I've been working hard on the Guide Book of United States Coins prices for the upcoming year for the past several weeks (the Red Book). The task this year is daunting, as almost every price in the book needs to be raised, several has to be raised significantly. For instance, Morgan Dollar prices rose by more than any other version I have worked on.
Anyone who's been paying attention to the rare coin market knows this. These past several months have seen a number of strange auction records. Last year, a record number of 22 coins fetched over $1 million at auction.
As recently as a few years ago, supply-and-demand forces were strongly skewed in favor of supply. For a long time, the market seemed to be struggling with the influx of new, high-profile collections. Prices for Colonial coinage were decreased across the board in some parts of the market. Excess supply and the passing of key collectors who previously drove demand for colonials damaged the market.
The current boom is being driven by collectors, not investors. Last year, these forces started to change in a significant way.
In a frenzy that hasn't been seen in decades, collectors have flocked to the market. Because investors aren't in charge like they were in previous booms, this one is considerably healthier. It's collector-driven demand. As proof of this, coins with a lot of visual appeals can sell at astronomical prices. Investors don't give a hoot about the finer points of the hobby.
Not everyone is thrilled with the sudden surge in interest. Nonetheless, People who have been collecting for a long time have expressed their unhappiness at the scarcity of material and the rising pricing. One collector told me that he just visited a coin show and walked away empty-handed for the first time ever. He couldn't understand why the price of the coins he needed to complete his collection had suddenly risen so much. I have talked to other collectors who have expressed similar concerns about the long-term health of the hobby as a result of this.
The Price Drops May Take a while
It is difficult for long-time collectors to compete with the recent influx of collectors. You have the option of paying more or waiting for a price reduction. Depending on how long it takes for prices to fall, it might be quite some time.
For the past few years, I've been thinking of buying a condo in Florida. As soon as I start looking into anything serious and find something I want, the price starts to appear out of line. There is a 20% to 40% increase in the price of the identical condominiums compared to when I started exploring. I'm sure many others who buy rare coins have the same sentiment. It's possible that waiting for prices to drop is an unrealistic expectation.
In the face of rising prices and limited availability, here are some thoughts and tips:
Sort out inventory! Make an inventory of your coin collection and get rid of anything that doesn't serve your long-term goals. Even the most accomplished coin collectors occasionally come upon duplicates or errors in their collection. Dell Loy Hansen, a massive collector, frequently auctions off his duplicates. Now is a great moment to sell or exchange coins that don't have the best visual appeal. Coins of greater value can be purchased with the money you receive from selling your collection. Coins must be of the correct quality if collectors continue to have sway over the market.
Find out other else in the market. Things haven't gone through the roof in the past year. Stopping your Morgan Dollar collection may be a good idea if you want to look into other coin series that are more stable. Even now, the value of type coins is still low when compared to other, more well-known series. It's been a quiet period for generic gold coins, too. Stack's Bowers will begin auctioning the Sydney F. Martin Collection, one of the finest collections amassed in the last few decades, next year. Pay attention to quality, no matter what type of series you're looking at.
Pay attention to "critical" dates in the series you're collecting. You may want to look for and buy the rarest coins if your budget is limited. Because of this, they are less prone to fall in a depressed market than other products. As monies become available or values change unexpectedly, you can fill in the more common coins. When the supply-demand equation comes into play, common coins that have soared in value are the ones most likely to fall in value.
Educate yourself on numismatics with the money you have. In the classic proverb, "purchase the book before the coin," we are reminded of this. But how many people actually do this? We live in an age of incredible numismatic research resources. During the last two decades, Whitman Books has released more numismatic books than at any previous time in history. Numismatic research can be found on a wide range of websites. American Numismatic Association (ANA) focuses on education and is one of the greatest deals in the field.
Rare coin prices have fluctuated widely throughout the years, but this recent increase is likely to level off soon. Numismatics has attracted those who are looking to preserve their money from inflation, but in the long term, many of them will fall in love with the history and beauty of the hobby.
However, there is a growing number of fraudulent web advertisements selling counterfeit coins and fake bullion items or overpriced genuine gold and silver coins, according to professional coin dealers in the Professional Numismatists Guild (PNG).
Weaver warns consumers and investors that counterfeit coins and bullion market crooks are increasingly using social media channels.
Unscrupulous dealers offer illegal "replicas" of historic coins that are not marked "COPY" as required by federal law, in addition to outright phonies." Estimated losses to victims are in the tens of millions of dollars, according to the Anti-Counterfeiting Educational Foundation (ACEF).