silver (and gold) lining

There are, however, some “silver” linings to these recent events. In times of uncertainty, many investors seek tangible assets. Gold has performed strongly in the last several months, and many predict further flights of capital to this safe haven. Other precious metals could also see renewed interest. Usually, some percentage of these buyers become interested in numismatics.

One of my most important jobs as a professional numismatist is to know exactly what coins are worth at any given moment. I am asked to make purchase offers or make major purchase decisions almost daily. Financial uncertainty such as that which has occurred in the last couple of weeks makes this a more difficult task.

For now, I am cautiously optimistic. When I am offered great coins, I plan to take advantage of the opportunity. I believe the market for attractive coins with good eye appeal will continue to be solid. My personal plan is to cull my inventory and reposition my assets into great coins when they become available at favorable prices. Collectors can also take advantage of this opportunity to improve their collections for a better long-term result.

Patience is a virtue

Nearly every great financial genius of the last century has encouraged investors to take advantage of market panics. Warren Buffett has dozens of famous quotes about buying assets when there is blood in the streets. Hopefully, the current situation will not get that bad, but the same basic advice holds — buy when others panic.

Rare coin prices for many popular issues were already at their lowest levels in years before the current “black swan” event transpired. Proof type coins, High Relief Double Eagles, silver dollars, commemorative coins, generic gold and a host of other issues are selling for less than they were 30 years ago. The downside for most of these issues is minimal at this point, which means it is an excellent time to assemble an attractive collection of rare coins.

Despite the uncertainty that prevails because of coronavirus, one thing is certain: This will eventually pass into history. Collectors should exercise patience when considering sales and capitalize on this opportunity if they have a chance to buy great coins. In the long term, I am optimistic about the United States, its economy and the hobby of numismatics. Thinking long-term has always been the secret to the success of most of the great investors who I have known.

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